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CFD vs Direct Market
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CFD vs Direct Market

  #11 (permalink)
Market Wizard
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ratfink View Post
I actually agree with you, although from own experience in recent years the situation has improved dramatically for the better ones.

I also think that. But nevertheless bucket shops are still regular "guest stars" e.g. here (in Germany)
at Regional and Higher Regional Courts. For those who like reading German records of cases - Frankfurt
is a good direction for that. In addition you will get many "interesting" ideas how to rip off a customer


ratfink View Post
Horses for courses, definitely a waste of time for big boys, but plenty useful as fractional cost building blocks and stepping stones for us growing little-uns.

Also agree with that. Unfortunately the German DAX ETFs show low liquidity and high transaction costs
compared with e.g. SPY. Otherwise they also would be an alternative (let's not to talk about (leveraged)
certificates or warrants). At the moment DE30 CFDs are presumably better for small accounts and/or
testing trading strategies with spare change.


Last edited by choke35; March 18th, 2016 at 09:28 PM.
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  #12 (permalink)
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bbgg91 View Post
I trade a variety of indices (well 3) and have always done it through a CFD provider. I only trade during market hours and almost never hold any position over night. I make reasonable returns from what I do and am quite aware of the tricks that a CFD provider will pull on you on some occasions but over all it is an efficient use of capital. I am just wondering what the net advantage is going direct to market as the margin requirements are so much higher?

It depends on what CFD provider you trade with.

If you traded index CFDs via FP markets DMA model then you are going to get similar fills as to if you were trading the real underline- The depth/ price is mirrored directly. However you will get scammed in comms, and the margin requirements are not much different to a real clearing firm. So it's a waste of time.

If you are trading index CFD's via an MM model through CMC or IG then you are probably getting scalped on fills. Also, their markets will not always mirror the underline tick for tick, and depth will be fictitious.

Can someone please clarify, Is IB a bucketshop?

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #13 (permalink)
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I used to trade CL through a DMA model and now trade Germany30 CFD through FXCMs dealing desk offering. There are some disappointing fills and slippage during fast market periods but overall I would say there is little difference between them. The spread is 1 tick most of the time but does widen occasionally. I think the most slippage I have had is 6 or 7 ticks which is probably similar to my CL trading

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  #14 (permalink)
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Neo1 View Post
If you are trading index CFD's via an MM model through CMC or IG then you are probably getting scalped on fills. Also, their markets will not always mirror the underline tick for tick, and depth will be fictitious.

I have watched the tick data on cmc aus200 and the spi and they do move tick for tick (excluding cmc's small fraction numbers) during market hrs. The spread during market hrs is almost always 1 point. I have never seen it vary from that.

For what I do I cannot complain about the fills or slippage. When I traded stocks I had the same problem so I see no real difference. I could always use stop entry orders but for they way I trade at market is ok. I always exit on a limit order.

The margin requirements is so much better and allows more flexibility in what I do. If I was trading large sizes and holding overnight then I agree something like CMC is probably not the best product but for day trading smallish (stay within their guaranteed market) it is quite useful (no need to worry about market depth).

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  #15 (permalink)
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Neo1 View Post
It depends on what CFD provider you trade with.



If you traded index CFDs via FP markets DMA model then you are going to get similar fills as to if you were trading the real underline- The depth/ price is mirrored directly. However you will get scammed in comms, and the margin requirements are not much different to a real clearing firm. So it's a waste of time.



If you are trading index CFD's via an MM model through CMC or IG then you are probably getting scalped on fills. Also, their markets will not always mirror the underline tick for tick, and depth will be fictitious.



Can someone please clarify, Is IB a bucketshop?


What is 'FP'

Thanks


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  #16 (permalink)
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bbgg91 View Post
I have watched the tick data on cmc aus200 and the spi and they do move tick for tick (excluding cmc's small fraction numbers) during market hrs. The spread during market hrs is almost always 1 point. I have never seen it vary from that.

For what I do I cannot complain about the fills or slippage. When I traded stocks I had the same problem so I see no real difference. I could always use stop entry orders but for they way I trade at market is ok. I always exit on a limit order.

The margin requirements is so much better and allows more flexibility in what I do. If I was trading large sizes and holding overnight then I agree something like CMC is probably not the best product but for day trading smallish (stay within their guaranteed market) it is quite useful (no need to worry about market depth).

Do you have a direct SPI feed to compare with? In some cases, I think you'll find that swing high/lows are different by a couple of ticks. The spread might appear 1 point wide, however, what happens when you cross the bid with size? Is all the liquidity still there?... only when it benefits the liquidity provider.

At the end of the day if you don't care about order flow or market depth, and are happy to trade a fictitious market where you get scalped on fills and end up paying extra in comms, then CMC is great for you.

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #17 (permalink)
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steve2222 View Post
What is 'FP'

Thanks


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Fp= First Prudential Markets
Online Trading: CFD Trading and Forex Trading.

Steve,

If you want to trade CFDs then don't sign up with on of the Aussie based providers. Sign up for an account with IB. They offer DMA CFDs for most equities, and more transparent commission for indices ( they don't profit by adjusting spreads).

You could buy 1000 units of AAPL via IB and pay $5 per side(0.005), with a min charge of $1USD
Or,
you could buy 1000 units of AAPL via CMC/IG and $20 per side(0.02), with a min charge of 10USD

Even better if you are trading smaller size:

100 units of AAPL via IB for $1
100 units of AAPL via CMC/IG for $10

I've never traded index CFDs with IB, however, I think you can trade the likes of the ASX200 for around $1 per contract.

If you can't fund the min required 10,000 USD for an IB account. Then you could sign up via one of their Introducing Brokers, eg Captrader- https://www.captrader.com( around 5000 USD to open an account).

For any Aussies reading this, sorry mate, you can't trade CFDs via IB.

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #18 (permalink)
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Neo1 View Post
Do you have a direct SPI feed to compare with? In some cases, I think you'll find that swing high/lows are different by a couple of ticks. The spread might appear 1 point wide, however, what happens when you cross the bid with size? Is all the liquidity still there?... only when it benefits the liquidity provider.

I did have but I no longer have a use for it. For all the years I have been watching it there is no discernible difference within market hrs.


Neo1 View Post
At the end of the day if you don't care about order flow or market depth, and are happy to trade a fictitious market where you get scalped on fills and end up paying extra in comms, then CMC is great for you.

Like I said, CMC create a guaranteed market so if you play within that market depth it is not important. If you want a larger size, do multiple orders within their limit. If you are worried about getting scalped on fills change your order type. No different to the real market. Doing at market orders on any exchange will create problems at times. I have done both. If you play within the parameters they set there is not much difference.

If they move things around as to control what they do to their advantage at the cost of their customers I am sure they will not be in business for very long. There are plenty of CFD providers around to stop each other doing that.

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  #19 (permalink)
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bbgg91 View Post
I did have but I no longer have a use for it. For all the years I have been watching it there is no discernible difference within market hrs.



Like I said, CMC create a guaranteed market so if you play within that market depth it is not important. If you want a larger size, do multiple orders within their limit. If you are worried about getting scalped on fills change your order type. No different to the real market. Doing at market orders on any exchange will create problems at times. I have done both. If you play within the parameters they set there is not much difference.

If they move things around as to control what they do to their advantage at the cost of their customers I am sure they will not be in business for very long. There are plenty of CFD providers around to stop each other doing that.


"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #20 (permalink)
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Neo1 View Post

For any Aussies reading this, sorry mate, you can't trade CFDs via IB.

Thanks for that. Lucky I am not an Aussie

Actually a long time ago I did have an Aussie CFD account with IG when I lived there, but never really got into trading CFDs and closed the account.

I remember seeing somewhere else about IB not accepting Aussie CFD customers. Why is this given Australia is a well known CFD country with numerous CFD providers? Is it something to do with IB not wanting to comply with some Aussie regulatory requirement? Don't IB still operate there for other forms of trading?

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