If you're not a US citizen, then yes. If not, I don't think so, but it might be hard to find you're trading unauthorized products (which is ridiculous IMHO, are interesting instruments, less toxic or risky than some allowed instruments).
Usually in trading, those who know don't talk, and those who talk don't know. (Al Brooks)
success requires no deodorant! (Sun Tzu)
CFDs are private contracts, which as far as I know are legal in most or all European countries. You can consider CFDs as an alternative to trading FOREX.
- CFDs can be traded on margin, margin requirements are as low as 5%
- Some CFD brokers offer you a guarantee that your maximum loss is limited to your account equity
- You trade against the only market maker, who can manipulate prices as he likes
- The spreads are higher compared to stocks or futures
- You have a significant counter party risk, your funds are not insured if the broker goes bust
- The only one who gets rich is the broker
- If you are profitable the broker may refuse to continue business with you
CFDs are forebidden in the US, and there is a good reason for this.
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The CFDs are offered by brokers like Interactive Brokers and Saxo Bank on about 40k global stocks, indices, forex, commodities and ETFs.
I found out that the traders who are trading with Anton Kreil's Institute of trading are all trading CFDs on an account with saxo bank. I did not read any good reviews about saxo bank but Interactive brokers also offer CFDs as trading product with their universal account, so guess CFDs would be an interesting product with low margin requirements and some tax benefits.
There's abit of mis-information that goes around about CFD providers.
It's only the Market maker providers who you want to stay away from, if you trade with a decent DMA provider then all you're essentially doing is borrowing money to buy stock, the broker matches your order with the direct underline in the market, so you see your order get entered into the book, and then executed. The advantage is that you can also get matched from multiple different order books/ insto darkpools which can improve liquidity. The only real downside is bigger commissions.
I trade alot of US stocks via CFD's on margin as low as 5%. If i'm trading liquid stocks then usually there's zero spread, and most of my market stops never slip more than a couple of ticks( if any). I prefer to trade CFD's than buy the underline outright. The execution is flawless, and I've never had any real issues.( I've been trading CFD's for the last 3-4 years). I know a couple of other traders from institutional backgrounds who prefer to trade stock CFD's aswell.
Most retail clients get caught out trying to hold positions overnight on margin, paying high interest. which is extremely high risk considering the opening spreads on US equities, and the volatility on commonly traded OTC markets that CFD providers offer.
If you trade CFD's then you need to be in and out,never hold overnight, and never trade with a MM
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