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I'm a full-time trader since almost 7 years and actually I switched from futures to CFD in 2009 and never looked back so far. Just because trading capacities are very risky does not mean you have to comply to them
How come ? First I was ripped by ActivTrades and during one full week my trades showing on NinjaTrader were erroneous and acting as phantom ones. I realised this the first day of week and talked them about it every day by email and telephone support. They reassured me everything was fine during each contact .... on friday morning, I got a phone call from them when they realised my account was not even emptied, it was NEGATIVE. Their security system did not even cut out my positions with the help of regular margin calls.
To this instant, they were scared about what went wrong on their side and they started treating me like shit whereas before I had good relationship with most of the support team. I was not even allowed to talk to the manager anymore. It drove me crazy.
They finally agreed, after much communication and arguments, that the link from NinjaTrader to RCG clearing firm went wrong for one full week (showing me sometimes flat positions when in real I had double positions etc... leading me to total failure) ....anyway, although they admited a total failure on their risk procedures and the problem, they only offered to refund me 25% of the 100% money I had lost from my trading account. After 3 weeks of negociations, they agreed to refund me 50%, not more. I did not take it into justice because I had better to do at that time and knew I could get back on my knees if I'd let go negative vibes.
After that, I went with Interactive Brokers and won back what I had lost. It went well a few months ....until to the day when again bad luck stroke me. I had no complaints about futures trading however I encountered suddenly very serious issues about spot forex trading. To sum it up, my orders were executed totally outside bid/ask spread. Say I would buy EUR/USD at ask price of 1,5001 , my actual fill was dealt at 1,5010 and "execution markers" showing on Ninja would not even match candle OHLC boundaries They were "floating in free space". It happened to me 2 or 3 times, and although IB refunded me on those bad fills after filling complaints, when a friend of mine began having the same issues ...I thought I'd just quit and do not risk another horror story just like with ActivTrades.
Since then I tried CFD trading with GFT (UK) and I have never been more happy than this.
Customer service has been just way above futures brokers. Just no comparison. And besides CFD specifities since close to 3 years I cannot find any stuff I am not satisfied with.
Just for the short story, I had 3 small issues with GFT up to this day and was refunded the same day each time. One was bad fill from a sudden market news which was not planned and my stoploss was executed with a slippage of 10 pips, another one was a datafeed which went broke due to exchange failure; last one, I do not remember.
What really totally blew my mind is that for the first issue, I did not even had to ask and file a complaint, the trading desk manager actually called me on the phone to tell me I would get a refund from the bad fill.... would have a huge futures corporation like IB done that to me or anyone else ? I don't think so. So to all people stating CFD brokers have a business model only to make money on their client's back andmoney, please revise your opinion first and check for yourself with true trading experience.
Finally, there are advantages to CFD trading, actually many but here are a few ones.
On high volatility markets (like now), you might want to carry overnight positions. On futures you have to decide at market close to carry on your night exposure or not and wait till the next day open to have the surprise if your bet went well or not.
Say the maket will open with a 100 points gap down ....With actual 24/24 5/7 day quotes on CFD through GFT (LMAX does not offer this), I can set a crash stop at 50 points or say 75 instead of praying and stopping my long trade at -100 at the futures 8am open (I trade Dax mostly)
For investors, you don't have to rollover your positions through different expiry dates, you can just "hold" it as long as you need. Also, if your position is short, with actual low interest rates as of now, you'll actually get PAID to keep your position ... for the long side, it will cost you a very small fee. I know for a fact IB charges on the other hand, overnight fees whatever the side of trade.
Finally, having really low margins, margin cut offs and huge leveraging is excellent if you are not a psycho. It does not mean you have to use them ....really not.
Personnally and quite a few friends which have been actively trading for years as a living, use those trading facilities to trade in a brand new way, which we call "kamikaze" or "banzai" between us (now, it begins to look like casino but it is totally a chosen stance)
Which basically means, you'll try to perform very risky "runs" (between 1:200 up to 1:400 leverage with GFT) for a few hours only and accept to lose ALL the capital set for this run.
For instance, you can try this when identifying very high reward/risk price patterns like Harmonic trading with R/R of 5 to 20 or by playing only wave 3 elliott waves (huge moves with no retracements so you can even capitalize in real time every single $ cents win of the running trade)
To us, since we have experience and some with 80% win ratio on avg, we found out it's actually the easiest way to survive and make money. With that procedure, you accept to lose all your money on a single losing trade (about 26 pips on euro for exemple) so you start with 200 to 1000 EUR and go nuts with a vivid mind for a few hours, be it scalping or day trading.
For exemple, my record (a few weeks ago trading FDAX, EUR/USD, Gold and Silver at the same time) is transforming 300 EUR to 21000 EUR in one and a half day (with no sleep at all) I have another one of 1000 to 35000 in a 4 days (and again, less than a full night sleep)....would you be able to do that on futures trading ? never ever. But actually quite a few people do it on a consistent basis (with less numbers but still very much interesting) You just accept to lose everything and trust me, it helps you focus on being GOOD and make the less mistakes out of you... (it might be the opposite of paper trading, or even regular trading because you DO care about every move you take whereas starting trading with a very low money amount which you just don't give a shit about, helps you relax .... to me it's really a win/win psychological situation)
With this approach, you can give up yourself to blow up 4 accounts of 500 EUR because you know as soon as you'll master a run at close to max leverage that you'll earn x5/10/15/20 your initial deposit.
This way of working is obvisouly not recommended for beginners.... more to intermediate+ to experienced traders.
To me, money management has to be either very very secured in a traditionnal investment type way, but when you embrace the full risks of the markets, it does not make sens to me to go "in-between", you better go with FULL risk. Because to the end you just have to face the fact : are you good or are you NOT ? Do you have a profitable sharp ratio with a positive expentancy and high win% ? If so, go full risks but do it in a smart way (CFDs offer this), if not, revise your trading...
So is CFD trading a viable option ? YES papa ! (I have even a friend of mine who is a trader for a managed fund which deals only on CFD through AvaFx. It is more and more a solution taken by instituionnals and professionnals because lot size increments are way more defined than Futures so you can develop very precise money management and model techniques or diversify portofolios for your clients)
LMAX seems good. Besides that, go for GFT, although they are a market maker, they are crazy good as long as you are not trading heavily huge sizes depending on market hours and liquidity.
Sorry for US people who cannot benefit from these trading products.
Besides, LMAX was created actually by a sporting betting very known and profitable company, so you're quite close But it does not really mean a thing. More feedbacks welcome (personnaly, I will check them for sure very soon)
PS : edit was performed on my first long explanation with more emphasis and better englaish (numerous times lol), so don't read zhao's quote or you'll miss info/arguments
Sorry I am not, neither my close friends are right now (but it's clear I will open an account very soon to check them at magnifying glass)
But some other french relatives seem to swear by it (and they have practice knowledge of Dukascopy, MB trading, IB, sometimes being affiliates or even Introducing Broker etc so it's not blinded or cheerful appreciations for a fact)
You can check feedback here (sadly it is in french, although they have an english driven website/forum, it is less documented). It is oriented to algo and pro solutions trading especially (it is a coding corporate held by a french CEO but London based working for a vast array of clients from retail to hedge funds)
Actually they developped a trading platform dedicated specifically for LMAX to lower latency and have full control of professionnal automatic trading. It is still at the start of development but it is very promising. If you only care about vivid, quick and dirty, reliable execution and running your systems in with full coding support and full encryption environnement, it mght be better than Ninja or even MC integration. Of course, you won't have all the retail fancy features (like charting, etc etc) (I admit most of us are Ninja fans and although executing on CFD, we can't get past using Ninja for decisions, etc)
Right now, the software is free (I think because it is still in beta phase and I have no idea if you'll have to pay for it later on or if they aspire to make money on their programming services related to it instead)
It's important everyone made up his own mind about CFD trading that gets a lot of unrighteous bad advertising. Personnaly I don't trust people's opinion before checking everything myself.
HOWEVER, it is also true that most CFD companies will be jokes and sometimes working against you. You HAVE to be careful with whom you choose to go with. Just like everywhere else (at first, I would have NEVER imagine I'd have such crazy unprofessionnal issues with ActiveTrades and InteractiveBrokers due to their friggin reputation, but it indeed happened... the only clearing firm for futures I'm now considering is Crossland LLC because I have again friends satisfied with them with no bad reports since quite a few years ...so I'm unofficially supporting them)
There are no wire out fees when withdrawing money.
0 minimal deposit might be lifted in the next weeks.
Commissions are negotiable if you have high volume and/or account size.
iPad and Android platforms are on their way.
Non-base currency trading is swept to base currency each next morning.
3/4th of their users are trading FX, the remaining CFD.
FX trading seems a killer however CFD might not be (worse than futures, good for CFDs). I'm investigating this week.
New clients and it happened at the rigth time ! Opening account is dirty quick, you do not necessarily have to provide documents (ID, proof of address) as they have the means to crosscheck your identity most of the time (don't ask me how !)
New liquidity providers popped out in the last 10 days !
Now spreads for CAC range from 0 to 0,5 points (less than 1 futures tick !) and DAX spreads from 0 to 1 point on average (0 to 2 futures tick so about 1)
It is very amusing to see spreads of 0 displayed this often ! We question ourselves how market makers win money on this environnement :O But maybe GS, JPMorgan and Oliver have other ideas in their head than to be profitable short-term.
Commissions are still higher than futures but they are negotiable at $50M volume and above.
The good thing is that although liquidity is less than futures, liquidity providers are REQUIRED to quote their minimum lot size at the best bid and ask ALL the time cotinuously....which means than you can create a wide array of execution algorythms and get the very best out of this model.
Only critic (we hope to be fixed later) is that contrary to GFT, RTH instruments are not opened ETH-overnight (on euro indexes for instance) for now. Too bad, because it can be of good benefit on swing trades.
For us, it's now the best forex and/or CFD broker out there. It stole GFT's place for CFD as number one We're moving over accounts.
Trading: Mini and micro US Indexes/ DAX/ FX/VIX/GOLD
Posts: 180 since Apr 2010
Thanks Given: 53
Thanks Received: 164
I came across LMAX almost by accident. Opened an account on Friday (took about 10 minutes from application to first trade!). They should be much higher profile for the service they offer, in my opinion. I'm trading eur/usd/gbp/jpy and the spreads are really excellent during european open to London close. The execution is instant every time. I second what's been said about low margin and the flexibility this affords. Also, min lot size of 10,000 is great for those who have a strategy that requires taking multiple entries/ exits. Easy to do with floating ticket and quick buttons for lots means 10,000 units can be added or taken off very easily at any point. The charts are basic but very smooth (much more so than fxcm data which I currently use with SC). So if you are a 'naked' trader it might be sufficient. I plan to use the Multicharts integration some time soon. As has been said, as more join the market liquidity can only get better. Not sure if US folks can find a way around the restrictions to trade with them?
Trading: Mini and micro US Indexes/ DAX/ FX/VIX/GOLD
Posts: 180 since Apr 2010
Thanks Given: 53
Thanks Received: 164
SAR, how are things going with LMAX/ MC's? Any problems with data or execution through the platform. Are you getting historical tick backfill okay? I've had no issues with executing through LMAX Trader but am thinking about using thier MC api. Thanks.
They were "floating in free space". It happened to me 2 or 3 times, and although IB refunded me on those bad fills after filling complaints, when a friend of mine began having the same issues ...I thought I'd just quit and do not risk another horror story just like with ActivTrades.
We question ourselves how market makers win money on this environnement :O But maybe GS, JPMorgan and Oliver have other ideas in their head than to be profitable short-term.
We're moving over accounts.