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How to trade US stocks with leverage
Started:June 18th, 2015 (12:18 PM) by DarkPoolTrading Views / Replies:651 / 10
Last Reply:June 19th, 2015 (06:11 PM) Attachments:0

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How to trade US stocks with leverage

Old June 19th, 2015, 06:11 PM   #11 (permalink)
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Christchurch, New Zealand
Futures Experience: Beginner
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Broker/Data: IB,IG,TT, IQ Feed
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DrewDown View Post
Selling premium is definitely capital-intensive.

I don't really trust CFDs, looked into them, and to me, it just seems unnecessary. Novel concept, but unnecessary.

You can go long or short with 2:1 margin on a US brokerage account - they will allow you to size up to 2x your amount of cash. With a larger account, you can do more intraday, and with a portfolio margin account (over 100k), I believe it is 4x all the time. Might depend on your broker.

CFDs typically have 10:1, or 20:1 Margin, often with better overnight rates.

The only reason not to trust CFD's is if you're trading a Market maker model that's taking the otherside of your trade or using some indirect hedge. DMA models( like IB's) are generally quite transparent, as your order is physically hedged in the book( you can see the order for yourself) so their CFD markets trade 1-1 with the underline- You're basically trading the NBBO. If you're trading liquid stocks eg AAPL, FB etc then a typical retail trader isn't going to see any real difference in order fills/ execution. The only disadvantage is that illiquid stocks might not always have shares available, there can be delays in modifying orders( it might take seconds instead of ms), and you can't route to a specific exchange.

"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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