I trade the mini (FDXM) most of the time, especially if I’m not around to manually adjust my trailer or initial stop. The mini is more liquid than the big contract. In 8 years of trading I’ve not had any stops that have failed. Even in volatile markets, slippage yes, but outright no fill....never.
I use GoToMyPC as well when I can’t be in front and once I’m in a position I just adjust accordingly occasionally.
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Some countries in Europe and in Europe do not allow CFDs either (Belgium). I believe that France does not allow advertising of CFDs.
The use of CFDs became prevalent because of the flexibility to trade small contracts and big contracts with enormous leverage until the new ESMA rules have looked into the models and restricted the use of leverage.
However, I am a bit puzzled how they call a CFD on the DAX a DMA(?). The term "Direct Market Access" also means that your orders are reflected in the exchanges. So, while I understand that CFD shares could be matched and edged directly on the regulated exchnages, where do "DMA Germany 30 (DAX)" gets hedged? If the broker is not the market maker and holds the risk on the trades, where do they offset the risk? For example, let's assume that 80% of customers go long, then how do they account for that risk? If some could explain that, I would be grateful.
Essentially, when you trade on the exchanges, the clearing firm (or broker) does not care if you are long or short because every buyer has a seller and vice versa. There are no SWAPS charges, tight spreads under most normal market conditions, and slippage is based on the depth of the market, not the mercy of the market maker.
I recognize that some CFD providers have a deep book of liquidity, but the exchange could still provide a better alternative for many of the CFD products.
Matt Z
Optimus Futures
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In France, the advertising of CFD is still allowed at the conditions the broker offers both negative balance protection, guarranteed stoplosses and margin cuts at 50%. These are marketed online and by introducing agents as “limited risks CFD”
Regarding the DMA tag, the french regulator fined IG for false advertising, because indeed there’s no real DMA properties behind the scene, the broker just cheated with the name to comment that it follows precisely the underlyings.
In the end, the CFD brokers are B-booking 80% o 95% of the client’s activity.
Hi Redcycle,
I wasn't refirring to such a kind of manipulations like you said 200 points ... I'm simply saying that they make the price THEY WANT...so over a volatility spike it can do the difference..even several points...
About the cfd broker maybe it could be right and you pay only once the 1 point of spread... but I'm not so sure about that.
Let me explane the difference with an example ( I also have cfd broker so I can saw the difference and the advantages ):
If you buy now the DAX with a limit order of 12300 with a future, you're buying it at 12300... with no spread, just at you limit order price. If you but the dax with a CDF at 12300 you immediately see a negative P&L of 1 point of dax.... and that is your spread.
The spread in futures come from the difference in the bid and ask of the book and you should see a real book to understand this...
Hello again, sorry for this late reply but just Re reading this thread and really trying to understand what u was writing, I hope u still are around here
U later also wrote this
"
If you buy now the DAX with a limit order of 12300 with a future, you're buying it at 12300... with no spread, just at you limit order price. If you but the dax with a CDF at 12300 you immediately see a negative P&L of 1 point of dax.... and that is your spread.
The spread in futures come from the difference in the bid and ask of the book and you should see a real book to understand this..."
So iam trying to figre out if you are wrong, or i am really stupid.
Lets say that 1lot CFD is same size as 1lot future, so both equal to 25e/point. So if I buying one contract with CFD dax and immidietly step out of that trade, I will lose 1p since the spread is 1p between the ask and bid, right? So that "round turn" will totaly cost me 25 euro.
And exactly the same thiing should be with futures, only difference is that the spread is 0,5 instead of 1. So 1 buy and sell would cost me 12.5.
Hello Redcycle, what you said IS right....but I think that is the point of view that doesn't evidence the difference.
So let's modify your example in order to show the difference between CFD and Future.
So lets say as before that in both cases we use 1 lot or 25€. Now if you buy limit the FUTURE FDAX for 12300 and then you sell limit the FDAX for 12300 you haven't lost anything except the commission that would be around 2$ total.
If you want to buylimit the CFD dax at 12300 then if you want to sell it for the same price at 12300 you will pay FOR SURE the spread agreed with the broker and with 1 pt of spread it would be 25€. There's no way to enter/exit at the same price without pay the spread. PLease note that in this example if you buy CFD dax at 12300 and then you place a sell limit at 12300 then the broker will need to reach 12301 to close your position (considering 1pt of spread).
I hope this example explane better the difference. :-D :-D
Ohh, Thanks for this fast answer, glad that you are still around here!
Well, I think I understand your logic, but dont understand why it is so. Cause sellers and buyers need to agree on a price, right?
Or do you mean that in futures market, there can be meny contrats traded at the same price? Lets say that there are 5 sellers on 12000 and 5 buyers at 12000? and those can buy and sell to each other without spread? Cause then I understand this, cause in CFD, there cant be selllers and buyers at one price, but always 1p difference between the buyer and the seller.
So basicly, if iam tradig the CFD and have a target for a nice win at 12000, and the price just goes to 12000 I wont be able to take profit, since price needs to hit 12001, but you on the other side thats trading futures, will probebly be filled at 12000 and take profit? So not just the 25euro difference with 1p, but its "easier" to trade futures if you trading small orders with lets say 5p stoploss and take profits?
