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Trading dax futures vs CFD


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Trading dax futures vs CFD

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  #21 (permalink)
ycomp
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but (in general) you need to trade the FDAX , not the mini because the spreads are generally tighter - right? (I base this only on cursory examination of the QM since I don't really have it on my platform to compare with the FDAX)

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  #22 (permalink)
neil
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Dvdkite View Post
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

The introduction of Micro Indices such as the Micro SP500 etc might now alter the perspective on CFD's versus Futures trading.

https://www.cmegroup.com/activetrader/Microsuite/?gclid=Cj0KCQjwt4X8BRCPARIsABmcnOorisYtUCcJVto0vVhqdIZT1DxFgj43yvrwDuEmDZAZ2oXGFa2AtVoaAhNTEALw_wcB&gclsrc=aw.ds

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  #23 (permalink)
jazzmutant
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Hi fellow traders!

To add to the discussion, I have to say I appreciate trading CFDs as the cfd platforms gives me the ability to open 2-way positions. However I gather this is illegal in the US (I don't usually try to open 2 way bets, but I inevitably get my direction terribly wrong, so I would hedge in the opposite direction of my original trade. The mean reversion on the indices I trade usually lets me 'rescue' my original positions at minimal loss, aided by averaging down at opportune moments)

For this reason, I am hesitant to use US brokers as my main (i do have a tradovate account which I use to view tick data and charts).

However, the spreads on CFDs do add to the cost of trading, and are significantly more than if I trade CME regulated products; for the micro e-mini S&P, it's $1.12 roundtrip on tradovate (50 cents comm plus exchange and clearing fees). Equivalently, the US500 cfd (which mirrors the s&p 500) has a 0.4 spread - this adds up to $2 for a CFD roundtrip trade sized proportionately to 1 micro emini. The disparity in costs bothers me quite a bit; it adds up given my manic style of trading.

Would love to hear from you guys and appreciate any feedback if you know of any platforms or workarounds that lets me trade the CME products while maintaining the ability to trade both ways? Thanks!

jzm

[edit - correction on tradovate costs to incldue exchange and clearing fees]

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  #24 (permalink)
 SBtrader82 
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jazzmutant View Post
Hi fellow traders!

To add to the discussion, I have to say I appreciate trading CFDs as the cfd platforms gives me the ability to open 2-way positions. However I gather this is illegal in the US (I don't usually try to open 2 way bets, but I inevitably get my direction terribly wrong, so I would hedge in the opposite direction of my original trade. The mean reversion on the indices I trade usually lets me 'rescue' my original positions at minimal loss, aided by averaging down at opportune moments)

For this reason, I am hesitant to use US brokers as my main (i do have a tradovate account which I use to view tick data and charts).

However, the spreads on CFDs do add to the cost of trading, and are significantly more than if I trade CME regulated products; for the micro e-mini S&P, it's $1.12 roundtrip on tradovate (50 cents comm plus exchange and clearing fees). Equivalently, the US500 cfd (which mirrors the s&p 500) has a 0.4 spread - this adds up to $2 for a CFD roundtrip trade sized proportionately to 1 micro emini. The disparity in costs bothers me quite a bit; it adds up given my manic style of trading.

Would love to hear from you guys and appreciate any feedback if you know of any platforms or workarounds that lets me trade the CME products while maintaining the ability to trade both ways? Thanks!

jzm

[edit - correction on tradovate costs to incldue exchange and clearing fees]

The question is "are you making money trading cfd?". If you are you should definitely stick to it otherwise you should consider sueing the broker to have your money back. If you get serious about it they will reimbourse to you the money that you lost.

Most CFDs brokers are professional scammers. I don't want to mention any but ask yourself why their names appear on the t-shirts of soccer players.

Since they are scammers they don't want to have too much trouble with authorities and they will give you your money back. At the end of the day they took your money exactly as an online casino would do.



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  #25 (permalink)
 bobwest 
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jazzmutant View Post
Would love to hear from you guys and appreciate any feedback if you know of any platforms or workarounds that lets me trade the CME products while maintaining the ability to trade both ways? Thanks!

If you put in, let's say, a buy of 1 ES contract and a sell of 1 ES contract on the CME, the orders net out and you have no position left either way. (You buy 1 and open a long, then the sell goes through and you sell it out, so there is nothing left. You don't have a short and also a long still open.) That's how it works. Selling against a long position is how you close the long; buying against a short position is how you close the short.

You could have accounts at two different brokers and enter long in one and short in another. I believe this would be against the rules, but probably you could do it. But then, the profit on one position would be exactly offset by the loss on the other, so this is a true hedge in the sense that there is no profit as well as no loss -- other than commissions, which you would pay on both, so you would gradually go broke.

I don't know how CFD's work (they are illegal in the US, because you are trading against your broker, who has his own interest at heart, not yours.) So I don't know how this long/short hedge works with CFD's. With futures, even if you have a long with one broker and a short with another, they net out because their profit/loss move equally, but in the opposite direction.

I don't see any way to do this with futures, sorry.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #26 (permalink)
jazzmutant
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SBtrader82, thanks for your concern. I make money and tbh I'm actually happy with my broker, they're legit and have been very good to me.

The cost of trading the CFD is the only thing that's bothering me, knowing there exists a cheaper alternative.

L

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  #27 (permalink)
Redcycle
stockholm
 
 
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jazzmutant View Post
Hi fellow traders!

To add to the discussion, I have to say I appreciate trading CFDs as the cfd platforms gives me the ability to open 2-way positions. However I gather this is illegal in the US (I don't usually try to open 2 way bets, but I inevitably get my direction terribly wrong, so I would hedge in the opposite direction of my original trade. The mean reversion on the indices I trade usually lets me 'rescue' my original positions at minimal loss, aided by averaging down at opportune moments)

For this reason, I am hesitant to use US brokers as my main (i do have a tradovate account which I use to view tick data and charts).

However, the spreads on CFDs do add to the cost of trading, and are significantly more than if I trade CME regulated products; for the micro e-mini S&P, it's $1.12 roundtrip on tradovate (50 cents comm plus exchange and clearing fees). Equivalently, the US500 cfd (which mirrors the s&p 500) has a 0.4 spread - this adds up to $2 for a CFD roundtrip trade sized proportionately to 1 micro emini. The disparity in costs bothers me quite a bit; it adds up given my manic style of trading.

Would love to hear from you guys and appreciate any feedback if you know of any platforms or workarounds that lets me trade the CME products while maintaining the ability to trade both ways? Thanks!

jzm

[edit - correction on tradovate costs to incldue exchange and clearing fees]

Arent you forgetting that in the futures there are also a spread on 0,25? vs the CFD witch is 0,4 . So the difference isnt that big that you are describing?

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  #28 (permalink)
 steve2222 
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bobwest View Post

You could have accounts at two different brokers and enter long in one and short in another. I believe this would be against the rules, but probably you could do it. But then, the profit on one position would be exactly offset by the loss on the other, so this is a true hedge in the sense that there is no profit as well as no loss -- other than commissions, which you would pay on both, so you would gradually go broke.


Bob.

You don't even need to have accounts at two brokers for Futures.

At Amp Futures I can have sub accounts under my main account and I can go Long ES in one account and then short ES in a sub account at the same time - I have actually experiemented with this in the past (Live) but I dont do this any more. Downside is there is no margin relief ie you will have to have funds to meet the Day Trade margin level for BOTH the short and long.

Another option with Fututres now is to trade mini and 10x micro contracts through the same account. With this option you get almost 100% margin relief ie the short and long margin requirements almost cancel out. I think once when I asked Amp to run it through the SPAN model it came out at a net $3 day trade margin required to go long 1 ES contract and short 10 micro contracts at the same time.

The bigger question is why would you do this at all. If you get the direction horribly wrong, then take the loss and enter in the other direction.

Prediction is very difficult, especially about the future - Niels Bohr, Danish Physicist
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  #29 (permalink)
 bobwest 
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steve2222 View Post
You don't even need to have accounts at two brokers for Futures.

At Amp Futures I can have sub accounts under my main account and I can go Long ES in one account and then short ES in a sub account at the same time - I have actually experiemented with this in the past (Live) but I dont do this any more. Downside is there is no margin relief ie you will have to have funds to meet the Day Trade margin level for BOTH the short and long.

Another option with Fututres now is to trade mini and 10x micro contracts through the same account. With this option you get almost 100% margin relief ie the short and long margin requirements almost cancel out. I think once when I asked Amp to run it through the SPAN model it came out at a net $3 day trade margin required to go long 1 ES contract and short 10 micro contracts at the same time.

The bigger question is why would you do this at all. If you get the direction horribly wrong, then take the loss and enter in the other direction.

Thanks. I didn't think about the mini and micro long/short idea, and I didn't know about the sub account idea, although I should have thought of both.... both are logical ways to do it.

I agree with your comment about "why would you do this at all" being the question. Your profit on one side would still cancel out against your loss on the other.

Since I don't really know anything about CFD's, I can only say that there must be good reasons to do this with CFD's, but I don't see it in futures as a profitable method.

Always glad to know when I'm wrong, so thanks for pointing it out.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #30 (permalink)
 SBtrader82 
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jazzmutant View Post
SBtrader82, thanks for your concern. I make money and tbh I'm actually happy with my broker, they're legit and have been very good to me.

The cost of trading the CFD is the only thing that's bothering me, knowing there exists a cheaper alternative.

L

that's great! then it means that you are really good, I think that futures will only bring positive things to you. For instance in Futures you can see volume which is the volume that is traded around the world on that product. I don't think CFD show you the volume, maybe they show only the volume traded on your broker.

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