CFD's, another scam or can I really make money?

[jenkotvr]

Ive done a bit of research into contract for differences and even had a 'dabble' with GNI. Won £100 then lost £200 even when the 'real time' market was in my favor
What concerns me from what I read is that basically we are competing against the company, not the 'real time' market = ultimatly losing! so:

Does anyone know of a company and had experience where we can buy/sell off of the real market pricing and not some fictitious one?

Has anyone made money using CFD's?

Over to the panel

[matsmith]

jenkotvr said:

Won £100 then lost £200 even when the 'real time' market was in my favor

I'm confused by that part so could you elaborate please? Are you saying that their prices did not reflect the underlying market?

[limpsfield]

jenkotvr said:

What concerns me from what I read is that basically we are competing against the company, not the 'real time' market = ultimatly losing! so:

Does anyone know of a company and had experience where we can buy/sell off of the real market pricing and not some fictitious one?

The first comment is one of those popular urban myths that really isn't true. There is so, so much rubbish about these sort of derivative products - CFD/Spread betting etc on various financial forums and so much of it boils down to "I have lost money, but it can't have been my fault who should I blame"

With a company such as IG Markets, www.igmarkets.co.uk who I work for, you can trade CFDs using direct market access if you want, so you can trade directly in the stock exchange order book.

it is important to understand that because of leverage the risk is greater with these sort of products and you should take steps to make sure you are controlling that risk, but I wouldn't be put off them due to the ramblings on the internet.

Edited by limpsfield on Thursday 3rd February 09:24

[jenkotvr]

matsmith said:

I'm confused by that part so could you elaborate please? Are you saying that their prices did not reflect the underlying market?

This is going back some 3yrs ago when I did this, but basically yes. The spread difference was something like 20 points from the real time market, which if you have a stop; triggered and you got out....making them a nice pot of money.

[jenkotvr]

limpsfield said:

The first comment is one of those popular urban myths that really isn't true. There is so, so much rubbish about these sort of derivative products - CFD/Spread betting etc on various financial forums and so much of it boils down to "I have lost money, but it can't have been my fault who should I blame"

With a company such as IG Markets, www.igimarkets.co.uk who I work for, you can trade CFDs using direct market access if you want, so you can trade directly in the stock exchange order book.

it is important to understand that because of leverage the risk is greater with these sort of products and you should take steps to make sure you are controlling that risk, but I wouldn't be put off them due to the ramblings on the internet.

Does IG markets provide direct access CFD for the FTSE 100?

[matsmith]

jenkotvr said:

matsmith said:

I'm confused by that part so could you elaborate please? Are you saying that their prices did not reflect the underlying market?

This is going back some 3yrs ago when I did this, but basically yes. The spread difference was something like 20 points from the real time market, which if you have a stop; triggered and you got out....making them a nice pot of money.

Ah right, that is the risk of having a stop and on a different day that 20 point difference could well have been in your favour and increased your profit with a limit order. What market was that on? 20 points on, say for example, crude futures would be quite normal whereas 20 points on the FTSE would be very unusual.

Limpsfields post above is a good one, I don't buy into the conspiracies that they are out to get us. From what I understand they are hedged anyway so they make their money on the spread rather than our wins/losses. Stick with a reputable company and there should be no issues like the one you described. I can't say I have ever head of GNI.

[jenkotvr]

matsmith said:

Ah right, that is the risk of having a stop and on a different day that 20 point difference could well have been in your favour and increased your profit with a limit order. What market was that on? 20 points on, say for example, crude futures would be quite normal whereas 20 points on the FTSE would be very unusual.

Limpsfields post above is a good one, I don't buy into the conspiracies that they are out to get us. From what I understand they are hedged anyway so they make their money on the spread rather than our wins/losses. Stick with a reputable company and there should be no issues like the one you described. I can't say I have ever head of GNI.

Ive just googled GNI and it comes up with MF Global, maybe they got bought out
It was the FTSE I was battling against.
Maybe procedures have changed now, it has been a while.

[davepoth]

Here's a good rule. If you can't see where the money's coming from, eventually someone is going to come to ask for the money back.

HTH.

[matsmith]

jenkotvr said:

matsmith said:

Ah right, that is the risk of having a stop and on a different day that 20 point difference could well have been in your favour and increased your profit with a limit order. What market was that on? 20 points on, say for example, crude futures would be quite normal whereas 20 points on the FTSE would be very unusual.

Limpsfields post above is a good one, I don't buy into the conspiracies that they are out to get us. From what I understand they are hedged anyway so they make their money on the spread rather than our wins/losses. Stick with a reputable company and there should be no issues like the one you described. I can't say I have ever head of GNI.

Ive just googled GNI and it comes up with MF Global, maybe they got bought out
It was the FTSE I was battling against.
Maybe procedures have changed now, it has been a while.

I've just had a look and it seems GNI was the trading name of MF Global, so they must have changed their trading name to their company name.

I'm very surprised that they were 20 points out on the FTSE, that wouldn't happen with a reputable company so if you are wanting to start CFD's again and you want DMA then talk to IG Markets. As long as you are betting the right way there is no reason why you won't make money; or at least there is nothing that they are likely to do to stop you from making money.

[DonkeyApple]

jenkotvr said:

matsmith said:

I'm confused by that part so could you elaborate please? Are you saying that their prices did not reflect the underlying market?

This is going back some 3yrs ago when I did this, but basically yes. The spread difference was something like 20 points from the real time market, which if you have a stop; triggered and you got out....making them a nice pot of money.

Not possible on equities.

GNI, now called MF Global is pure DMA, no book making. Same company but GNI was an old English brand that has been phased out by the US parent company.

First, people need to understand that a CFD and a spread bet are exactly the same product packaged and branded differently to appeal to different markets and utilise different tax laws.

Second, with equity CFDs you can deal DMA onto the LSE order book or OTC onto the brokers 'book'. In the former the prices come from the exchange you are dealing on and with the latter the prices are derived by the broker. The broker can deviate their price from the underlying market but the reality is that this would open up arbitrage opporuntities so isn't all that prudent.

IG is one of the few firms who offer both DMA and OTC within one platform. Each has their own merits.

If you were punting on the FTSE Index then you would have been trading OTC and not DMA (unless trading the futures).

If you are ever unsure of why a stop has been triggered just ask for the print from the market showing the product traded at that level. It will be for the futures but the synthetic cash is just the future with the interest stripped out and divis re-applied, so linked.

The only real scam in this market is that retail punters go and trade on leverage without even bothering to try and understand the absolute mechanical basics of what they are doing.

[jenkotvr]

Thanks guys for you input on this, really helpful

Slightly off topic but have any of you used the Quotespeed platform formerly known as Tenfore but now Morning star?

I need to look for a decent platform before I attempt trading, would rather work off that and trade only on the company supplied version.

[DonkeyApple]

jenkotvr said:

Thanks guys for you input on this, really helpful

Slightly off topic but have any of you used the Quotespeed platform formerly known as Tenfore but now Morning star?

I need to look for a decent platform before I attempt trading, would rather work off that and trade only on the company supplied version.

It depends what you want to trade.

Any 3rd party platform that is routed in to a broker is likely to be less flexible and robust than the broker's inhouse system. There are exceptions such as on futures but generally it is a pretty good rule of thumb.

Many brokers buy in from 3rd parties such as MetaTrader or Ariel and they do not stack up well against a good inhouse product with it's own back end system. designed around a specific

[jenkotvr]

Looking at FTSE 100 only, its the chart im most comfortable with and the one ive studied the most.

What platform would you recommend?

[DonkeyApple]

jenkotvr said:

Looking at FTSE 100 only, its the chart im most comfortable with and the one ive studied the most.

What platform would you recommend?

I assume the index as opposed to constituents?

Depends how you want to trade the FTSE 100 index though?

Future, ETF, Spread Bet, CFD, Options, Binaries etc and over what time period, dailies, monthlies, quarterlies etc.

[jenkotvr]

DonkeyApple said:

I assume the index as opposed to constituents?

Depends how you want to trade the FTSE 100 index though?

Future, ETF, Spread Bet, CFD, Options, Binaries etc and over what time period, dailies, monthlies, quarterlies etc.

Yes Index, daily & monthly, CFD....ideal futures but not quite ready for that.

[DonkeyApple]

jenkotvr said:

Yes Index, daily & monthly, CFD....ideal futures but not quite ready for that.

Why CFD not Spread Bet? Are you a non UK tax payer?

[jenkotvr]

UK Tax payer, spread bet I take it better option?

[DonkeyApple]

jenkotvr said:

UK Tax payer, spread bet I take it better option?

They are identical products. At present, most firms seem to be offering narrow spreads on the spread bet version than the CFD. All you do need to check is the overnight funding element of each as it is typically a little more on the spread bet as it is hidden, rather than billed separately so the broker can sneak a higher rate in.

Even if it is higher, it all depends on how many days you hold the rolling spot as to whether this is relevant to you.

Unless you are dealing the futures (no fractions of a contract and much larger margin rates) then the cash, or daily FTSE index at any firm will be an OTC book product.

This means that the firm has the ability to 'slip' your entry or exit price in their favour if they need/want to as ultimately they are running a book on the client positions. The best way to avoid this is to use a broker with the largest volume going through it as they will have the most stable quotes and the least desire to slip a position as it matters far less whether a client wins or loses on a trade.

Most firms have taken an absolute battering since 2007 and are a fraction of the size they used to be so I'm afraid this will tend to steer you towards IG Index.

I suggest Limpsfield could point you towards his online webinars etc to learn more. He has a face for radio but knows what he is talking about (when it comes to spread betting, not about cars. He has an awful taste in cars) .

[limpsfield]

DonkeyApple said:

He has a face for radio but knows what he is talking about (when it comes to spread betting, not about cars. He has an awful taste in cars) .

I will have you know that, in these straitened times, one of my cars is single handedly keeping two mechanics in regular work!

[DonkeyApple]

limpsfield said:

I will have you know that, in these straitened times, one of my cars is single handedly keeping two mechanics in regular work!

Well, at least it sounds like you got a good one