CFDs allow small outlay for big bets

Only buy stocks with money you can afford to lose......

One extremely interesting thing to note.
Non of our 3 local banks offer CFDs trading facility.
"Under consideration" are their replies.

There are risks with the nominee trust accounts. Perhaps one has to really scrutinize the T&C well.
Different platform providers do have differences in their T&C.

I'm aware there is at least one CFD platform that allows 100% cash transaction opposed to 80% margin. CFD is just one of many choices if we want to do bi-directional trade as opposed to long only investment.

seriously after what happened to MF global I have given up on CFD
If you buy shares, you know its really safe since the shares are kept with CDP, back by our government

for CFD the potential disaster of losing your principle due to the default of a 3rd party is really very real and risky

(26-05-2013, 05:39 PM)camelking Wrote: Hi CY09,

Did you think of getting CFD one year ago?
The reason for asking IS i am also thinking of going into it...and it set off alarm ringing in my head...
yes, it is a sign of greed and if it is not managed well, could lead to disasters...

No offences...

Hi Camel, I did think of getting CFD 1 yr ago (to be exact 1 year 7 months). In fact I signed up for CFD accounts with CMC and Philips and have used both, Philips only 1 trade (open and close a trade) and CMC a few times (cos last yr CMC did not charge min commission nor had a rollover fee)

---

(26-05-2013, 05:57 PM)arthur Wrote: One extremely interesting thing to note.
Non of our 3 local banks offer CFDs trading facility.
"Under consideration" are their replies.

There are risks with the nominee trust accounts. Perhaps one has to really scrutinize the T&C well.
Different platform providers do have differences in their T&C.

I'm aware there is at least one CFD platform that allows 100% cash transaction opposed to 80% margin. CFD is just one of many choices if we want to do bi-directional trade as opposed to long only investment.

Hi Arthur, is the CFD platform you are referring to that allows 100% cash transaction, CMC markets?

(03-11-2011, 11:34 AM)Musicwhiz Wrote:

(03-11-2011, 11:18 AM)wsreader Wrote: Before last week, how many AmFraser, Kim Eng and CIMB Securities' CFD clients were aware that MF Global was their counterparty?

Is CFD the only way to short a stock? Forgive me for this question but I've been long all my life so it's kind of a surprise to know about this CFD-counterparty thing and how it can screw people up.....

So sorry, I realised I did not provide a reply in 2011.
Another way to short a stock is to have Securities borrowing & lending account, but I am very sure you know that already.

I am also "long only" as far as stock is concerned.

(26-05-2013, 06:51 PM)CY09 Wrote:

(26-05-2013, 05:39 PM)camelking Wrote: Hi CY09,

Did you think of getting CFD one year ago?
The reason for asking IS i am also thinking of going into it...and it set off alarm ringing in my head...
yes, it is a sign of greed and if it is not managed well, could lead to disasters...

No offences...

Hi Camel, I did think of getting CFD 1 yr ago (to be exact 1 year 7 months). In fact I signed up for CFD accounts with CMC and Philips and have used both, Philips only 1 trade (open and close a trade) and CMC a few times (cos last yr CMC did not charge min commission nor had a rollover fee)

---

(26-05-2013, 05:57 PM)arthur Wrote: One extremely interesting thing to note.
Non of our 3 local banks offer CFDs trading facility.
"Under consideration" are their replies.

There are risks with the nominee trust accounts. Perhaps one has to really scrutinize the T&C well.
Different platform providers do have differences in their T&C.

I'm aware there is at least one CFD platform that allows 100% cash transaction opposed to 80% margin. CFD is just one of many choices if we want to do bi-directional trade as opposed to long only investment.

Hi Arthur, is the CFD platform you are referring to that allows 100% cash transaction, CMC markets?

Very interesting!
i have been thinking why CFD trading must use margin only? What if i am not willing to pay the interest and i have the cash? And not going to be too greedy to take a large position with leverage. Is there any pros and cons for doing so? Or CFD is practical only using leverage?
i also understand usually people use CFD for shorting during a Bearish market. Is it really for shorting only? Who is the counter party willing to take the long position during a Bearish market? No practical at all. Anyone willing to share?

In the CFD market, it is common for providers to put in fixed margins for stocks and do not allow you to vary. Most of them charge you financing rates on the full market contract's value instead of what you have borrowed. What makes Singapore providers worse is that they charge higher finance charges than their international counterparts and one or two had rollover fees as well.

I think the use of leverage is ok if one knows how to use it probably, you just need to know the level you are ok with. CMC had a feature I liked - It was that they allowed an individual to vary the margins you took with CMC and interest was accordingly charged and not on the entire contract. If you are so risk averse, you can consider 99% cash and 1% margin or even pay 100% in cash full. It was a good personal experience as I took the liberty of placing $1000 contracts and judge the level of margin I was suitable with. (I found that I am "emotionally stable" with an average 1 part debt to 2 or 3 parts equity.). However since CMC introduced min commission and a monthly data fee, I have stopped using CFDs and am on a look out for better providers

Lastly, I think the CFD provider will try to hedge when people take short positions. Essentially CFD are like houses in casinos, though they will try to hedge if suddenly a lot of people are in one trade. CFD providers can also control the bets by restricting the amount of lots you can take, stop you from initiating long/short positions and even calling off some trades you have. The last point is a risk you take with CFD, they can close your position

.

(26-05-2013, 06:51 PM)CY09 Wrote:

(26-05-2013, 05:57 PM)arthur Wrote: One extremely interesting thing to note.
Non of our 3 local banks offer CFDs trading facility.
"Under consideration" are their replies.

There are risks with the nominee trust accounts. Perhaps one has to really scrutinize the T&C well.
Different platform providers do have differences in their T&C.

I'm aware there is at least one CFD platform that allows 100% cash transaction opposed to 80% margin. CFD is just one of many choices if we want to do bi-directional trade as opposed to long only investment.

Hi Arthur, is the CFD platform you are referring to that allows 100% cash transaction, CMC markets?

Hi there

Yes its CMC markets. However, I would strongly discourage anyone from applying the leveraging effect, despite whatever encrouagement all the CFDs companies are encouraging.
Leveraging has a magnifying effect on one's ego, and its substantially increased when the market turns against you.

Cheers.

I have been trading CFD DMA (Direct Market Access) for several years, will be able to answer queries whatever possible.

There are several instruments you can short the market - SBL (Securities borrowing & lending), CFDs, stock options (OTC mkt). Stock options are not available to retail clients.

Considerations on CFD trade execution include chart reversal points, overbought/oversold stocks (Valuation aspect) in extreme bull/bear market situation. There are other scenario such as analyst upgrade/downgrade, sector upgrade/downgrade, company miss/surprise corporate earning.

Using CFD as a instrument, you need to focus on entry price as it is highly leverage instrument. Thus, CFD is meant for advance trader or investor whom can monitor the market actively and exercise CUT LOSS strategies. Blue chips can leverage up to 10X, very high risk reward ratio.

If you dont practice cut loss, or you cant monitor the market or your broker dont monitor the stocks for you - DO NOT TRADE CFD because from my experience on the eventual outcome, you shall loss your capital.

If you have less than 6 years stock market experience, its likely you have not experience BULL/BEAR cycle transitions, the sentiment changes in bull/bear cycle. Please DO NOT TRADE CFD because you need to be reactive to market changes and volatilities.

CFD is a pure leverage instrument, if you cannot accept higher risk for higher returns. DO NOT TRADE CFD. There are reasons why fixed deposit is still popular dispite lowest return.

For CFD DMA (Direct Market Access), your cfd transaction are dealt on Exchange cash market. e.g. If you sell 10 lots DBS, its sold at the bid, you can see your trade done via market depth.

Unlike share margin instrument, ff you have higher cash amount in your CFD account, it does not lower the interest cost.

The difference between normal CFDs and CFD DMA, please consult your stock broker.

(26-05-2013, 08:39 PM)Temperament Wrote:

(26-05-2013, 06:51 PM)CY09 Wrote:

(26-05-2013, 05:39 PM)camelking Wrote: Hi CY09,

Did you think of getting CFD one year ago?
The reason for asking IS i am also thinking of going into it...and it set off alarm ringing in my head...
yes, it is a sign of greed and if it is not managed well, could lead to disasters...

No offences...

Hi Camel, I did think of getting CFD 1 yr ago (to be exact 1 year 7 months). In fact I signed up for CFD accounts with CMC and Philips and have used both, Philips only 1 trade (open and close a trade) and CMC a few times (cos last yr CMC did not charge min commission nor had a rollover fee)

---

(26-05-2013, 05:57 PM)arthur Wrote: One extremely interesting thing to note.
Non of our 3 local banks offer CFDs trading facility.
"Under consideration" are their replies.

There are risks with the nominee trust accounts. Perhaps one has to really scrutinize the T&C well.
Different platform providers do have differences in their T&C.

I'm aware there is at least one CFD platform that allows 100% cash transaction opposed to 80% margin. CFD is just one of many choices if we want to do bi-directional trade as opposed to long only investment.

Hi Arthur, is the CFD platform you are referring to that allows 100% cash transaction, CMC markets?

Very interesting!
i have been thinking why CFD trading must use margin only? What if i am not willing to pay the interest and i have the cash? And not going to be too greedy to take a large position with leverage. Is there any pros and cons for doing so? Or CFD is practical only using leverage?
i also understand usually people use CFD for shorting during a Bearish market. Is it really for shorting only? Who is the counter party willing to take the long position during a Bearish market? No practical at all. Anyone willing to share?

(26-05-2013, 09:28 PM)CY09 Wrote: In the CFD market, it is common for providers to put in fixed margins for stocks and do not allow you to vary. Most of them charge you financing rates on the full market contract's value instead of what you have borrowed. What makes Singapore providers worse is that they charge higher finance charges than their international counterparts and one or two had rollover fees as well.

I think the use of leverage is ok if one knows how to use it probably, you just need to know the level you are ok with. CMC had a feature I liked - It was that they allowed an individual to vary the margins you took with CMC and interest was accordingly charged and not on the entire contract. If you are so risk averse, you can consider 99% cash and 1% margin or even pay 100% in cash full. It was a good personal experience as I took the liberty of placing $1000 contracts and judge the level of margin I was suitable with. (I found that I am "emotionally stable" with an average 1 part debt to 2 or 3 parts equity.). However since CMC introduced min commission and a monthly data fee, I have stopped using CFDs and am on a look out for better providers

Lastly, I think the CFD provider will try to hedge when people take short positions. Essentially CFD are like houses in casinos, though they will try to hedge if suddenly a lot of people are in one trade. CFD providers can also control the bets by restricting the amount of lots you can take, stop you from initiating long/short positions and even calling off some trades you have. The last point is a risk you take with CFD, they can close your position

.

Wow! Very scary to me leh!
We all know the odds or edges in a Casino are fixed. From your explanation of CFD operation by Brokerages, they can vary as and when they seem appropriate. It's really very "frightening" to me.
Thanks.