t4p .... re cfds

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    I have followed a simillar strategy t4p and only use CFDs for obvious death spirals as a supplement to any trades in the "real" market.

    For example Northern Rock shorted on CFDs at GBP 8.10 and closed out at GBP 2.30 and a few trades on the DAX when it was obviously in freefall.

    CFDs are great for following the trend when the movement is expected to be dramatic as then even big CFD positions are just a part of the general market movement.

    However if one tries to take clever contrary positions using CFDs in any size then the position will stand out and your CFD provider will trade against you. After all they usually have more money than us retail guys.

    Anyway t4p good to see your conclusions on when to use CFDs dovetail nicely with mine over here in Europe ... or should I say over here in the former Soviet Union.

    And yes I too have had great days trading CFDs with some seriously good profits only too see half the profits go in brokerage.

    So if you win the CFD provider takes an unfeasibly large percentage of your profits as brokerage and if your position is large and in a somewhat contrary direction then the provider will move the market against you until the margin call level is reached.

    The only thing to do her is just use 50% or 100% leverage not the usual 10X leverage but that rather negates the reason for using CFDs in the first place and you might as well just buy the underlying FPOs or Options.

    EB
 
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