CFD Trading - Anyone else doing it?

TheSetMiner

I have begun trading on CMC Markets - just indices and commodities as I can't justify paying the commission on stocks just yet. I am getting up to speed with things pretty quickly. However, as trading goes I haven't been profitable so far. Is anyone else trading with a CFD account? If so, what is your strategy?

I have found that apart from "analysing" the graph or somehow getting access to news before the rest of the market, there doesn't seem to be a whole lot of ways to predict whether something will go up or down.

People talk about portfolios and hedging but I just don't see how this can be applied profitably and consistently on CFD trading. The idea of having a large number of positions in some of these volatile markets with varying spreads sounds incredibly unprofitable to me? Stop losses getting triggered only to see that the price actually recovered shortly afterwards etc.

I guess I haven't found an approach that works for me yet, just curious what are other people doing on their CFD accounts?

euroboom13

Spread betting is difficult because you are multiplying your price movement through leveraging your stake.( 100% loss/gain with a 10% price movement)

If you invested in the stock directly you can survive the drops by holding till price recovers or take some loss and re-invest else where .(10% price drop can mean hold or 90% stake recovery)

But with spreading, if you time it right you can make 100% tax free profit on 10% price movement .Very hard to time your entry ,so that there is little downward movement before market rise. GAMBLING

(also I feel, because they are legally not a direct representation of the listed company, there is nothing stopping firms from manipulating the price to catch people out, but that's only my opinion)

TheSetMiner

euroboom13 wrote: »

Spread betting is difficult because you are multiplying your price movement through leveraging your stake.( 100% loss/gain with a 10% price movement)

If you invested in the stock directly you can survive the drops by holding till price recovers or take some loss and re-invest else where .(10% price drop can mean hold or 90% stake recovery)

But with spreading, if you time it right you can make 100% tax free profit on 10% price movement .Very hard to time your entry ,so that there is little downward movement before market rise. GAMBLING

(also I feel, because they are legally not a direct representation of the listed company, there is nothing stopping firms from manipulating the price to catch people out, but that's only my opinion)

I'm not sure what the difference is, but upon opening an account I chose a CFD account instead of a spreadbetting one so I assume there is a difference?

So you're saying it's definitely not a long term approach to investing? I did think it seemed a lot like gambling. One can make a lot of money or lose a lot quite quickly based on what can seem like completely random fluctuations, but surely there are people doing this profitably? If I were to work at low stakes, well within my bankroll, could a short-term scalping system be feasible, for example?
I am interested in getting to know the markets better and would like to become a good trader so putting in the time wouldn't be a problem.

euroboom13

TheSetMiner wrote: »

I'm not sure what the difference is, but upon opening an account I chose a CFD account instead of a spreadbetting one so I assume there is a difference?

So you're saying it's definitely not a long term approach to investing? I did think it seemed a lot like gambling. One can make a lot of money or lose a lot quite quickly based on what can seem like completely random fluctuations, but surely there are people doing this profitably? If I were to work at low stakes, well within my bankroll, could a short-term scalping system be feasible, for example?
I am interested in getting to know the markets better and would like to become a good trader so putting in the time wouldn't be a problem.

I like speculating, and like the idea of trading but its not as simple as sell on this news buy on that, markets tend to price things in and do the opposite.

It is a great way to watch the markets and feel some pain but I would only use it as a training ground before getting your own capitol and getting some ownership of the companies you strongly believe in.

Trading/CFD/spreading is only sitting in the bookies, buying stock is bringing your horse to the races.

As for making money, if you want to depend on luck, stay with what you are at, if you want to depend on your own wisdom ,get ownership. You will need to start with over 2k(min) to justify the fee`s but after this recession ,equities will be, the green shoots.

Goodluck

Bizness

TheSetMiner wrote: »

I'm not sure what the difference is, but upon opening an account I chose a CFD account instead of a spreadbetting one so I assume there is a difference?

So you're saying it's definitely not a long term approach to investing? I did think it seemed a lot like gambling. One can make a lot of money or lose a lot quite quickly based on what can seem like completely random fluctuations, but surely there are people doing this profitably? If I were to work at low stakes, well within my bankroll, could a short-term scalping system be feasible, for example?
I am interested in getting to know the markets better and would like to become a good trader so putting in the time wouldn't be a problem.

CFD's are subject to capital gains at 33%, cfd losses can be offset against future gains. No stamp duty on CFD's or s-betting. Spread-betting gains are not taxable - however if main source of income, like being a full-time trader, then that rule could change. On the flip-side, spread-betting losses cannot be offset against future capital gains in other investments.
Most people lose on betting, hence why tax-free as more losses than gains. Requires a lot of patience and discipline imo, waiting for buying opportunities, volatility - (I don't day-trade, more long term holds, 3, 6,12 months)
CFD's and spread-betting allow you to trade on margin, e.g. to own €5000 equivalent worth of stock, you might need only 5% or 10% in your account, i.e. €500/€1000. But if you punting on volatile stocks etc, then trading on this level of margin is risky and you could lose more than your initial deposit if price gaps down and you have not used a guaranteed stop-loss.

Of course you could also treat your spread-betting/cfd account like an actual stock-broker account and not trade on margin and not use stop-losses, i.e. you buy only stakes equivalent to what you have in your account or else have a higher margin in there, e.g. 30-50%. Only makes sense for spread-betting vs CFD's, because you get the tax-free benefit.

Wouldn't use CMC for spread-betting individual stocks, because all they have is daily rolling for stocks, versus forward contracts. After about 10 days, the overnight charges makes it more effective to have a forward contract, e.g. 3 month, 6 month. IG offer forward contracts, up to 9 months. After that, the costs of roll-overs makes owning the physical stock more cost-effective.
Technical analysis, meh. Fundamentals always win out.

arrowloopboy

euroboom13 wrote: »

I like speculating, and like the idea of trading but its not as simple as sell on this news buy on that, markets tend to price things in and do the opposite.

It is a great way to watch the markets and feel some pain but I would only use it as a training ground before getting your own capitol and getting some ownership of the companies you strongly believe in.

Trading/CFD/spreading is only sitting in the bookies, buying stock is bringing your horse to the races.

As for making money, if you want to depend on luck, stay with what you are at, if you want to depend on your own wisdom ,get ownership. You will need to start with over 2k(min) to justify the fee`s but after this recession ,equities will be, the green shoots.

Goodluck

Just to say Euro,i think most if not all of the above is a complete load of B0llox ,just sayin.
If your a Larry Shang,jumping in to this and out of that willy nilly,you will get raped.
If you take a disciplined systematic approach ,you can make money year in year out ,consistently .I can vouch for this,i do.
If someone looses all their money spreadbetting ,its not the method that's wrong / its the man !!!

euroboom13

arrowloopboy wrote: »

Just to say Euro,i think most if not all of the above is a complete load of B0llox ,just sayin.
If your a Larry Shang,jumping in to this and out of that willy nilly,you will get raped.
If you take a disciplined systematic approach ,you can make money year in year out ,consistently .I can vouch for this,i do.
If someone looses all their money spreadbetting ,its not the method that's wrong / its the man !!!

Your investment`s will end up were your vocab already is, my friend.

arrowloopboy

euroboom13 wrote: »

Your investment`s will end up were your vocab already is, my friend.

You know 0 about my investments ,my friend:rolleyes:,I simply pointed out that your stereotypical opinion of spreadbetting was B0llox ,simples......

euroboom13

arrowloopboy wrote: »

You know 0 about my investments ,my friend:rolleyes:,I simply pointed out that your stereotypical opinion of spreadbetting was B0llox ,simples......

I am old enough to know ,that when someone gets annoyed with a passive opinion, its normally a sign of raw nerve ..

I am also old enough to know that ,any 2nd party that take 80%+ of the risk ,and offer it to stranger, as an honest partnership, has only got its eye on one thing ,the strangers capitol. You can learn this in one week, one month or one year but I personally know people whom only learnt it after 15yrs but believe me ,if you think there is a system ,that works all the time ,you will land in it.

I am not saying ,that money can't be made, very good money can be made, but its not smart.

Good luck with it(but not for me ,and I will always speak against it):)

arrowloopboy

euroboom13 wrote: »

I am old enough to know ,that when someone gets annoyed with a passive opinion, its normally a sign of raw nerve ..

I am also old enough to know that ,any 2nd party that take 80%+ of the risk ,and offer it to stranger, as an honest partnership, has only got its eye on one thing ,the strangers capitol. You can learn this in one week, one month or one year but I personally know people whom only learnt it after 15yrs but believe me ,if you think there is a system ,that works all the time ,you will land in it.

I am not saying ,that money can't be made, very good money can be made, but its not smart.

Good luck with it(but not for me ,and I will always speak against it):)

What you've written above is a some what plausible opinion ,which your entitled to ,your previous post was not !
I never said I had a system that works all the time,in fact about 40% of my trades loose money(and that's after a lot of research) ,but when you limit your downside and have an unlimited upside,one trade can cover 5 turkeys.
I was just pointing out that your sweeping all encompassing statement about spreadbetting was unfounded .

Good luck to you ,and I will always point out that its not the devils work ,IF approached properly,

Regards,

Arrow.

Rightwing

arrowloopboy wrote: »

What you've written above is a some what plausible opinion ,which your entitled to ,your previous post was not !
I never said I had a system that works all the time,in fact about 40% of my trades loose money(and that's after a lot of research) ,but when you limit your downside and have an unlimited upside,one trade can cover 5 turkeys.
I was just pointing out that your sweeping all encompassing statement about spreadbetting was unfounded .

Good luck to you ,and I will always point out that its not the devils work ,IF approached properly,

Regards,

Arrow.

Yes, you are right. Spread betting can be very effective. In fact, it largely contributed to the demise of stock brokers.

The key to it is, don't over leverage yourself. Euroboom seems to have missed this point. You can put €20K into your account, and buy a share to the value of €20K. No one forces you to go above or beyond this. However, it does require discipline.

My advice to anyone getting involved is:
Stay away from indices betting/fx/commodity etc (that is gambling).

zpehtsfd

euroboom13 wrote: »

I am not saying ,that money can't be made, very good money can be made, but its not smart.

Making good money is not smart? Can you please elaborate on this statement please.

Also, if my hours of research leads me to believe AAPL is a strong buy @ $110 right now why would it not be smart of me to take a position via my Spread Betting account?

Appreciate any feedback you have.

zpehtsfd

Rightwing wrote: »

Spread betting can be very effective. In fact, it largely contributed to the demise of stock brokers.

I was under the impression that it is still more cost effective to trade via a stock broker even taking into account the fact that you have to pay CGT. Any idea yourself?

RobertKK

Personally I like to own the company via buying shares.

No intention of going near CFDs or spread betting, it doesn't suit me, but that is not to say it doesn't suit someone else. Once you know what you are doing and have a method that you can explain and that makes sense, well who am I to say you are wrong.

I wouldn't mind updating my understanding of options as a tool to work alongside buying and selling my shares.
The main thing is one should understand the thing they are investing in, what will drive up the price what will drive it down, how safe is the investment.
Gambling with your money is the easiest way to lose it, and no such thing as a safe investment'
Even a great company like Apple was not safe, analysts were saying two years ago when at $700 a share it was heading to $1000 a share (pre share split) instead it fell 45%, but if you had bought at $700 a share back then and kept those shares you would be in profit now.
I don't know about spread betting or CFDs to say if one could wait like this.
btw didn't buy Apple at $700 a share...

Escapees

Would agree that if getting into stock market, it's best to buy and sell stocks over longer term rather than going near CFDs or spread-betting. Sure, Apple might be a strong buy now (sure even the basic Yahoo Finance analysts' opinions indicate this!) but that doesn't mean the share price won't continue falling in the short-term before seeing any gains. That could be enough to burn you if involved with spread-betting whereas if investing for the medium to long-term it's only a glitch. Granted the payback from any gains is much smaller but so is the risk.

My personal belief is that spread-betting is effectively gambling. I know of several people over the past few years who have lost badly after 'dabbling' in it. And I use that word dabbling lightly, as these guys have good business heads and general cop-on. Granted folk are making money with spread-betting, but if you take them at their word in relation to winnings and do the math, then... hmmm, how do I put this... let's just say I'd personally be enjoying my winnings and retirement rather than writing this! At least that's my opinion.

Rightwing

zpehtsfd wrote: »

I was under the impression that it is still more cost effective to trade via a stock broker even taking into account the fact that you have to pay CGT. Any idea yourself?

SB is cheaper, but riskier. You £50K guaranteed. But there are no stamp duty costs. The key is to invest in shares with minimal spreads.

euroboom13

zpehtsfd wrote: »

Making good money is not smart? Can you please elaborate on this statement please.

Also, if my hours of research leads me to believe AAPL is a strong buy @ $110 right now why would it not be smart of me to take a position via my Spread Betting account?

Appreciate any feedback you have.

Anyone can make good money, the trick is holding on to it.

Have yet to meet someone whom hasn't witness their good judgement robbed by "unlucky" timing, and when you believe it was only your timing that slipped you up , you get more determined not to let it happen next time.

I have no doubt that you can get very good at it but if you are depending on an element of luck , more often than not, its bad luck.


Good luck (or judgement) respect to everyone it serves!

jackofalltrades

TheSetMiner wrote: »

One can make a lot of money or lose a lot quite quickly based on what can seem like completely random fluctuations...

Give it enough time and the random fluctuations smart to make sense.

If I were to work at low stakes, well within my bankroll, could a short-term scalping system be feasible, for example?

To be successful at scalping you need to have a high win rate.
You're only making a small amount each trade, so you can't afford to have too many loosing trades that will wipe out all your profit.

I am interested in getting to know the markets better and would like to become a good trader so putting in the time wouldn't be a problem.

I'd only get into trading if you're looking to do it full-time.
It's not something I'd do as a hobby.
As others have said you need a lot of discipline to stand any chance of success.
Also trade with paper money until you're consistently in profit, before you move over to real money.

The approach you take to trading/investing is what defines it as gambling.
Whether you do it through buying/selling, spread-betting or CFDs does not.
I'd also be wary of people who seem to have an axe to grind.

braddun

lose your shirt

http://barefootinvestor.com/lost-money-trading-cfd/

syntheticjunk

I like the story - "successful" financial advisor lost $500K trading with 1:100 or bigger leverage, going all-in and praying for the best.

arrowloopboy

braddun wrote: »

lose your shirt

http://barefootinvestor.com/lost-money-trading-cfd/

Ye all my leave fools out of the equation when trying to establish the merits of any financial tool . John deserved to be wiped out !