luisHK pretty much explained it all. With a DMA broker you don't pay the spread and I would never use a non-DMA CFD broker as I think those are just bucket shops that take advantage of unknowledgable newbies. CFDs aren't part of the stamp tax either, making them the best instrument for equities. I'd also love to trade European markets but the current commission rates are just too expensive. I wish they'd lower the fees to attract liquidity and with the added liquidity keep their net profits at the current level. I don't see it happening, sadly.
"you seem to be a fast talker rather than valuing facts and statistics.[/QUOTE]" I am a fast talker which is complete nonsense. you are a dancer who dances around reality who needs to learn basis mathematics. you got friends in hong kong who pull out a "100 basis points per day" and are glad to pay the stamp tax. somebody be kind to explain to him what the simple rate would be if you pulled only 50 basis points(.005) per trading session after paying the stamp tax. to keep it simple someone please tell him how much you have at the end of the year if you started with $100 on day 1.
you contradict yourself: You claim the whole time that CFDs are priced in the exact same way than cash equity (which they are definitely not, else where would be no need for CFDs), then you say that the tax implications are a "bonanza for brokers who make much more money on those than on equities". Which way around would you like to have it? So, please explain to us how that CFD DMA works for a CFD with underlying that cannot easily be shorted because of short sell restrictions, low availability of borrow inventory of the underlying, and borrow rates in general when shorting the equity. You are telling us that all those costs are nicely taken up by your broker as a service to LuisHK? Jeez, why are we even discussing this? Fact is: * CFD commission is different from the underlying cash equity commission for the same notional exposure * spreads are most of the time different = > and the above because the economics are very different between a CFD and cash equity: Different leverage rates (some extends leverage and of course charges for it), different borrow rates, different commission, different spread, different tax implications. Of course are therefore CFDs and the underlying cash not equally priced. If you claim such then you are talking utter nonsense. Not one single index CFD, for example is identically priced as the underlying index. And most equity CFDs are not priced the same as their underlying stocks, either, because most markets apply short sell restrictions among the many other issues I listed above. Please note that I never said nor say that CFDs are inferior or superior to trading the underlying cash equity, I am saying they are not equally priced. Simple as that.
Of course there is not much of a problem in European or US markets with very few short sell restrictions. But there are more restrictions in markets such as Korea, HK, Singapore, Japan, ... pretty much those are the markets CFDs would be more interesting. Or think of the time when foreigners had limited access to China's A share market. You could however trade swaps (which is what CFDs exactly are) because the issuing bank was issued a QFII license and could therefore hedge its exposure. Again, I brought up short sell restrictions, and other issues to demonstrate that CFD by large majority are not identically priced than their underlying equity, I would actually claim they never are identically priced. With DMA the order is transmitted on the underlying order book and the customer is filled with CFDs only after the order is filled on the underlying. It doesn't matter if the order rests a long time. Shorting works pretty well on UK and french markets, which were the ones mentionned here where to use CFDs rather than shares. But if one can't short (can't borrow shares for instance) the underlying with IB, he probably won't be able to short CFDs[/QUOTE]
Yes, US, the world capital of euro trading. And we were talking about Korea. Whatever mate. Good trading.
You don't pay the spread when you buy and sell a CFD via DMA broker? So when you buy an AMZN CFD and sell it you do not pay the spread? Jeez, must be that brokers are really out there to benefit society, they earn nothing but take on all the risk and costs of trading. Interesting...sorry but I could not disagree more. Also, there are more non DMA brokers out there that make markets in CFDs than those that offer DMA access. And whether they take advantage of newbies is one thing but has nothing really to do with the fact that CFDs are not equally priced as the underlying cash. So, 5 basis points is not cheap enough for you? Hmm, maybe considering going lower frequency would be a solution...
my wife is one of the few experts on FTT's. We traveled the world several years ago presenting the research--- FTT's are proven to hurt market quality-- it will never happen--- http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1980185
you are a fast talker and retarded. On ignore. Goodness. " I am a fast talker which is complete nonsense. you are a dancer who dances around reality who needs to learn basis mathematics. you got friends in hong kong who pull out a "100 basis points per day" and are glad to pay the stamp tax. somebody be kind to explain to him what the simple rate would be if you pulled only 50 basis points(.005) per trading session after paying the stamp tax. to keep it simple someone please tell him how much you have at the end of the year if you started with $100 on day 1.[/QUOTE]
[/QUOTE] thanks for making my point. you can't do the numbers. therefore you sink to calling me names. where are the numbers? your posts are full of opinions but no numbers. "you got friends in hong kong who pull out a "100 basis points per day" and are glad to pay the stamp tax. somebody be kind to explain to him what the simple rate would be if you pulled only 50 basis points(.005) per trading session after paying the stamp tax. to keep it simple someone please tell him how much you have at the end of the year if you started with $100 on day 1." you can't/unwillingly to do the calculation because your assertion that day traders can survive even a low ftt is an unrealistic possibility. it is an old trick. when you can't win on the numbers/facts you attack the other person's character. not surprising at all. how much is $1 at the end of the year when your hong kong "friends" net 50 basis per days. volpunt you can't/won't do the calculation because it would reveal that your assertions of ftt not being the demise of active traders is a mirage on your part.