Any good reason to use index CFDs given the emergence of E-micros? Are index CFDs obsolete?

Discussion in 'Index Futures' started by helpme_please, May 12, 2019.

  1. In the past, index CFDs have an advantage over E-mini futures because CFDs allow smaller position size. With the emergence of E-micros thanks to CME, this advantage has disappeared. E-micros are cheaper in commission too.

    Are there any good reasons left to use index CFDs for trading U.S equity indices with the emergence of E-micros? Are index CFDs obsolete as a result?
     
    monet likes this.
  2. MrMuppet

    MrMuppet

    CFD'S were always obsolete. If not for tax reasons, why would anybody trade against a bucketshop and listed CFD's are doing as hot as single stock futures
     
    Peter10 likes this.
  3. Elji

    Elji

    They can be traded 24/7 against 22.75/5 for US futures.

    They never expire.

    I have never heard of my cfd broker (IG) to be down. CME servers are down sometimes.

    Cfd have no backwardation/contango.

    Leverage is huge in some countries (over 300 ...).

    IMHO: cfd are an excellent hedging tool compared to futures for small traders but they are not liquid enough for the big institutions.
     
    helpme_please likes this.
  4. MrMuppet

    MrMuppet

    I'm not trying to be a smartass here but I worked in a bucketshop as a trainee a long time ago...and from that experience I know that you haven't made significant dough against a bucketshop...otherwise you wouldn't talk like that.

    For everybody else just think about it this way. When there is no backwardation, no commissions and 24/7 trading, how is all this paid? How are you getting fleeced...because you are getting fleeced.

    As far as the small account goes: The eMicro S&P has a Ticksize of 1.25$ outright and 0.25$ for spreads...how much smaller do you want to go? The entire index is just 3600$, so you would not even need margin...

    As I said there are tax advantages for CFD's in some countries but besides that you can either chose trading against a single counterparty that can see all your orders and your positions or you can trade anonymously on a lit exchange.


    And it's not that they are not "liquid enough for big institutions"...I'm not sure if you are even aware of the fact that IG markets is not an exchange...Nobody who has even the slightes bit of common sense would bet against a bucketshop
     
    Epicurus and helpme_please like this.
  5. Elji

    Elji

    MrPuppet, I am not promoting CFD. Myself I trade futures. As a scalper I would loose if I traded CFD with my current technique.

    But CFD have a few features that futures do not have, especially regarding hedging.

    When one places large size orders one understands what liquidity means for CFD: your order gets rejected. I know it from a day trader who traded with IG and its orders larger than 5 Million $ were rejected occasionally.
     
    Last edited by a moderator: May 12, 2019
  6. Thanks for your reminder about CFDs being bucket shops. Fortunately, there are CFDs who uses DMA(Direct Market Access) model. These aren't bucket shops. I use IBKR CFDs because they use DMA, if I have to trade CFDs.

     
  7. MrMuppet

    MrMuppet

    Dear Sir, that's unfortunately not correct. It's clearly stated on IB's website that IB is your counterparty (https://ibkr.info/node/1912, https://ibkr.info/article/1984).

    Also DMA is just windowdressing for the plebs. Most CFD's are non interexchangeable OTC contracts, meaning unlike listed products if you bought at IB, you cannot sell to IG. So even if your broker is just routing to the bucketshop, the guy on the other end still gets to see all your information with the only difference that you pay commission on top.

    You don't know how the execution models works since they don't need to disclose it. 90% work with last look, meaning the infamous requote is now an automated sub ms "let me check if I want your order" algo.

    If you want to trade CFD's for tax reasons you need to trade on the LSE. It's an exchange, it's transparent, there are rules in place and it's anonymous. If you just want to trade the index: Use futures or ETF's.


    Most people "trade" the CFD BS cause the platform and market data is free...
     
  8. Turveyd

    Turveyd

    Long term CFD Spot trader, don't want to upset my trading at the moment, but month or 3 and I'll be jumping ship and going Micro Futures, stupid not to.

    I'll keep CFD account funded, might not be a Micro Dax but YM would be nice, 2pt spread currently no Comm's.

    Just feel safer that I'll be able to withdraw my profits rather than a CFD!!

    Good timing for once :)
     
    MrMuppet likes this.
  9. Pekelo

    Pekelo

    CFDs for Essos.

    Micro Eminis for Westeros.

    Quite simple.
     
  10. Overnight

    Overnight

    Admit it, Pekelo. Yer gonna' miss the dwarf. :)

    (Hell, I will. Great actor, funny as all get-out.)
     
    #10     May 19, 2019