cdf seem taboo in the united states.. theoretically, its a big F*** You to the whole industry, I love it.
This is a very good and puzzling question. why is CFDs or the daddy of them all - spread betting - illegal in the US? CFDs are effectively trading on the margin, and you pay funding. the broker (supposedly) trades the underlying for you and is hedged so you take the risk and they take a comission much larger than on a cash trade. Gains on CFDs are tax liable as well. so what's the problem? I'm not going to get into spread betting. sp is to CFDs/futures/margin trading as crack is to cocain. it should banned and SP founder/brokers hanged. disgraceful.
no you do not need CFD's. CFD's came into being to escape the stamp duty in the UK which was levied on every stock transaction. So with CFD's you escape this, but you pay atrocious commissions to the brokers. Pray with all your life that we never become like socialist europe.
CFD trading in Australia is the fastest growing area amongst retail traders. If you get direct access you can actually see your share CFD trades being traded in the ASX (real) market. So the CFD providers just make money on the cost of carry spread and brokerage. CFD's allow retail traders to gain more leverage and is a much more convenient way to short shares. I love them. I wont touch the index or forex CFD's these providers provide because they are usually market made which brings in risks I dont want. My guess is the exchanges have too much political power in the US to allow them there
i personally think cfds are very good for traders who have small account sizes. If you have a $5000 account i think its nuts to try and trade futures.(you can blow the account very quickly) paticularly if you want to swing or position trade. For example bond futures are $1000 per big point so a few wrong decisions and you will get wiped out but with a bond cfd one big point becomes $100(thats with GFTUK) and only requires a margin of about $270. admitedly the spreads are wider and there are also finnacing costs but i think the the benefits for small cap traders outweigh the negatives. But i'm still unsure as to why US citizens are denied trading in cfds.
There are 2 types of CFD's. There is the ripoff CFD from bucketshops (the more popular ones). And there are CFD's from solid, professional brokers with ultra-low commissions and same prices as LSE but not available to retail traders. Neither is available to US retail traders. Both are available to other domiciles.
Since CFD's is quite unregulated most brokers take the opposite trades of their retail clients and rip them off in various ways. In straight bucketshop fashion. The high leverage on them just makes the whole thing easier.
1) There is only one "type". They're both Contracts Forundercapitalized Douchebags. 2) Nadex.com may be something to look into for pikers in the USA.