I've been trading e-mini futures for a few years now and haven't ever traded their CFD equivalent. Does anybody have any experience or advice? What is the advantage of trading CFDs over e-minis? How does cost and liquidity compare? How closely does the CFD spread track the Globex spread? What are the difference in out-of-hours operating? Thanks.
The only one ever to have an advantage in CFD trading is your broker. Your advantage might be more leverage, but thats not a true advantage in my opinion.
I wouldnt trade CFD where an equivalent future is available. CFD will be less liquid when you need them.
If a Trader is going to trade CFD'S it would be when they are starting out due to having a small trading account and wanting to take less risk per trade. If you are already trading futures it would be a serious step backwards trading CFD'S. CFD'S aren't allowed in US and there's a reason for this.
In the United Kingdom, CFDs are often traded instead of the underlying stock for tax purposes. UK brokers can match exactly with the direct underlying asset price, or their own synthetic price, depending on preference. Many new traders start with the synthetic price as it avoids Exchange data feed fees, but then move on to Direct Market Access pricing for better spreads. I already trade with Interactive Brokers so would not have any concern trading their CFD if it was absolutely identical to trading the underlying asset, but cheaper. I can't see why I'd be concerned about withdrawing profits? From what I gather, the price is 0.005% commission, which I think is cheaper than the cost to trade an E-Mini. https://ibkb.interactivebrokers.com/node/1984 But I may be missing something.
I'm not a supporter of CFDs but just curious why there would be less liquidity for a retail trader when pricing is based on the underlying and a certain amount of liquidity is guaranteed by the CFD provider. How much difference would it make to a retail trader with sub-$100k account? I guess there are many factors involved when deciding between brokers and financial products. 1. What is the size of your account? 2. Are you discretionary trading or automated trading? 3. Is your trading program already coded for a specific API? 4. Is it worth re-coding for another API if you are already profitable with an existing broker/product and any further improvement would likely come from improving your trading system, as opposed to rewriting existing code for another API? Switching from IB CFDs to IB futures may not be a big of a deal but switching brokers and APIs might not be the best decision based on where one is at in the overall scheme of things.
Hi Southall, this was directed more at GAT than you so apologies for that. He has a habit of 'indirectly' ruffling my feathers about things I'm well informed about but have made a conscious decision to do otherwise. I agree, when there are no other considerations, trading the pure, unadulterated underlying futures contract through an exchange is always the better option than trading the synthetic contract-for-difference.