it depends on how you look at. if you are in the US you have to pay, which comes out to about 20% pro-rata, on 1256 contracts based on a 60/40 long/short term tax treatment. cfd's are tax free if you can get access to them abroad.. it depends on your citizenship and tax jurisdiction. most spreads on cfd's are not 20% bid/ask, so it is worth it especially in fx which are quoted 2-4 pips at some firms. if you are a US citizen - just trade futures, bc you stil have to pay taxes on cfd's. I would not recommend you do mini's on the exchange bc they having a wider bid/ask than the standard futures.... so define your trading instruments based on the metrics that we spoke about earlier.
further to the above, wti oil cfd is quoted at a 7 tick bid/ask wti oil future is quoted 2 tick bid/ask... so definitely better for small traders who can access them and can benefit from the tax free treatment.
In your opinion should we as traders monitor indices (e.g. SPY, sector, ...) or/and other markets (USD, oil, ...), or is it enough to focus solely on the instrument we're trading?
@JTrades idk, I can only tell you what I do.... when I started out in my career, I tried to do a lot of cross asset analysis and analysis correlations... from 2005-2009'sh I would say that this worked well for a lot of discretionary funds bc the global macro themes spilled over so heavily into the futures markets. A lot of traders built strategies around that but without realizing that they were just leveraged long only btfd kind of guys bc of the bull market. then we had an extreme peak to valley move from the crisis, then the reflation trade from QE 123. Global macro guys cleaned up. so in that sense, for example, you would buy gold when you saw bonds moving...attached is a historical break down from gold and eurusd....If I recall around the time the eurocrisis occurred, the relationship between gold and the eur started to breakdown bc the goldeur cross started to move. I know this break down in the fx market spilled over into other commodities as well. that is the danger with cross asset trading. if you are better at modelling indices and use that as a proxy to trade t-notes for example, if there is a global macro trade theme that sometimes that works, but many times these relationships disappear and having a defined risk managed approach around it can be difficult. therefore, I no longer trade this way bc I got my ass handed to me during the financial crisis and nearly lost my job. if I want to look at one market as proxy for another, I will actually trade that pair as its own separate time series an individually risk manage it, irrespective of anything else. additionally, I look at multiple markets bc I can handle it...another guy might only have the mental capacity to trade one market. you have to decide that for yourself. I chose to look at multiple markets bc sometimes u cant generate revenue in one market alone. that is why banks are firing market makers in addition to the changes in dodd-frank act..a market maker in one product cannot make money without the flow
not complex, just have to understand the logic. but it is based on a mathematical calculation and rules around it. from a conceptual standpoint, it just tries to achieve what a channel index does....but it goes to the next level and spits out buys and sells signals with entries and stops in one framework......to clarify, the mathematical calculation is very different from a channel index, but I just notice that many times the signals are consistent...as I cannot say what my IP is, I am simply suggesting you use that as a tool as the basis to build your own models. it is simple but effective....a lot of guys use these tools. further more, a lot of these funds who are running money, you will be surprised that not all of them are as sophisticated as you think....some are, some are not...what has to matter if the investor can understand you as a trader, the overall concept of the model and is there infrastructure in place.
Are you a product of the Bull market, then will blow up spectacularly like 90% of other hedge fund/trading desk geniuses? (Big bets with other people's money) Not hating, serious question.
as mentioned above i alluded to the fact i was also just a leveraged long only guy. from that i learnt and evolved. today i am a true long short, market neutral.