CFD trading vs spread betting – differences

The key differences between cfd and spread betting are
> CFD trade on price per share while spread betting trades on dollars per point
> CFDs can be traded with no spreads while spread betting markets are run by market makers who palces spreads between the buy and sell price
> no expiry on CFDs
> CFD contracts is a holding in the underlying which entitles the holder to dividends.
> CFD contracts are financed and hence will require explicit interest payments. Spread betting contracts have the financing cost built in the price.

CFD or Margin Loans?

CFD trading in some ways achieves the same things as a margin loans.
It allows to gear into shares to supercharge your profits or losses.
While CFD trading tend to be short term in anture margin loans are used for buy and hold investments.

One interesting difference between the two is the interest rates on finance. The interest rate on financing a long CFD positon is RBA cash rate plus 3% this is around 6.75%. This comapres to 8.55% on a margin loan. As you can see the differential is quite high so this is one advantage that CFD will have over margin lending.

CFD Trading in US – Portfolio Margin paving the way?

I never really understood why US residents cannot access CFDs. CFDs are just like any other derivatives, why someone can buy and write options which are arguably much more complex but not CFDs is puzzling. However, when I learnt that the conservative margin requirements for margin trading in the US are regulated and resulted from the stock market crash in 1929. However, in recent times a new form of margining has been approved referred to as Portfolio Margining which allows clients to trade on margins that are significantly lower than 50% intital margin as is regularly required. This gives another reason why it does not make sense that CFD trading is not available to US residents.

Will this pave the way for CFD to take hold of US as well?

City Index CFD

City index CFD is offering 0% commission for CFD trades throughout June 2008.

Conditions Apply.

Visit their website for more details.

http://www.cityindex.com.au/

CFD – Emissions Trading

With the amount discussions going on around emissions trading, will CFDs experience another level of growth as a result of the hedging demands from carbon emitters?

Will emissions become tradeable like other commodities?

Will follow up with another post once i do more research on this.

CMC Markets Understanding volatile markets – Free Education Seminar

CMC as part of their series of education seminars is providing a free seminar on understanding volatile markets. People who register for the free seminar will receive a free copy of Real Traders II by Eva Diaz.

http://www.cmcmarkets.com.au/en/content/education/education_seminar.jsp

FP Markets Commission Free Trading

FP Markets is offering commission free trading when you present a contract note from your broker between 11 Feb and 11 March 2008.

Go to their website for more information.

http://www.fpmarkets.com.au/comm_promo.html

Fat Prophets CFD Trading Report

Fat prophets already run popular investment reports on Australian shares, mining shares, and UK shares.
They introduced a daily report in September 2007 which provides CFD trading advice on the equity, fixed interest, currencies and commodities markets.
Their website provides details of the performance of closed trades.

http://www.fatprophets.co.uk/cfd/content.aspx?page=Home

The Trading Game

This is an interesting idea. This website runs a CFD trading game which mirrors the real market but lagged. This will allow traders to test their skills before they use real money. http://www.tradinggame.com.au/

ASX CFD Seminars

ASX is running series of free seminars commencing in February 2008.
Don’t miss these seminars as they a valuable source of useful information if you are a beginner.

http://asx.com.au/investor/cfds/education/seminar.htm

 
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