Contract For Difference - CFD

Re: Contract For Difference - CFD

Postby winston » Thu Jun 18, 2009 8:11 am

You forgot to mention those S-Chips ...
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Re: Contract For Difference - CFD

Postby lithium » Sat Jan 16, 2010 10:55 pm

kennynah wrote:the CFD brokerage is always taking opposite to ALL your trades... you buy, they sell, and if you sell, they buy... no CFD traders trade with another CFD trader..ie, they are the gambling house / casino

don't ever trade CFD directly... they will ALWAYS have the edge...no matter what they say

but then why do so many still trade using CFD? the answer is simply "leverage".... and becos of "leverage", the risks involved is exponentially multiplied... but this is not the only reason why one should not use CFD to trade stocks...

the other reason is that CFD houses decide if they want to keep a certain counter open for trading... ie, it is 100% their perogative as to whether they want to trade with you...herein lies the danger...

imagine this scenario... you bought a company X at $5 using CFD...and for whatever reasons, company X make a sudden and very damaging announcement about their business prospects...the next day, market opens and company X stock price opens at $2 and continuously drop to 50cents... that CFD house can choose to NOT accept your SELL order... why should they? they make money when you lose..and they are in NO way obligated to trade with you, if they choose NOT to...

go ask people what happened during the days after the planes crashed into NY.... you will discover that many many many CFD houses refuse to open for trading... too bad...


Thanks Kenny ko and Winston on this hidden RISK of CFD!
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Re: Contract For Difference - CFD

Postby lithium » Sun Jan 17, 2010 3:24 pm

Found these from Poem's CFD infosheet. I didn't know Singapore government has approved casino licenses long time ago :lol:


1) Spreads are subject to variation, especially in volatile market conditions. Please note that the target spreads are subjected to the Market Maker’s discretion.

2) Phillip Securities has the discretion to halt trading in circumstances of extreme price movement but without limitation.

3) Please take note that any CFD offered is not approved or endorsed by the issuer or originator of the underlying security and that the issuer or originator is not privy to the CFD contract.

4) The Margin Percentage for all Stock Index contracts is the percentage of the opening value of the contract listed in the tables. We reserve the right to alter the Margin Percentage at any time.
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Re: Contract For Difference - CFD

Postby Cheng » Fri Jun 04, 2010 11:18 pm

I chanced upon Kim Eng's Direct Market Access (DMA) CFD. Is this a new model that is more transparent as compared to the Market Maker CFD model?

Are there any restrictions in DMA?

I got this info from here http://www.nextinsight.biz/content/view/2466/79/

There is not much info at Kim Eng though.
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Re: Contract For Difference - CFD

Postby profittaker » Fri Jun 04, 2010 11:58 pm

Hi Cheng, I am not expert in CFD, what I know is DMA is connected to realtime sgx data, a buy/sell order submitted thru DMA will be reflected in stock market as well. LimTan, Poems and KE also offers DMA. The commission is higher by 0.15% (0.2% vs 0.35%) on average compared to normal CFD.

Cheng wrote:I chanced upon Kim Eng's Direct Market Access (DMA) CFD. Is this a new model that is more transparent as compared to the Market Maker CFD model?

Are there any restrictions in DMA?

I got this info from here http://www.nextinsight.biz/content/view/2466/79/

There is not much info at Kim Eng though.
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Re: Contract For Difference - CFD

Postby kennynah » Sat Jun 05, 2010 3:35 pm

no CFD deals will be reflected in SGX Exchange....
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Re: Contract For Difference - CFD

Postby Poles » Sat Jun 05, 2010 3:55 pm

does it mean when you short using CFD....brokerage will long against you??
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Re: Contract For Difference - CFD

Postby millionairemind » Sat Jun 05, 2010 3:57 pm

Poles wrote:does it mean when you short using CFD....brokerage will long against you??


It happens at times... or if too many people are SHORT.. they DISALLOW shorting and put the counter as LONG only to balance their risk exposure. :D :D

If you notice on Thursday, the counters that went up the most were the counters that had the LARGEST SHORT VOLUME - Like OCBC, UOB, NOBLE and Jardine CC etc.. :P
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Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Contract For Difference - CFD

Postby kennynah » Sat Jun 05, 2010 3:57 pm

the CFD brokerage always takes opposite to your CFD positions...ALWAYS....

they are the market makers for its clients...ie, you cannot open a Short at Saxo CFD and then close the Short at Philips CFD (if there's such a serivce by Philips).. you must always open and close thru the same CFD brokerage...becos... that brokerage CFD is your sparring partner... unlike equities positions...you can BUY Yanlord thru Kim Eng and then Sell Yanlord thru DMG account...

so...how do CFD brokerages handle their exposure risks??? one of which is stated by MM...they close that counter for play... or they hedge their positions in the open exchange markets...

how do they make money?
a) spreads
b) leverage risks - failure to meet margin calls
c) interests charge for the leverage buy

the bulk of it is from failure to meet margin calls...and then, they close off your losing positions = they win big time
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Re: Contract For Difference - CFD

Postby profittaker » Sat Jun 05, 2010 5:13 pm

Hi Kenny Bro, hmmm... may be I got the wrong idea, from POEMS website, it says:
Poems CFD wrote:What is CFD Direct Market Access (DMA)?
Phillip Securities Pte Ltd (“PSPL”) sends a corresponding stock order to the respective exchange upon receipt
of the client’s CFD (DMA) order, allowing clients to participate in the order book of the exchange and the
liquidity of the market. Clients can also participate in the pre-opening and
pre-closing sessions of the exchange.


I didn't find out from folks at POEMS what it really means, because I don't use DMA as the cost is higher. Since POEMS mentioned about sending corresponding order to respective exchange, that's why I assume the order will be reflected in exchange also. What do you think?

And just to add on, IGM also offers DMA.
kennynah wrote:no CFD deals will be reflected in SGX Exchange....
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