3 Reasons To STOP TRADING CFD's ❌

You might not like it, but we need to say it loud anyway. If you are trading CFD's or using a spread betting broker, you need to listen to this. Although they may look similar, trading futures and CFD's are two different things. Yes, both have a similar underlying price but one has a massive disadvantage. If you have guessed that CFD's have the disadvantage, you have guessed it right. Not only do they give you a spread that works against you, your broker fully sees all your hands, but also you have no ability to impact the market. By trading CFD you simply take a bet but do not participate in the price discovery at all. On the other hand, with futures, you have the chance to be a market participant that actually votes with your own money and supports the desired direction. That is a big difference. Something to consider when going for your next trade. Stay safe by being smarter.

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Demetris Mavrommatis – Co-Founder, Head of Trading
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[TheTraveler]

Problem is for Non US Citizens it is very difficult to get direct market access to the Futures market, chances are you are going to have to use a US broker and it’s a pain trying to deposit and withdraw funds

[DJ-strs]

My only gripe with CFDs is for the moment, contingency based orders cannot be placed after hours like on traditional stocks/shares. A CFD (if one does the maths) compared to buying options/stocks, if you are correct provides a better return on investment. These days one can hedge, you can hedge a position like with options (buying calls/puts) without incurring additional fees. You can trade a cfd i.e going long (without a stop) but by simly entering a sell limit order below the stop (like one would do with puts). The contingency based order is the only gripe. If your timing is down, if you get in at the same time, the CFD outperforms from a ROI more than options all the time.

in terms of time value (Theta) with CFDs up to 2 months (ideal trend trades) yes one pays a holding fee but that holding fee if you did a calculation is actually less than the theta decay in an option if you were holding it. With options you pay to hold the position, with CFDs you are essentially being paid to hold the position since you would only hold the position so long as the share increases or decreases in value depending on your long/short position in the market.

Where options shine bright & are better than CFDs is timing. With options if you buy enough time (2 months), you can be a bit sloppy with your entries, buy cheaper option premiums while the stock shows a little weakness. With CFDs one should have really good entry/exit techniques. With options, the jiggle a stock does before it makes its move would potentially kick a CFD trader out if the stop was too tight, while with options with enough time on it, you could ride that out. That is pretty much the only thing where I see options beating CFDs but in order to have that option, you have to pay a premium and even then, if you got stoppd out of a CFD on the first jiggle, you could get back in when it takes off and be in the position.

Even with the 1st position taken out of your CFD during the jiggle, if you got back in with the same amount of shares once it moves, if people did the calculations the CFD will still make more than the actual option.

With $250 dollars of options, the average person (depending on which option OTM/ITM/ATM) could buy 2 months premium for a stock in the range of $15-$45 to control say 100 to 200 shares i.e 1 - 2 contracts. Maybe 3-5 (300 - 500 shares) if you are buying out of the money or far out of the money calls.

Assuming your stop is $0.45 per share, you can buy 555 shares (5 contracts) (provided you have enough in the account for the underlying in margin) & you would essentially have no time decay, you would be in the money (if your timing is correct) and theta is not working against you.

I have spent many hours, hours upon hours doing the calculations. The spread on most options combined with most commissions allows me to essentially trade the equivelant of 1 options contract (100 CFD shares) just in what the spread is. I have purchased options in the past, been 100% correct, only for the spread to eat 90% of the profit. Fills with options (depending on brokers) is another issue with options. I have traded with IB and a fill took literally minutes.

I have not ever had to wait more than 3 seconds at most to be filled with a CFD

[yyrhx]

As for the non-seeing part, you can see what's happening in the CFD market by opening another futures account or finding a way to look at the amount of sellers and buyers in another window

[kingal]

I'm sorry but this entire video is misleading. Yes futures are great. I trade futures. However no one watching this video is moving the futures market. Also the cfds follow the actual market so you can pull up the order flow from a futures broker and see the exact thing everyone else sees. The main thing to worry about with cfds as with any broker is execution speed and spreads. ES has a 1 tick spread by default. A broker like eightcap for example has .48 spread. So yes your spread is double. Apple and Meta have spreads that are 1-3 pennies. Which is negligible. Cfds can be traded the exact same way as futures. It is just another vehicle to make money. One isn't better than the other.

[KnottySunshine]

No disrespect, but your video is incredibly misleading. I trade US500 cfd's and chart on ES. exactly the same. we are super fortunate in Europe to be able to trade them. People with small accounts are better able to manage risk by sizing appropriately. With a $1000 one can trade 1 lot and and only risk less that 1% comfortably. You cannot do that trading a Micro ES on the futures market without taking more risk than necessary

[akshaydhende]

very good one... I think capital is the Main reason why people choose CFD over futures.

[firmaforex]

I trade NAS 100 with CFD and pay a spread of $0.80 and no commission. I only need one chart of Nasdaq 100 and I do not need to change chart every three months and to keep the old 3 months chart together with the new three months chart plus you need to have a real Nasdaq 100 chart to see longer term price action and then you have the premarket movement and the movement during market hours. It was a very frustrating and stressfull trading environment. With CFD I trade one chart and it is cheap and simple, easy to enter, stop-loss and profit target, CFD works great for me.

[djayjp]

The "flow" (volume) information is in the price action and movement of the underlying.

[Jimbo_]

I'm just wondering how much impact a retail trader is going to have in moving the market? I was under the impression that it's only the big players who can truly make the market move with exceptions being meme stocks like GME for example.

[fubar]

I swing trade stocks on admiral market. I hold between 2-14 days. I thibk a cfd is the cheapest option for me even with the swaps. If i buy at my broker i have no margin and i pay 5$per order. But yes, i agree with your points

[thomaswunsch]

Read the small print !! The CFD broker is not forced to give you a specific price, lets say you are in profits at 15736 and you want to get out, in the worst case the broker wont let you take your profits, he can wait a little until your profit vanishes. In short the CFD broker is your enemy, not your partner, the exchange as such is neutral, therefore futures are much much better. A CFD spread of one tick is not guaranteed, in fast market conditions its widening significantly. (sorry if my english is a bit scattery)

[fuzzyeducation]

I live in the UK. OPTIONS dont seem to be an choice here. How different is CFD? Seems those are common herr

[marketsqueezer]

Huge benefits trading CFD’s that you can’t obtain when trading future contracts. For example big leverage is possible and spread is small.

[hamza]

I only trade cfds with the direct market model. Here your actually trading on the exchange and have influence on price with your liquidity. The market maker one is basically just casino trading where you and the broker trade against each other. Such a big conflict of interest.

[philhan]

I don't know which CFD broker you're using as an example but the spread on the DAX is 6. Most of the main CFD brokers I know would never offer a spread of 6 on the DAX unless perhaps out of hours. Typically it's 1 or 1.5. CFDs have tax advantages that futures don't have. Better margins. Can trade smaller sizes. They don't expire like futures. Generally more markets available. And, you can trade CFDs through DMA if you want.

[phemelosebastianmokgothu]

You Misleading, there's alot of advantages/benefits trading cfds compared to trading Futures/Options. Why do you think the US banned Cfd trading

[jeanjacque]

lets not pretend every trader can move the market....I would agree on counter party risk

[manajsarkar]

why a broker will keep a profitable cfd trader on their platform ?

[AliFeraoon]

CFD is just paralleled market of the actual market you trading with broker, other traders AND sometimes with liquidity provider.

[cobayeashi]

Would you say that it's the same as trading bitcoin futures instead of bitcoin spot ?