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(11-01-2014, 07:32 PM)wahkao Wrote: Anyone invest/trade using CFD? I think CFD is crazily expensive!
Anyone agree?
I think investing/trading with CFD is crazily expensive. Its a gimmick brokers use to milk people behind their backs with finance charges.
Do you all agree?
[Image: trade-cfd.png]
For me, i definitely agree. There are some investment book's advice that for DIY (OPMI) investor the most important thing is to keep the cost of capital for investing as low as possible. In fact zero is the best. That is use your own money.
My own thinking is before you make any money from your investment, you lose money already by paying interest for leverage (money loan to you as capital).
That's why i have never used any leverage for investing. Besides they say you may be right about your call or put options but you are wrong about the time. They expire worthless and you pay for the premiums. And maybe your capital too. In fact they are many more "complications".
And you are betting against professionals most of the times. In fact against the House (The Brokerage). So the house can see the whole picture of what people are betting. And what can you see? Nothing much. Who has the advantage?
i am not that smart. i am just too toot to dabble in complicated financial instruments. i can never be a trader.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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wahkao... well says...
100% agree...
A Life not Reflected is a Life not Worth Living.
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But to short sell a share CFD is the only way right?
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12-01-2014, 12:12 AM
(This post was last modified: 12-01-2014, 12:12 AM by CY09.)
Just some history lesson of CFD in Singapore. In the past, CMC markets only charged interest for the margin you borrowed and had no min commission. Then CFD (thru CMC) was really cheap. However, CMC has since changed the rules. Not sure about the new CMC platform.
However, I do agree that many CFD providers are ripping consumers. Take for example trading on POEMS. If one is to take a stock on 20% margin, he has to pay the full cost of the contract value. Hence instead of 4% financing (as advertised), he is actually paying 5% for a position.
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Cfd is for shorting and for buying more than what you normally can afford. It is far riskier and tends to be more expensive (various charges) but that's the price some people don't mind paying.
Cfd is not for value investing due to the high finance charges for holding long term. These are short term instruments.
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CFD is for short term traders
normally you should hold from maybe intra day, a few days to longest a few weeks only...
Value investors should always avoid using CFD or other derivatives
Use cash and hold for the stocks long term
like warren buffett said
if you are smart, you don't need leverage to make a lot of $$
if you are not smart, leverage will kill you faster
cheers ^^
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