Anyone clued up about CFD trading?

Johnnytoxic

Johnnytoxic

Johnnytoxic

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13 Nov 2006
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I need to buy some stock that I think will rise.

Am I best trading CFD's or actual stock? The company is on the Nasdaq.

Any tips recommended sites would be great, thanks.
 
If your first step is clicking 'New Thread' at OcUK then trading financial derivatives is probably not a good idea quite yet.

Have a read through the stocks and shares thread here first or something.
 
Damn I'm not sure I know what I'm doing but this is what I've done. I'm in this for at least a month.

Hoping TakeTwo's stock will jump high when GTA5 gets released.

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Why would TakeTwo's stock jump high when GTA5 is released?

It is a semi-strong market, which means the current share price reflects all publically available information - including the expectation of a succesful launch of one of the biggest franchises in gaming. If the stock was guaranteed to jump on release day its current price would already have this priced-in.
 
I know its not going to shoot through the roof, I can just see it going up closer to release.

The share price is at $19.18 currently, If it goes to about $24 like it did with GTA4, I'll grab the difference.

About £380 for 300 cfd's. We will see, I just know the buzz and excitement usually ups the price temporarily.
 
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This makes no sense. Do you honestly beleive you are the only person to have had that though? If not, then the price reflects the fact everyone thinks it might go up, therefore limiting any gains.

If it was a sure-fire-thing everyone would be pouring money into Take2!
 
So its a 1:10 ratio or so?
Are the losses real, and the profits real?
So if your 300 share options diminish by 10% does that mean on cashing out you will get none of the £300 back? Or is it a percentage of your investment is reflected in the amount back?
How much do they charge you for the pleasure of using their service?
 
Yeh 1:10.

Yes you can have losses, but you can put a stop limit on it, so if the share price falls below say 14 which I hope it won't it automatically closes.

They charge a 0.03% overnight position holding fee each night. So 0.75% for 25 days, is that right?
 
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CFDs can give you leverage and avoid stamp duty on UK equities... you do have interest charges when holding a long position.

for US equities a lot of brokerages will allow you to trade on margin anyway and stamp duty doesn't apply - you'll likely find that commissions are lower too than trading US equities via a CFD wrapper
 
Johnnytoxic said:
Yes you can have losses, but you can put a stop limit on it, so if the share price falls below say 14 which I hope it won't it automatically closes.
Click to expand...

just an FYI... its not really a limit - it triggers a market order - if prices are moving rapidly then it can be executed at a lower price
 
I imagine the projected sales have been priced in already, can't see it going up that much. Only if it exceeds expectations.
 
Theophany said:
Depends on whether the 3bps are based on the underlying price, in which case it could be more or less than 75bps.
Click to expand...

shouldn't be relevant - just the size of the initial position - the interest charge is there because the CFD provider has* purchased 6k worth of take two on his behalf so should charge him LIBOR + X

(*in theory... some CFD providers are essentially modern day bucket shops)
 
If the share price goes up 10% do you make 10% based on the entire holding? Minus this .75% interest?
So at a 10:1 input, you double your money in a 10% increase then fees?
 
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