Opinion on CFDs

[Sparrow 10]

What's your opinion on CFDs? Are they any good?

I suppose it's a bucket shop type of thing, but that's only my suspicion.

My broker charges 40USD per round trip on them plus interests, that's why I won't go near them any time soon.

 

Thanks in advance

[Guest cooter]

Your suspicion is warranted as trades are not executed on the regular markets.

 

Caveat emptor.

[mister ed 10]

There are different types of CFDs, depending on the CFD provider you

are dealing with. These are not standardised products and each provider

can have different brokerage rates, interest rates, dealing platforms, and so

on. Also, some providers are market-making in the CFD (these are most

likely to be a "bucket shop" operation) while other providers will have a

DMA model (Direct Market Access) where each deal you do is automatically

dealt into the exchange, such a provider is much less likely to be a "bucket

shop".

 

On the face of it, and with only the information you provided, a 40USD

round trip charge would seem to very strongly suggest that the CFD

provider you are referring to is indeed operating on the bucket shop

model.

[Sparrow 10]

thanks for your comments, i'll steer clear of CFDs.

i didn't see how i could have overcome being down 40USD from the start with little capital in the first place.

[adwebster 10]

Its not CFD's you need to steer clear of, but those who operate market maker platforms. The DMA models are fine as all trades are actually purchased the respective exchange

[Sparrow 10]

Thanks for clearing that up adwebster.

I did a bit of research and found out that my broker, which i am stuck with, has a bad record on FOREX. I suppose it's all the same with CFDs.