User Research/Opinions   

Questions on Contract For Difference (CFD)

my remisiers sometimes oso snook me on my questions on CFD until my stomach full of panadols... lol... basically, my 2 remisiers in poems nt very steady in the CFD saga.. bt other than that, still not bad la.. so give n take lor..

 

went to Phillip and asked questions on scenarios such as rights issue, bonus issue, share split and dividend and how they affect CFD. the officer did not know the answer... guess i will have to attend the seminar and ask them then.

yes, i found the list of counters available, together with the cost sheet at Phillip CFD site. good info. got Flash demo too. 

 

bucky_bunny, wat geojam said is spot on.. i forgot to add.. think the best way is to write a long email to them ba, then get them to reply u via email.. wat i posted here only got bits n pieces.. coz everytime i will call up my remisier to double confirmed any doubts i have 1..

 

Bbunny...CFD...not all counters are available for u to play.

 

bucky_bunny, in this case the long position is the brokerage firm lor.. bt if i short thru CFD, i got 30 calendar days to cove back unlike intra day shorting...

 

thanks, rogue trader, for your comments.

you mentione dthat if i short a counter that has just declared div, i'll have to factor the div amount when i close the position since someone must buy my position i.e. long. so this works just like normal shorting of shares within intraday? i thought CFD is a contract between player and brokerage. silly of me!

more comments are welcomed! i'm still  very hazy on how CFD works. i think i better check with Phillip to see if they have courses on it.

 

Hi and good morning..

 

bucky_bunny, allow me to say my shallow knowledge in CFD.. If wanna got for CFD, CityIndex is a better choice in terms of brokerage (the last time i ask was around 2 months ago, so not quite updated ar).

 

I had been using CFD from Poems.. up to now no complain.. interface quite easy to use.. I used CFD for TA coupled with momentum plays as I have "30 contra days".. Note: "30 contra days" is 30 calendar days including public holidays and weekend. so if i long/shot a counter for more than 30 calendar days, i will incur 1 more time brokerage.. to simplify, every 30 calendar days = 1 brokerage.

 

If the counter got any corporate announcements like dividend, and if you had shorted that counter, please take note that you need to "debit" the dividend payable to the other counter party to your shorting.. meaning if you short, someone must had long, and this long position is entitled to the dividend payment so you had to pay through the CFD. please take note all the calculations will be "done" automatically, so you do not actually need to deposit $$ to that long position holder unless one hit margin call..

 

Hope this is of some usefulness to you. 

 

Hi bunny and educator

I do not mean to be rude but i do not enjoy writing long post.

I will see whether my friend LIVERMORE will be kind enough to explain the margin bit.

Yeah...so be patience,he will show up.

 

 

to geojam,

what are the factors that make margin lending more flexible than CFD? i have the impression that margin lending has a higher costs that CFD, but do correct if i misunderstood. 

thanks for your advice! 

 

Hi geojam,

I am new to this. What is the difference between CFD and margin lending?  

 

hi Bbunny

Instead of CFD,why not consider margin lending?

it is more flexible.

 

hi! I'm new to investing and would like to find out more about CFD. I did a search on this topic but could not find the answers I'm looking for. Do share your opinions!

1) Which brokerage offers best deal for CFD? I think OCBC Securities does not offer (correct me if i'm wrong). Phillips seems to be good, especially the rates. City Index offers too, I think UOBKH as well. Any major difference between those that offer and what are your experiences trading CFD with them? Who offers the best rate/commission?

2) If I use CFD to short, how long can I hold? As long as I want since the longer i stay in short position, I will have to pay "interest" to them? there's also a 30-day contra, correct? how does it work? dun understand the explanation at Phillips.

3) For example, this share is trading at $1.00. then it announces a dividend of $0.20. market will then factor this in and the price will now be $1.20. If i short this share through CFD before it XD, does this make sense? this is because the price will drop after XD (usually). Or does brokerage disallow you to short like this when corporate actions are involved? Please advice. thanks!