周末随想---发明CFD(DMA)一定是天才人物。只须在键盘上操作几下，交易者根本不曾拥有过的股票，就能做为 short sell,
居然就这样卖给了某位价值投资者，还能显示在新加坡交易所的成交回报里（time & sales),
而这种无中生有股票，即能助涨，也能助跌。
真是太神奇了。
咳咳。。。
these are not so correct
CFD is not option, they are one of the OTC(over-the-counter) products. singapore doens't have so called options, we only have "warrants" which is a bit different than options (for eg,: institutional market maker, can't short overnight, and of course you can't apply any option trading strategies on warrants, ect.)
CFD is also not stock futures. Singapore single stock futures is called ES (extend settlement) contact (so far no volumn, a failure product---personal opinion only).
If you want to trade CFD successfully, you must really understand how this product works.when you are trading CFD, you are in fact trading with the CFD maket makers (we have IG markets, phillip, Citi index, or many others). The main benefit for trading CFD is that:
1) CFD offers you leverage. You can trade 5K or even 10K if you only have 1K.
2) Short overnight or even longer period.
when we see CFD advertisement, many times they also claim that the comm. is cheap. while that is for advertising. CFD should be cheaper, because ppl trading CFD are not trading in the exhange, so there is no SGX clearing fee and exchange access fee, but only the comm for the broker. however, CFD indeed is not cheap at all. don't ever forget that you are payintg the "spread" whenever you are trading CFD. According to CFD rules, trading CFD can only sell at the bid price and buy at the ask price. you can't Queue. and if you want to queue, your order will only be filled when the bid or ask price has already flipped. for a $1 stock, spread is 1%, for a $5 stock, spread is 0.2%, which ever way you count it, it will be more expensive than trading in the exchange.
there are a lot of times we also observe that our CFD order is not shown in the times and sales or Queue track. while they should not, because you are trading OTC. the marmet maker is "betting" with us! we are indeed the source of trading profit for them! don't ever think that market maker will not hedge your orders. next time try dump 300 lots, and watch your time and sales and observe what is going to happen.
And then next they have a new renovation so called CFD(DMA). OK now your order problem is solved. even trading with 1 lot, should your order be seen in the time and sales and Queue track. sounds good? yes, but you have to pay for this. don't you ever notice that the CFD(DMA) is more expensive than the normal CFD? should be. becuase now the market maker can only make profit from your trading commision, but there is no profit for them from this trade itself. that is why they charge CFD(DMA) trades more.
And finally, why can broker let you short? of course they have shares on that stocks so that they let you short. some CFD counters are marked "long only", why? becaues market maker also don't have that shares in long position. so you can't short the share if market maker don't have that share. Generally human being's phychology is long biased. So even when trading CFD product(which is indeed very usefully when shorting the market) most ppl wil still long with certain leveraging ability. So CFD market maker will most of the time have long positions for most CFD counters. So use this human weakness, pick your short at the correct market timing, and make a ride. happy trading......
CFD is also not stock futures. Singapore single stock futures is called ES (extend settlement) contact (so far no volumn, a failure product---personal opinion only).
If you want to trade CFD successfully, you must really understand how this product works.when you are trading CFD, you are in fact trading with the CFD maket makers (we have IG markets, phillip, Citi index, or many others). The main benefit for trading CFD is that:
1) CFD offers you leverage. You can trade 5K or even 10K if you only have 1K.
2) Short overnight or even longer period.
when we see CFD advertisement, many times they also claim that the comm. is cheap. while that is for advertising. CFD should be cheaper, because ppl trading CFD are not trading in the exhange, so there is no SGX clearing fee and exchange access fee, but only the comm for the broker. however, CFD indeed is not cheap at all. don't ever forget that you are payintg the "spread" whenever you are trading CFD. According to CFD rules, trading CFD can only sell at the bid price and buy at the ask price. you can't Queue. and if you want to queue, your order will only be filled when the bid or ask price has already flipped. for a $1 stock, spread is 1%, for a $5 stock, spread is 0.2%, which ever way you count it, it will be more expensive than trading in the exchange.
there are a lot of times we also observe that our CFD order is not shown in the times and sales or Queue track. while they should not, because you are trading OTC. the marmet maker is "betting" with us! we are indeed the source of trading profit for them! don't ever think that market maker will not hedge your orders. next time try dump 300 lots, and watch your time and sales and observe what is going to happen.
And then next they have a new renovation so called CFD(DMA). OK now your order problem is solved. even trading with 1 lot, should your order be seen in the time and sales and Queue track. sounds good? yes, but you have to pay for this. don't you ever notice that the CFD(DMA) is more expensive than the normal CFD? should be. becuase now the market maker can only make profit from your trading commision, but there is no profit for them from this trade itself. that is why they charge CFD(DMA) trades more.
And finally, why can broker let you short? of course they have shares on that stocks so that they let you short. some CFD counters are marked "long only", why? becaues market maker also don't have that shares in long position. so you can't short the share if market maker don't have that share. Generally human being's phychology is long biased. So even when trading CFD product(which is indeed very usefully when shorting the market) most ppl wil still long with certain leveraging ability. So CFD market maker will most of the time have long positions for most CFD counters. So use this human weakness, pick your short at the correct market timing, and make a ride. happy trading......
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