The example of liquidation is wrong: needs 40$ variation to be liquidated (not 4$). If you are in 100x leverage you need 1% of price variation for getting liquidated and 1% of 4.000 is 40. Anyway very nice video
A very important point to know (and not mentionned in the video) is that trading CFD, the opponent is no longer the regulated market, but the broker who is both actor and judge...
@@rockefeller13 Especially if there are 1mil+ shares being traded per day with a $25-$100 stock, no broker has the ability to control a stock for a week with $125mil-$500 mil because most CFD providers have hundreds, if not thousands of stocks, which means they would have to essentially have billions if not trillions to control the price of all those stocks - well said.
@@rockefeller13 yes but they can significantly manipulate spreads and slippage. If your day trading and your looking to scalp every pip or point is significant. I've seen situations where the better you are at trading and entry points the more aggressively the broker will stack the odds against you. Certainly not for the faint of heart but also quite frustrating and difficult to gain any kind of profits. other issues can be significant slippage from stop losses. sometimes really big, wiping out months of profits. sometimes the slippages are such that cannot be justified when you compare it to market data on a seperate regulated platform like Interactive Brokers etc. when trades go in your favor more often than not you will see sharp widening spreads against you reducing your profit and therefore impacting your risk/reward ratio massively. other times when your taking a loss on a stop loss, suddenly those losses are significantly larger than your stop loss, especially in normal market conditions. You can expect large slippage when markets are moving fast, but when there is nothing going on and then this kind of thing happens. anyway, thats been my experience. You can make money if you are exceptionally high win rate and risk/reward strategy. however, it makes it that much more difficult, and your profit margins are drastically impacted. In other words for sure you would have made more money trading in the normal way.
Awesome video Mike, very informative! I will definitely be looking into CFD’s (if they’re legal in Australia). I know it’s very uncommon these days, but is there also a risk of brokers trading against you or manipulating the prices? This is why I’ve tended to stick with futures as it’s all through the CME. Thanks again, will be using your link and broker for sure! :)
Thanks for your kind words. Yes there are CFD & FX Brokers who will deliberately manipulate prices so you definitely need to be careful. However, I have many friends in the industry and visited many of their brokerage offices. Some tell me that they dont need to manipulate prices b/c they know most retail traders will lose money. The biggest reason is they deposit a small amount of capital then leverage it to the max to try to hit the home run or they try to scalp for arbitrage opportunities.
Hey Mike since you have friends that own brokerage offices for CFDs do the trades really go to a liquidity provider that sends them to the interbank market? There is a lack of transparency in the Forex market and many believe that the broker is trading against them. Since we don’t know what’s happening on the backend this is why most rather go to futures or options but I do believe if there was more transparency or someone had insider information in how are trades get executed then most people would stay with CFDs/Forex brokers
No because the broker does not control the stock - unless the broker has full control of 1,200+ shares & can influence every single stock share price, it would be impossible. They do not control the chart patterns, they are relying on fools who do not know how to trade nor how to use leverage which is about 90% of the market probably 99% of the market. If it was a scam, no one would trade them and word would get around, they have been around now for more than 30 years.
I'm using E toro and I opened a cfd for an etf but for only 80 usd. Just to try. So if im correct with cfd you will either get the difference if it goes down or you get the profit if it goes up? But how do you select your bet / production? Is going short the option for predicting it will go down and long if ypu expect it to go up?
I recently entered a small long position in heating oil at 2.73. The price of heating oil went down, but the trade made a profit. How does a cfd trade make profit from a long position that goes down in value?
CFD's are tracking the heating oil futures contract and it depends on the contract month you are referring to. Different contract months have different pricing.
The example of liquidation is wrong: needs 40$ variation to be liquidated (not 4$). If you are in 100x leverage you need 1% of price variation for getting liquidated and 1% of 4.000 is 40. Anyway very nice video
A very important point to know (and not mentionned in the video) is that trading CFD, the opponent is no longer the regulated market, but the broker who is both actor and judge...
Either way they can’t manipulate a chart
@@rockefeller13 Especially if there are 1mil+ shares being traded per day with a $25-$100 stock, no broker has the ability to control a stock for a week with $125mil-$500 mil because most CFD providers have hundreds, if not thousands of stocks, which means they would have to essentially have billions if not trillions to control the price of all those stocks - well said.
@@rockefeller13 yes but they can significantly manipulate spreads and slippage. If your day trading and your looking to scalp every pip or point is significant. I've seen situations where the better you are at trading and entry points the more aggressively the broker will stack the odds against you.
Certainly not for the faint of heart but also quite frustrating and difficult to gain any kind of profits.
other issues can be significant slippage from stop losses. sometimes really big, wiping out months of profits. sometimes the slippages are such that cannot be justified when you compare it to market data on a seperate regulated platform like Interactive Brokers etc.
when trades go in your favor more often than not you will see sharp widening spreads against you reducing your profit and therefore impacting your risk/reward ratio massively. other times when your taking a loss on a stop loss, suddenly those losses are significantly larger than your stop loss, especially in normal market conditions.
You can expect large slippage when markets are moving fast, but when there is nothing going on and then this kind of thing happens. anyway, thats been my experience. You can make money if you are exceptionally high win rate and risk/reward strategy. however, it makes it that much more difficult, and your profit margins are drastically impacted. In other words for sure you would have made more money trading in the normal way.
Thank you for this video , really helped a lot 🔥🔥🔥
Awesome video Mike, very informative! I will definitely be looking into CFD’s (if they’re legal in Australia). I know it’s very uncommon these days, but is there also a risk of brokers trading against you or manipulating the prices? This is why I’ve tended to stick with futures as it’s all through the CME. Thanks again, will be using your link and broker for sure! :)
Thanks for your kind words. Yes there are CFD & FX Brokers who will deliberately manipulate prices so you definitely need to be careful. However, I have many friends in the industry and visited many of their brokerage offices. Some tell me that they dont need to manipulate prices b/c they know most retail traders will lose money. The biggest reason is they deposit a small amount of capital then leverage it to the max to try to hit the home run or they try to scalp for arbitrage opportunities.
@@MikeSerTrader ah yes, that does make more sense. Thanks for those insights!
Hey Mike since you have friends that own brokerage offices for CFDs do the trades really go to a liquidity provider that sends them to the interbank market? There is a lack of transparency in the Forex market and many believe that the broker is trading against them. Since we don’t know what’s happening on the backend this is why most rather go to futures or options but I do believe if there was more transparency or someone had insider information in how are trades get executed then most people would stay with CFDs/Forex brokers
So youre pretty much betting against the broker right?
No because the broker does not control the stock - unless the broker has full control of 1,200+ shares & can influence every single stock share price, it would be impossible. They do not control the chart patterns, they are relying on fools who do not know how to trade nor how to use leverage which is about 90% of the market probably 99% of the market. If it was a scam, no one would trade them and word would get around, they have been around now for more than 30 years.
I'm using E toro and I opened a cfd for an etf but for only 80 usd. Just to try.
So if im correct with cfd you will either get the difference if it goes down or you get the profit if it goes up?
But how do you select your bet / production?
Is going short the option for predicting it will go down and long if ypu expect it to go up?
25x4=100 not 1000. Thx for the nice video
It is malicious to recommend CFDs especially to beginners. CFD trading has one of the higest lost rates of any investment.
I recently entered a small long position in heating oil at 2.73. The price of heating oil went down, but the trade made a profit. How does a cfd trade make profit from a long position that goes down in value?
CFD's are tracking the heating oil futures contract and it depends on the contract month you are referring to. Different contract months have different pricing.
جيد جداً 🧏♂️📈