OK this is nowt to do with Zeds and nowt to do with car ... but this is the off topic area so...

 

 

I'm getting increasingly interested in CFD trading as a possible way to generate some additional 'fun' money especially seeing as the Zed likes to consume so much of it!

 

One of my customers put me on to this and he makes a good amount from it, spending just a few hours a day

 

Has anyone on here had any experience of CFD trading as a part time 'hobby' (or even as a main income) and if so do you have any useful tips or info?

 

There are lots of companies offering free demos with 'play' money to trade. Are there any good ones (or rogue ones to avoid?). If you try the free demo's does this become 'addictive'?

 

Rich

What is it?

Contracts For Difference (or just go google CFD)

 

It's quite popular apparently

 

Rich

Sounds very similar to Binary Options.........

It seems to me that its just the same as the stock market, buying and selling.

It seems to me that its just the same as the stock market, buying and selling.

 

Yes it is but you can use a much smaller amount of capital to generate very significant gains so you can infact leverage deals of 10's of thousands though you in fact only have a few thousand to play with

 

And are there not massive amounts of money (a significant part of the countries weath in fact) made on the stock market?

 

It's something i have been looking into for quite a while and am getting increasingly interested in trying my hand at this - I was rather hoping there may be some with experiance who could share some info as it seems it is something that some folk do in their spare time to generate a bit of extra income to suppliment there wages

Edited March 30, 201411 yr by dicky96

I'm just sending off a cheque to buy some cheap shares in my company due to a rights issue :-)

 

I'd love to buy some shares myself normally but don't know where to start

I was given 100 shares of a company I used to work for, not worth a great amount though.

Truth is though, wouldn't know how to sell them, plus I lost the certificate. They do keep sending me cheques for interest/profits on the shares, last couple of cheques were 12p and 7p! If they keep coming like that, I'll be rich in no time!!! :thumbup:

Good explaination here:

 

http://en.wikipedia.org/wiki/Contract_for_difference

 

 

The problem as I see it for any new or amatuer investors in such activity is the hundreds of avenue`s the professionals use to hide/cover/ fake/ deceive/ charm / rip off ( choose applicable) can use to lure you in. The use of phrases that most people do not know or even can under stand fully when its explained, the original use of contacted buying based on future rises was simply "Tax Avoidance". This was when the trading was between professional bodies and trading was based on non transferred assets or shares, this fell out side the normal tax that profit attracts ( capital gains) as no actual exchange of contact ownership occurs. Bit like selling your house to yourself no tax on the profit because you have not gained from the sale except taken out a larger mortgage ( same as remortgaging to build an extension)) However if you acted for yourself you can charge fee`s admin costs and loan repayment costs, all of which will fall under the umbrella of a non advantage contact and ....no tax see the deal was not a deal it was a tax free money generator

 

Early trading in this sense was subject to huge fraud in the industry and many key brokers and organisations saw fit to use it to their advantage and was a basis for "insider trading" and gave the good traders bad names and the bad traders a hiding place! eventually the industry cleaned its act up by imposing sever penalties and regulated the way "contacts" are written and it has provided a usable method for the industry to use it as a market stabilising tool as well as profit making, having said that the main problem that still exists is the contacts are written against a single market figure that is governed by the rate adjuster known as "Libor" this rate determines the generated margins,profit and loss liability, and given that in recent times some of the major banks have been accused and found guilt of manipulating the "Libor" figure to suit themselves it has moral and ethical concerns.

 

Of course above is my own view based on my readings into it and do not to have any professional knowledge of the system but you will always come across people are making great gains and those that are not in any form of stock market "betting" this particular method "appears" low risk and may be worth a punt who knows? but sure is a way of adding some extra cash to the brokers new Posche fund .

 

Jeff TT

Edited March 30, 201411 yr by JeffTT

I agree with that appraisal Jeff

 

I've spent quite some time looking at this market now and reading some of the CFD forums and sites.. There are certainly brokers to avoid but there are also reputable ones. And quite a lot of part time (amateur) traders add money to their own porsche fund!

 

My thinking of this (or rather our thinking as the wife also agrees and is even keen to learn herself), is now our mortgage and loans are all paid off we do have some capital we could afford to lose, not that anyone likes to lose money but in that I mean we could afford to lose without causing ourselves major financial headaches, and am sure we will take a few steps into this market hoping to generate money for nice things, not needing to generate money to live off. I think anyone taking that approach has a reasonable chance of making significat gains, maybe you would concur?

 

From my own research, every broker you look into you will find some people on some sites saying it is a scam or rippoff. Just like Trip advisor really - if you took everything you read on there as being true then you would never go anyware!

 

However there do seem to be some brokers that have a lot of bad rep and some that have a mixture of opinions. The one I am looking at right now is Capital Spreads which seems to have pretty good rep overall and is regulated by the FSA. They do a two week trial where you can play on the live markets with £10000 of monopoly money for free

 

Another one that has a mixture of folks calling it a scam and others saying it is reputable is IG - they do a similar trial with £2500 of play money

 

So I am pretty much sure we will give this ago, not just yet but last two weeks of May as we have a two week period coming up when our business will be flat (ie dead). I guess also that gives more time for some reasearch :)

 

Still would be interesting to hear form anyone who has done this, apart from the customer of mine up in Liverpool

 

 

Rich

Edited March 30, 201411 yr by dicky96

I use IG Index for spread betting - they are very good and reputable in the City.

 

Otherwise I use TD Waterhouse for all my stocks and funds trading - also very good but much more self-managed so only as good as you are.

 

I've not had any experience of CFDs specifically but it looks very similar to spread betting. I would say it works on similar principles - always do your research and always have a trading strategy defined and stick to it!

I used to go to the casino alot, similar principle and you can take your winnings with you lol

I use IG Index for spread betting - they are very good and reputable in the City.

 

 

I think the major differences are tax status and the fact there is no time limit on a CFD

 

I found this link quite educational and the video was pretty good too

 

CFD trading (and spread betting?) seems to have it's own terminology like going long (buying something you think will go up in price and then selling) and going short (selling something you don't actually own that you think will go down then buying it back when it does - making the difference in profit)

 

If you don't mind me asking, how long have you been spread betting, do you do it part time and do you make (or lose) significant amounts of money?

 

Rich

 

http://www.bullbearings.co.uk/traders.views.php?gid=4&id=32

PS cheers for the thumbs up on IG

I think the major differences are tax status and the fact there is no time limit on a CFD

 

I found this link quite educational and the video was pretty good too

 

CFD trading (and spread betting?) seems to have it's own terminology like going long (buying something you think will go up in price and then selling) and going short (selling something you don't actually own that you think will go down then buying it back when it does - making the difference in profit)

 

If you don't mind me asking, how long have you been spread betting, do you do it part time and do you make (or lose) significant amounts of money?

 

Rich

 

http://www.bullbearings.co.uk/traders.views.php?gid=4&id=32

PS cheers for the thumbs up on IG

 

I'm not sure what you mean re time limits. There aren't time limits with any traded assets except for bonds, options and futures (there are some others but I won't go into that). There's certainly no expiration/time limit with spread betting.

 

The terminology is the same with all investments (long/short) but these are forms of derivative trading as your gain/loss is dependant on the price move of an underlying asset and not like a simple stock investment where your gain/loss is dependant on the move in price of that specific asset. Also remember that with derivative trading your potential loss is not limited to the value of your investment!

 

This also ties into the tax status you mention as you are not physically taking control of any asset so you are outside of the CGT net. In simple terms you are gambling which falls completely outside of UK tax.

 

If you do go ahead, where available make full use of caps and floors to limit your risk to loss. Yes it can also limit your gains but it's all about your risk appetite which you should define ahead of time.

 

I have dabbled with spread betting for about 3yrs, mostly on the FTSE and the FX Markets. I wouldn't same I'm massively up, it's always just been a bit of fun. Short term trading, such as the kind I think you are saying you want to get involved in, takes a lot of commitment and a lot of investment to make material gains. For example, in a day the GBP/EUR may typically move 1.2098 - 1.2099 but spread betting would involve you betting X amount on a basis point move. You'd be lucky to get 10 or even 5 basis point fluctuations on a typical day for a major currency pair so to make any decent money off it you'd be betting big but if it goes the wrong way, you'd be losing the amount you thought you'd gain. It's not for the feint hearted!!

 

I haven't done it for a while but my last job was working on the trading floor in an IB so I was 'close to the action' so could afford the time and effort to be constantly monitoring Bloomberg and Reuters feeds. Nowadays I'm a long investor which is a comparatively much simpler task.

 

As I recall, IG Index have some good tutorials you can run through for free which do a good job of explaining the basics.

 

Good luck!

just watch the wolf of all street :boat: