General Discussions about CFDs

**Admin** · Admin Posts: 14 Join date: 2008-08-06

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herman5mm · Posts: 6 Join date: 2008-09-14

I have traded options for a few months, and find it very complicated and hard to master. But when I learned about CFD I find it was more simple. Now I am thinking of switching to CFD.

As this month many stocks are reporting their earnings, can we use CFD for the gapping strategy? How can we make profit when the stock gaps up or when it gaps down? We need Orangtua for advice.

Thanks & regards
Herman

**orangtua** · Posts: 117 Join date: 2008-08-06

herman5mm wrote:

I have traded options for a few months, and find it very complicated and hard to master. But when I learned about CFD I find it was more simple. Now I am thinking of switching to CFD.

As this month many stocks are reporting their earnings, can we use CFD for the gapping strategy? How can we make profit when the stock gaps up or when it gaps down? We need Orangtua for advice.

Thanks & regards
Herman

Glad to hear that you have found the usefulness of trading CFDs. Both instruments have different usage in strategies. If you intend to catch those big moves during earning period, one can put an OCO order, meaning one cancel another. In this way, when it moves any direction, one is filled and the other is cancelled.

herman5mm · Posts: 6 Join date: 2008-09-14

Hi Orangtua,

Thanks for yr prompt reply. Yes, I think the same way. In Options we pay both premiums for Put and for Call ( in straddle) and it could be very expensive. Using CFD would be much cheaper, but I have no experince yet. It worth to try it. Thanks again.

iwan · Posts: 6 Join date: 2008-10-11

Pak Herman, Thank for sharing.
could u share to use the adv.and disavantages CFD compare to OPTIONS.

as far as I can learn: OPTIONS = derivative (like forex, index) scary :-(

**blessing08** · Posts: 2 Join date: 2008-09-07

pak herman,
tx for sharing

herman5mm · Posts: 6 Join date: 2008-09-14

iwan wrote:

Pak Herman, Thank for sharing.
could u share to use the adv.and disavantages CFD compare to OPTIONS.

as far as I can learn: OPTIONS = derivative (like forex, index) scary :-(

Sorry for my late reply, because I just opened the Forum this afternoon.
Here are a bid of my experiences with options:

Options: many things to be considered before you place the order, buy call or sell call, buy put or sell put, the combination of the call and put can be used for certain strategy just like: straddle, strangle, vertical spread, butterfly, calendar spread and many more. The options have to pay premiums which have a time decay, depreciated toward the time of expiration. The premiums are about 5% to 30% or more depending to volatility etc. There is a minimum of 100 share of Options. I think it is more difficult and take more time to learn than CFD, but for some people it is very interesting. I may say it is like to learn an art.

While CFD, you just decide to sell or buy, You pay no premiums but only margin, which will be returned back (like deposit). the commissions could be a little more than Options. There is no minimum of how many CFD you buy, no time decay of your margin, no expiration date, you can hold CFD in your folio as long as you like. I think CFD is not so complicated.

Fundamental and technical analysis are the same for Options and CFD. Putting Stop Loss /Target Profit is also the same.

The advantage of Options : the maximum loss is limited to your premiums, therefore in CFD you should not forget to use STOP LOSS otherwise it could be dangerous.

Rgds
Herman