Talk:Contract for difference

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The Contra view of Andres opinion is that a CFD is a commercial product that is constantly being refined, and as such the main sources of information pertaining to its relevancy as a derivative financial instrument will be contained within commercial websites. In addition the article has been added to by a commercial organisation and gives a favourable slant to that particular organisation. - Duncan Hickman, Director, Share Select Pty Ltd. 5 December

Being of the opinion that Wikipedia is not an advertising medium, I have removed all the links at the bottom of the page - to my feeling they were meant more for advertising companies that trade in CfDs than in informing the public. None of them gave significantly more information than the Wikipedia article itself. - Andre Engels 13:26, 29 November 2005 (UTC)

My kingdom for an impartial economist. This article seems to be very biased on favour of CFDs with statements like "you can of course lose more than you put in, however..." and "All forms of margin trading involve financing charges..." Talk about slanted. CFDs are extremely high risk and only work if you are 'day trading', ie, staring at equity movements and constantly changing your position - all the while paying fees for the service and usually eith your own money ending up in the red. I wish I had the knowledge to make this article more balanced; CFDs are being pushed hard by providers now and people need an objective analysis that isn't so soaked in gobbledegook like "previously agreed rate above or below LIBOR or other interest rate benchmark. Users pay to finance long positions and (may) receive funding on short positions". I wish more governments would outlaws CFDs - that would clear things up. --DreamsReign 02:02, 27 March 2006 (UTC)

Research it before you start slagging it off then; CFDs are of course a double-edged sword, as is the entire financial market, it just happens that CFDs have sharper edges, but simply put, I strongly disagree that CFDs should be banned since if one would simply take the time to apply the appropriate risk and money management, they prove to be a highly useful tool. --Olipro(IP)

Hi I have deleted the following words "searching google" in the page. The previous quotation was as follows: "There are a number of CFD dealers in the market, and many can be found online by simply searching Google, or any other search engine of your choice, here are a number of well known companies;" My purpose in doing so was to prevent bias in the search engines people use. I don't think Wikipedia should implicitly recommend the use of one search engine over another - as the previous quote did so. The correction makes the sentence less biased, however pedantic my point may be.

[edit] First sentence

The first sentence of this article doesn't say what a CFD _is_. It says that it is something which is an example of an equity derivative, and it tells us what it allows users to do. But it doesn't say what it _is_.

Unfortunately I don't yet know what it is, so I can't fix it. 82.36.100.133

Here is what I propose as the definition of CFD. Comments welcome.

A CFD is a contract between two parties, B ("buyer") and S ("seller"), stipulating that S will pay to B the difference between the current value of an asset and its value at contract time. (If the difference is negative, then B pays to S.)

"CFDs have varying brand names, depending on who issues them. For example they are sometimes called Turbo Certificates or Waves. In Hong Kong, they are referred as Callable Bull/Bear Contracts (CBBCs)." These are not CFDs but warrants with expiry dates.

I think it's obvious that an investor is required to finance his long positions if held overnight. But why does he receive funding on short positions?

[edit] corrections

I have deleted the quote of a broker :"a broker such as XXX",it's obviously free advertising in an encyclopedia article,+ corrected a weak argumentation largely in favor of CFD: Yes, maybe CFDs are a bit more flexible if you have a low deposit(<15k$) compared to futures, but futures are regulated in most countries they have less fees,more transparency and you don't go through a market maker(which means that the house doesn't trade against you if you trade with a serious/pro broker). I think that the part when they say you can have guaranteed stoplosses etc... is true but overlooks the dangers of leverage(for instance with a 1% margin,you can have a 100:1 leverage,that means your account can be completely wiped out in less than a few hours). + when they say :"CFDs are extremely high risk and only work if you are 'day trading'",it's not always true and depends on the leverage used and the underlying(for instance silver can have a range of 10%+ a day ),you can use low leverage with CFDs,and they don't only work if you are 'day trading',on the other hand 'day trading' always works for the broker who harvests the fees. So most of this is total BS.

[edit] About CFD dealer reputation

I disagree, I believe that the offering of CFDs, as well as other derivative products by a firm is a good sign of a professional outfit. Most firms will only commit experienced investors to such products, and will make sure that the client is well aware of the high risks that are involved in trading in such a manner. To label most firms that offer CFDs as "bucket shops" shows that the original author of this particular article obviously works for a big house, and therefore think his/herself better than everybody else! —The preceding unsigned comment was added by 81.145.240.229 (talk • contribs).

Answer for {unsigned|81.145.240.229}: There has to be a misunderstanding somewhere,I didn't intend to label a firm that offers CFDs as bucketshop,I was just referring to some of the retail brokers that are among the links at the bottom of the page here http://en.wikipedia.org/w/index.php?title=Contract_for_difference&oldid=88695663(ranging from the small ones to the several hundred-million ones)excluding banks of course xD. Of course brokers at the institutional level hedge the trades,maybe even a few ones offer access to mid-high networth individuals. And CFDs are a wonderful product,because regulation is so weak now,a group of hedge funds recently bought a huge stake of BAE systems(something like 20%) with CFD without having to warn the british regulator...