Forex vs CFDs: what do you prefer? | Forex Factory

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Forex vs CFDs: what do you prefer?

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  • Forex vs CFDs: what do you prefer?
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  • #1
  • First Post: Jan 22, 2015 5:03am Jan 22, 2015 5:03am
Hello everyone.
I wanted to ask which of these instruments used for your trading, if you have them tested both, and the reason for your choice.
In particular, I'm curious to know how many use CFDs to trade and if you feel more profitable than Forex.
  • #2
  • Jan 22, 2015 8:59am Jan 22, 2015 8:59am
Quoting lucacol
Hello everyone. I wanted to ask which of these instruments used for your trading, if you have them tested both, and the reason for your choice. In particular, I'm curious to know how many use CFDs to trade and if you feel more profitable than Forex.
Trading both FX and CFDs . And i can tell u FX is lot more easy because u dont need to care about fundaments at all . With CFDs u have at least understand what is that company doing. Or understand or have interest in the whole sector like Cars Banks Aero etc... You know , i dont know anything or dont have inerest about energy dont trading their stocks etc .. That is my point of view at cfds .. But there is a problém for intraday or swing traders at cfd´s and that is the Gap . YOu long something at 55,50 with SL: at 52,50 and next day is opening price 50,50
  • #3
  • Jan 22, 2015 8:26pm Jan 22, 2015 8:26pm
Quoting Petr.K
{quote}But there is a problém for intraday or swing traders at cfd´s and that is the Gap . YOu long something at 55,50 with SL: at 52,50 and next day is opening price 50,50
The gap can be a killer. That's why I like FX. I traded indicies before and like them too. Indicies can theoretically go to $infinity, where as FX is sinusoidal. Of the indicies I like the SP500, FTSE and DAX, but to each his own.

Of course anything can gap and destroy you. Witness the CHF on the 15th Jan 2015 - it destroyed brokers as well as traders.
  • #4
  • Edited 9:56pm Jan 22, 2015 9:25pm | Edited 9:56pm
Quoting lucacol
Hello everyone. I wanted to ask which of these instruments used for your trading, if you have them tested both, and the reason for your choice. In particular, I'm curious to know how many use CFDs to trade and if you feel more profitable than Forex.
All the instuments I trade are CFD's, even forex pairs (which may mimic Straight Through Processing to the Interbank STP) given that I use a Market Maker (MM) broker that mimics the underlying instruments with synthetic derivatives.

From my personal experience major indices (CFD's that are typically created against the futures market) are like currency pairs and can be traded identically as far as the approach that I use. In fact the CFD created indices that mimic the ASX, FTSE, Nikkei, Dax and DJI have marginally outperformed the major currency pairs (on average) but not by much over the last 2 years. There is very little bias (if at all) with long term trend trading approaches. Unless you like futures, CFD opportunities are limited to spot commodity offerrings (dependent on your broker) like XAUUSD and XAGUSD, but they, like indices are also good candidate to look at.

Individual stock CFD's however are problematic namely given to the gaps associated with intraday sessions. My tip is that if you use CFD's to trade like forex, then only trade those CFD's such as indices that have high liquidity and give 24/5 coverage.
  • #5
  • Apr 5, 2015 7:27am Apr 5, 2015 7:27am
CFD shares can be more profitable than forex but there are some problems. There isn't a good broker that offers many CFDs on shares. Usually market makers that I don't have much confidence in them. There are some brokers that I trust them (Hotforex and Fxpro for instance) but they only offer about 30-40 cfd shares if I remember well. I don't trust brokers who offer hundreds of CFD shares. Another problem is you may have a technical strategy that works well on forex (like I do) but doesn't work on shares ( I can't make a profit on US shares with the strategy I win on forex). I think this is because forex is a huge market but a stock can easily be manipulated by less richer people/institutions than in forex. When a stock moves mainly because of macroeconomics I still can make a profit with my strategy (many european shares are very correlated with the macroeconomics). The only strategy that worked for me in US shares was trend following with big stop losses. I can't make a strategy with small stop losses work on US shares even though I make money with the same strategy on S&P 500 index. I think this is because of microeconomics. Gaps are not much of a problem since they can also be in your advantage. However unlike in forex you don't know what your risk is. You can't say I put my stop loss at 5% from the value of a stock, I will only lose 5%. This means you must be more careful to don't use too much leverage. I don't trade intraday but if you put a small stop loss on 1hr charts you can lose a lot more than that. If you trade on higher time frames the risk will decrease.
  • #6
  • Apr 6, 2015 6:20am Apr 6, 2015 6:20am
Quoting str8
CFD shares can be more profitable than forex but there are some problems. There isn't a good broker that offers many CFDs on shares. Usually market makers that I don't have much confidence in them. There are some brokers that I trust them (Hotforex and Fxpro for instance) but they only offer about 30-40 cfd shares if I remember well. I don't trust brokers who offer hundreds of CFD shares. Another problem is you may have a technical strategy that works well on forex (like I do) but doesn't work on shares ( I can't make a profit on US shares with...

I would say Fx is even "more random" than CFD market ( which is actually a mirror market of stock), hence harder to manipulate. Nevertheless, for me CFD's are more preferable than Fx because in my view, the less factors have influence on an asset the more predictable it is. I also trade with Hotforex but only medium and long-term oil CFDs as this asset draws beautiful and clear trend swings last two years. Moreover oil is a politically dependent instrument what provides additional field of trading analysis. Regarding CFD trading conditions I can only say that it's less volatile (less price changes in certain period of time) in other points it bear a great resemblance with currencies..
  • #7
  • Last Post: Edited 6:24am Apr 18, 2015 6:07am | Edited 6:24am
Quoting leebsurag
{quote} I would say Fx is even "more random" than CFD market ( which is actually a mirror market of stock), hence harder to manipulate. Nevertheless, for me CFD's are more preferable than Fx because in my view, the less factors have influence on an asset the more predictable it is. I also trade with Hotforex but only medium and long-term oil CFDs as this asset draws beautiful and clear trend swings last two years. Moreover oil is a politically dependent instrument what provides additional field of trading analysis. Regarding CFD trading conditions...
Actually there are more factors that have influence on a share: the microeconomic factor AND the macroeconomic factor. If an important index moves in a direction the stock can also move in the same direction even if nothing important happened with the share from a microeconomic point of view. When you trade an index it moves because of macroeconomics. Same with forex.

It depends on strategy, but I don't have an edge on some shares (especially US shares) even though I have an edge on forex on most currencies with the strategy I use.
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