I've investigated this at length some time ago... and found that the brokerage and the interest charges on the amount held say if you hold over night are a killer... A show stopper in fact.
So Lets say you spend $10k and take a leveraged position out on BHP which exposes you to a $100k position (10:1 leverage) in the heads stock and you hold overnight. You will have to pay the interest on that 100k for 1 day at the prevailing interest rates. Also I understand the brokerage will be on the size of the 100k position not the 10k
Also need to factor in:-
1. CFD Provider bias. Ie, with one CFD provider I used the pricing was not transparent the price they quoted seldom matches the Live Quote on the ASX. Its usually in their favour.
2. Spread gap between buyer and seller...Some CFD providers artificially increase the gap between the buyer and seller meaning you need a bigger move in your favour to make profit
3. Re-quotes - Sometimes you get the buy and sell timing right and think you have a winner only to be faced with a Requote where the CFD broker revises the trade and you may lose.
4. Guaranteed Stop loss .. are OK Assuming there is a exact Transparency between the ASX and CFD Instrument pricing
5. Being able to trade short and long is great though.
So I am ultra cautious on CFD having learnt the hard way.
But saying all the above perhaps some things have changed since I had a go several years ago.
So may I ask a sample question:-
What would a position & Brokerage in BHP cost me with your provided if:-
1. I wanted to be exposed to say a $100k position to go long on the head stock.
2. What Capital would I have to commit to take out that 100k position?
3. What would be the overnight interest charge on the $100k
