Be Wary Of Trading CFDs In Your Forex Account Unless You Understand Futures ~ AM Trading Tips

Be Wary Of Trading CFDs In Your Forex Account Unless You Understand Futures

In many forex accounts, there's the choice to trade CFDs on oil, gold, silver, copper, the S&P 500, or Dow 30, among others.

These are often alluring, and that they could seem like easy things to trade. After all, oil is discussed all the time on the news, so most of the people think they know tons about it. Unless you've got studied futures trading, i might advise against jumping into these CFDs for variety of reasons.

1) The broker goes to charge an outsized spread, making it harder to profit over many trades.

2) These sorts of CFDs don't trade like currencies. These products are supported futures contracts, which expire, and therefore the next contract may have very different prices. If you do not close before expiry, you get rolled into the new contract, which is another trade and should be very different (different technicals, even different trend direction).

3)The broker goes to charge you tons to carry positions overnight. you're trading against the broker during a CFD they're going to take their take advantage of you somehow. this is often different than a derivative instrument , traded on an actual futures market , where the broker just facilitates your trade and another trader is on the opposite side of the transaction.

I have been trying to elucidate to people all morning the spread between May oil, which is expiring soon, and June oil. May oil is trading at $18, June oil is trading at $25.
May petroleum Versus June Crude OilTradingView

I several posts I saw today, people were thinking their brokers were ripping them off, that there was kind of conspiracy, that perhaps the $19 or the $25 contract was "Just forgotten about by the broker" or "Not updated". Since some brokers stopped showing the May contract and switched to the June contract, some though the worth had gapped $7 instantly.

No, these are both prices that are occurring immediately in several oil contracts. Visible right along . Both contracts are trading for an extended time at their own respective prices.

PLEASE! Before trading ANYTHING, study it. skills it operates. If you cannot open a futures account, or do not know what futures are, please don't trade gold, silver, oil, etc. within the forex account.

You are likely not trading the market you think that you're .

CFDs are totally fine to trade if you recognize about the underlying market you're trading. It became quite clear that a lot of people posting in some groups were trading something they didn't even understand the fundamentals of, including have a technique for taking advantage of it.

The worst thing was that with a lot of comments on these charts and questions, not one person knew about different contracts, expiries, or that there are often differences between contracts.
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3 May 2020 at 09:43 ×


Congrats bro Unknown you got PERTAMAX...! hehehehe...