CFD

[Limitless]

Hi Guys... Can someone explain simply how Interest is "paid" and "received" on CFD trades? Tx

[prancing_horse]

You pay interest on the full exposure of the trade on a daily basis(eg BIL closing price 300 and you have 1000 CFDs then you pay int on R300000) You receive interest on your margin and your cash balance, the difference in the rate you pay and receive is about 5%, and I think varies from broker to broker.

[SimonPB]

and if you are short you will receive interest at a lower rate then you pay .. credited/debited to your account every evening ..

[#4]

interestingly enough, none of the banks, except PSG, advertise the fact that there is a script lending fee for short positions. So, while you think you are earning interest on the exposure for a short contract, you actually aren't, because it is offset. A bit sneaky, IMO. OST's examples play vaguery with the spreads to cover this fact (you go short on a value without spread, you exit the position with spread in their examples. The script lending fee is neatly hidden in the spread, as far as I can see).

[SimonPB]

no the script lending fee is in the reduce interest paid on shorts .. it around 1% a year if I recalls

[surfer]

Simon ,I think a webinar on all these products from the Banks perspective would be useful.IE how does OST make money off CFD's,futures,warrants etc and exactly what hedging/market trades takes place from their .This will give a retail investor a full understanding of the products.Just my thoughts

[#7]

I think I am still okay with warrants. my loses are capped to time delay