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the real cost of CFD trading

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Not applicable
Some might think that brokerage is important - and it is if you are cycling in and out of stocks on a weekly basis - but overnight holdings are the real item to watch out for. If you build up R1m in exposure on OST's platform, that equates to close to R90k in interest (compounded daily). you would have to move in and out of your positions 10 times to incur the same amount of brokerage charges. Food for thought!
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11 REPLIES 11
Valued Contributor
and assuming R1m exposure is about R150k margin that equates to 66% profit from the margin just to pay interest .. or 9% of exposure of R1m ..
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Frequent Contributor
True. But to SSF I still prefer CFD. Compare NPN, with 24K I get SSF exposure of K114 en CFD it close to K240. With SSF the roll over spread 4 x times a year is 6.8% total.
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Frequent Contributor
What is OST's interest rate for overnight holdings?
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Not applicable
well, if you want to look at it that way - your beloved ALSI futures are as bad, if not worse!
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Frequent Contributor
prime less 1 on exposure
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Valued Contributor
it not about max'ing exposure .. it about managing risk
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Super Contributor
But what about the market marker spread of .35 % when you sell or buy based on EXPOSURE ? Is that not a hidden cost, and because it is based on exposure is it not time your gearing ? or am I wrong ?
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Super Contributor
Even for the alsi? or is this strictly for cfd's? The comment skooptjop made is like totaly confusing me!
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Super Contributor
Please elaborate skaaptjop.
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Not applicable
some platforms (I am not sure if OST does it) charge an overnight holding fee for futures contracts, just as if it was a CFD. Check out the worst of the worst - IG Markets - they will charge you SAFEY +5% for holding overnight
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antoniog
Occasional Contributor
By my calculations, one can "borrow" at effectively about 12%(geared portion) if one puts down 50% ie. say R50000 equity and R50000 gearing = R100 000 total exposure.So any performance above 12% from the geared R50000 can effectively be added to the R50000 equity portion. An 18% return on the total exposure will effectively be a 24% (18%+18%-12%) return on equity. A healthy dose of risk management will be paramount as this is a DOUBLE edged sword. NB: NOT FOR BEGINNERS!!!
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