2010-new-to-me-about-cfd-s

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#2010

wombat (User)

Fresh Boarder

Posts: 1

new to me about CFD's 1 Year, 3 Months ago

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This news provided to me by Global Electronic Trading

Whereas there are a limited number of shares available for each company, there are no such limits on CFDs. Companies don't issue CFDs or determine how many are available - traders do. As long as there are traders willing to buy or sell CFDs and dealers or others willing to take the opposite side of the trade, there is virtually no limit to the number of CFDs you can trade on each share or share index.

My thoughts.
This could mean that a company XYZ has 1 million shares on the market but a hedge company could short 10 million of XYZ driving the price right down.

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#2013

Deon (User)

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Posts: 452

Re:new to me about CFD's 1 Year, 3 Months ago

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Hi Wombat

Sorry didn't see your post ... CFDs may not necessarily affect the market unless the underlying provider hedges their position somehow. Market makers for example, take the other side of your trade - so you will never have any issues trading CFDs with them ... apart from the fact that they will try to fleece your money

The CFD providers that do hedge may refuse to offer CFDs on a company if they can't hedge; for example when short selling was banned, IG did not offer any short selling.

Cheers
Deon

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