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Why do I lose money even when my CFDs trading is Profitable


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Hey everyone,

I've just started a Demo account exploring how to trade CFDs however, what I've noticed is that despite I made a small profit there through a few trades I kept losing my funds value. The way I understood CFDs simply that it magnifies your returns whether it was profits or losses. But the confusing for me is that in my case should profits trades overcome the losing ones. Any explanation for that?

For the below tradings, my funds went from 10,000 to 9,812.93! A 187 short?

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Edited by JSmoney
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It is worth looking at the spread betting account option as if you are taking small size positions for shorter time periods, you need a big move to make enough cover the quite high fees and still make a profit. Forex does not have commission on CFD's but stocks and I think Indexes do. Spread betting has a larger spread to overcome but can work out a cheaper way to enter and exit trades if they are small and not held for larger moves.

 

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Above American Airline is share of a company and you pay a additional set fee for buying and selling it which is  £12.12 in this case.

Wall Street Cash index is spread betting  and difference between buying ans selling is the spread added or included within the trade. So  you don't see it separately.   

 

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  • 4 weeks later...

So you are down at least £20 to start with every time you decide to open a position? That seems like a pretty bad deal. 
Wasn't there a smaller commission/trade cost if more than a certain amount of trades are placed in a month? 
It just seems strange. If you're averaging say 4-5 trades a day you get a £100 dent into your profits (supposing you are profitable on all the trades). Seems unreasonable.

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20 hours ago, Msim224 said:

So you are down at least £20 to start with every time you decide to open a position? That seems like a pretty bad deal. 
Wasn't there a smaller commission/trade cost if more than a certain amount of trades are placed in a month? 
It just seems strange. If you're averaging say 4-5 trades a day you get a £100 dent into your profits (supposing you are profitable on all the trades). Seems unreasonable.

If you're from the UK you can trade stocks on a spread betting account. The fee would be the spread x your bet size. 

You may find this more cost effective for your trading strategy. 

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4 hours ago, CharlotteIG said:

If you're from the UK you can trade stocks on a spread betting account. The fee would be the spread x your bet size. 

You may find this more cost effective for your trading strategy. 

It is definitely the only reasonable option for a frequent or intraday trader. 
Another thing that seems to go against the concept of profitability (in both spreadbets and cfd accounts) is the minimum stop loss distance: in most of the assets it's 2% which is a HUGE gap, and makes it impossible to place a reasonable position. I've seen it explained as a way to avoid slippage risks on volatile markets, but it is literally on basically on 90% of the shares listed, and some that don't have the 2% seem to be some of the most volatile assets. 
It is incredibly limiting and puts the investment at unnecessary risk.
Something should definitely be done about this. 

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On 10/06/2020 at 13:09, Msim224 said:

It is definitely the only reasonable option for a frequent or intraday trader. 
Another thing that seems to go against the concept of profitability (in both spreadbets and cfd accounts) is the minimum stop loss distance: in most of the assets it's 2% which is a HUGE gap, and makes it impossible to place a reasonable position. I've seen it explained as a way to avoid slippage risks on volatile markets, but it is literally on basically on 90% of the shares listed, and some that don't have the 2% seem to be some of the most volatile assets. 
It is incredibly limiting and puts the investment at unnecessary risk.
Something should definitely be done about this. 

 

Other members have mentioned the large minimum stop distance. I have relayed the message to our exposure/ risk teams to see if they can be tightened. 

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Guest Elizabeth Ruth

 

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