(*High Risk Investing) CFDS Explained - Beginner's Guide To Contracts For Difference in Singapore

Alphidius

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1) what happens to CFD shorts during rights issue?

Corporate actions will always have impact on CFD and as such, it is up to brokerage to factor in the economic benefits or penalty. The only thing investors won't have in CFD is the non-economic benefits like voting rights.

Eg. Dividends for a stock is given and if investor holds CFD long for this stock, he may be given an equivalent amount as he would, if he actually owns the stock. Short positions will likely get penalize and need to cough out the dividend equivalent (they hope after XD the prices will fall and make profit from there).

In your questions, what happens to short position after rights issue. Depending on brokerage, they might or might not increase the size of the CFD to reflect the effect of rights issue for those in long position. For short position, they might lower the size of your CFD which means investor require lesser margin after rights issued and adjust the prices for closing positions accordingly. It is still best to call your brokerage to ask about the impact it will have on your open positions.

Actually some of my answers are found in E-Learning Portal by ABS.
You need to pass the quiz to get a certificate before can open an CFD account with any brokerage (MAS rule) unless you have financial background.

http://sips.abs.org.sg/Default.aspx
 
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lalalalalala

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Corporate actions will always have impact on CFD and as such, it is up to brokerage to factor in the economic benefits or penalty. The only thing investors won't have in CFD is the non-economic benefits like voting rights.

Eg. Dividends for a stock is given and if investor holds CFD long for this stock, he may be given an equivalent amount as he would, if he actually owns the stock. Short positions will likely get penalize and need to cough out the dividend equivalent (they hope after XD the prices will fall and make profit from there).

In your questions, what happens to short position after rights issue. Depending on brokerage, they might or might not increase the size of the CFD to reflect the effect of rights issue for those in long position. For short position, they might lower the price which means investor require lesser margin after rights issued (the money will be placed back into investor's account balance) and adjust the prices for closing positions. It is still best to call your brokerage to ask about the impact it will have on your open positions.

Actually some of my answers are found in E-Learning Portal by ABS.
You need to pass the quiz to get a certificate before can open an CFD account with any brokerage (MAS rule) unless you have financial background.

http://sips.abs.org.sg/Default.aspx
I did the quiz before. But don't remember rights issue because during rights the buyer has the option of not purchasing the shares.

The rest is just short opposite of long position. Long get div short pay div, long get shares short minus shares etc

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Alphidius

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I did the quiz before. But don't remember rights issue because during rights the buyer has the option of not purchasing the shares.

The rest is just short opposite of long position. Long get div short pay div, long get shares short minus shares etc

Sent from OnePlus A0001 using GAGT

Bro, call your brokers to verify.
Cos it's the brokerage that is offering the CFD so they will understand it the best.
 

wahkao3

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the financing charge is a huge turn off.
I got money,I poink it down on the table, still need to pay for what stupid financing charge as if i am borrowing money

no way to get around it

CFD is a crappy product!
 

Sinkie

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the financing charge is a huge turn off.
I got money,I poink it down on the table, still need to pay for what stupid financing charge as if i am borrowing money

no way to get around it

CFD is a crappy product!

Can, you buy your shares, then you sell or short your own shares next
 

wahkao3

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Question, CFD need to pay financing charge around 2.5-3%
is there anyway to get around this?
I have money, i pionk it down on the table. its ridiculous for me to pay financing charges on money I already own
 

wahkao3

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0 leverage Tio what charges? 0 Leverage = 0 loan

No loan how to get financing charges??

thats precisely the point! They still charge if I use 0 leverage!!!
thats why its a lousy ar5e product
 

wahkao3

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wahkao3

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4% is like dividend liao
enjoy paying your broker dividends on posiitions you own
 
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Sinkie

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thats precisely the point! They still charge if I use 0 leverage!!!
thats why its a lousy ar5e product

Yes, that's why commission for Cfd is cheap and always cheaper

To attract you to pay financing charges lo
 

Sinkie

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4% is like dividend liao
enjoy paying your broker dividends on posiitions you own

Ehh, is paying Cfd provider or brokerage, not broker hor

Cfd Brokers don't get cut for financing
 
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