CFD Trading from Singapore for US Stocks

[itsme220]

I am planning to invest US stocks using CFD. I am not a trader but Invest and hold for 3 to 6 months.


Can you suggest a CFD broker for US markets in Singapore?

My preference as follows
1. Wide varieties of Stocks.
2. Flexible to add Stocks to CFD. Suppose if I am looking at a particular counter and the particular counter is not on CFD list, then If I request the broker to add, the broker should consider the request and high possibility of getting the particular stock in CFD.
3. Low Commission.


Any experience? Suggestion?

Appreciate


Thank you

 

[Shiny Things]

I am planning to invest US stocks using CFD. I am not a trader but Invest and hold for 3 to 6 months.

Any experience? Suggestion?

Yeah, I have a suggestion: you don't need to use CFDs.

If you're holding for 3-6 months, you're going to get eaten alive on the interest charges.

You can get the same result a lot cheaper by either just using cash (in which case you want Standard Chartered) or by using margin loans if you really want to lever up (in which case you want Interactive Brokers and their 1% margin loan rates).

 

[itsme220]

Yeah, I have a suggestion: you don't need to use CFDs.

If you're holding for 3-6 months, you're going to get eaten alive on the interest charges.

You can get the same result a lot cheaper by either just using cash (in which case you want Standard Chartered) or by using margin loans if you really want to lever up (in which case you want Interactive Brokers and their 1% margin loan rates).

Thanks. But Interactive brokers margin is less ie 40% only right?
Suppose my portfolio is USD 10K wirth They will allow only 14K right? it is too limited.

But if I put USD 10K in CFD, I may able to levarage up to USD 40K total portfolio right here? So 30K USD the interest will be how much in CFD?

 

[Shiny Things]

Thanks. But Interactive brokers margin is less ie 40% only right?
Suppose my portfolio is USD 10K wirth They will allow only 14K right? it is too limited.

If 40% leverage is "too limiting", you're either trading LTCM-style fixed-income arb or you have a gambling problem. (Portfolio margin, which you can switch on when you have $100k in your account, lets you leverage up more: usually 5-to-1 or so on large-cap stocks.)

(OK, that's not entirely fair: day-traders might well want to be leveraged up a few times intraday; global macro traders will probably be a couple of times leveraged consistently; and you can get some really excitingly large leverage amounts with short-dated eurodollar futures, where you only have to post $350 of margin on contracts with $1mio notional so technically you're 3,000x leveraged. Leverage is not necessarily evil.)

But if I put USD 10K in CFD, I may able to levarage up to USD 40K total portfolio right here? So 30K USD the interest will be how much in CFD?

The interest will be something like 6-8% p.a., depending on your broker (some quick googling found me Phillip Sec, which charges 3% on US stocks and indices, but that's a promo rate: normally it's 5.5%). That puts you at a hell of a disadvantage.

That said, because you're in Singapore (anywhere but the US, Australia, and HK), IB will do you CFDs as well, and they give you pretty generous margining (about 10-to-1 leverage on stocks and 20-to-1 on indices) at the same generous financing rates they use for cash equities.

If you're really insistent on using CFDs, you might as well stick with IB for those as well.

Obligatory note: one of the things about IBKR is that they are very diligent with margin monitoring. If you hit your margin limit, they're not going to faff around and put their business at risk by giving you a couple of days to make the margin call: they're going to close you out automatically.

I quite like this, because it means their business isn't going to be put at risk by some overleveraged idiot who can't meet his margin calls. If you run on the ragged edge of margin calls all the time, though, you'll want to go elsewhere.

 

[wahkao3]

cfd sucks!!!!!! dont use!! stay far far!!!
plain brokerage is still the best! the more plain the better

 

[lcornwisky]

Thanks. But Interactive brokers margin is less ie 40% only right?
Suppose my portfolio is USD 10K wirth They will allow only 14K right? it is too limited.

But if I put USD 10K in CFD, I may able to levarage up to USD 40K total portfolio right here? So 30K USD the interest will be how much in CFD?

yes about there

 

[peterchan75]

Can try IG Market. Be sure to get the Guaranteed Stop at higher cost but it ensure you get out at your stop price when the stock gap up or down.

 

[Mecisteus]

i am trading CFD using IB. financing charges is definitely much cheaper than our local brokers.

CFD is a good tool if you know what you are doing. for an example, you decided to long $10k worth of apple shares. you know the downside risk of apple is very limited because of its strong fundamentals and valuations. instead of locking $10k by buying apple shares, you should buy $10k worth of apple CFD. you just need to lock $1k worth of your capital. and you can free up $9k to wait for other opportunities.

it is a suicide if you choose to buy $100k worth of other stocks if you only have $10k of capital assuming 1:10 leverage.

and your financing charges should be minimal compared to your target profit of lets say 10% and you plan to hold for a few weeks to a few months.

 

[itsme220]

Thanks for the detailed feedback. I spoke to couple of firms here

1. CFD and Forex Trading Provider in Singapore | CMC Markets
2. City Index Singapore | Trading platforms for CFDs & FX

Both charges interest rate of 2.5%+0.151% = approx. 2.65% on the daily balance.
The issue is suppose if I buy a stock at US$10 x 1000 shares = USD $10,000

When the stock price goes up say to $15 in 12 months gradually, the interest rate is on the holding value. i.e on $15,000

So Effectively significant port of my gain will be wiped out on interest. So as Shiny Things suggested better to borrow at bank short term interest 2.88% on credit card for 6 months.


I will speak to Interactive Brokers tonight.

Thank you for you inputs

 

[Mecisteus]

Both charges interest rate of 2.5%+0.151% = approx. 2.65% on the daily balance.
The issue is suppose if I buy a stock at US$10 x 1000 shares = USD $10,000

When the stock price goes up say to $15 in 12 months gradually, the interest rate is on the holding value. i.e on $15,000

So Effectively significant port of my gain will be wiped out on interest. So as Shiny Things suggested better to borrow at bank short term interest 2.88% on credit card for 6 months.

your unleveraged price gain is 50% for $10 -> $15.

your interest rate is 2.65% pa.

how did you calculate that a significant portion of your gains being wiped out?

in fact, your leveraged returns is much higher considering you use a small portion of capital.

 

[wahkao3]

Thanks for the detailed feedback. I spoke to couple of firms here

1. CFD and Forex Trading Provider in Singapore | CMC Markets
2. City Index Singapore | Trading platforms for CFDs & FX

Both charges interest rate of 2.5%+0.151% = approx. 2.65% on the daily balance.
The issue is suppose if I buy a stock at US$10 x 1000 shares = USD $10,000

When the stock price goes up say to $15 in 12 months gradually, the interest rate is on the holding value. i.e on $15,000

So Effectively significant port of my gain will be wiped out on interest. So as Shiny Things suggested better to borrow at bank short term interest 2.88% on credit card for 6 months.


I will speak to Interactive Brokers tonight.

Thank you for you inputs

1 more risk I like to highlight
what if the stock gets suspended? You are dead when that happens I tell you, stuck paying 3%PA

CFD is not worth

 

[Mecisteus]

1 more risk I like to highlight
what if the stock gets suspended? You are dead when that happens I tell you, stuck paying 3%PA

CFD is not worth

before you comment further, i suggest you read properly.

 

[Shiny Things]

So Effectively significant port of my gain will be wiped out on interest. So as Shiny Things suggested better to borrow at bank short term interest 2.88% on credit card for 6 months.

Wait WHAT? I never suggested that. Borrowing on your credit card to punt stocks is stupid.

 

[alexchia01]

Thanks for the detailed feedback. I spoke to couple of firms here

1. CFD and Forex Trading Provider in Singapore | CMC Markets
2. City Index Singapore | Trading platforms for CFDs & FX

Both charges interest rate of 2.5%+0.151% = approx. 2.65% on the daily balance.
The issue is suppose if I buy a stock at US$10 x 1000 shares = USD $10,000

When the stock price goes up say to $15 in 12 months gradually, the interest rate is on the holding value. i.e on $15,000

So Effectively significant port of my gain will be wiped out on interest. So as Shiny Things suggested better to borrow at bank short term interest 2.88% on credit card for 6 months.


I will speak to Interactive Brokers tonight.

Thank you for you inputs

You should becareful with CityIndex. They have a lot of hidden cost.

I close my account with them after they charged me a $1,200 commission for a $12,000 trade, which is ridiculous to me.

 

[GenerationX]

You should becareful with CityIndex. They have a lot of hidden cost.

I close my account with them after they charged me a $1,200 commission for a $12,000 trade, which is ridiculous to me.

OMG I Just sign up with them. can i pm u?

 

[alexchia01]

OMG I Just sign up with them. can i pm u?

You can PM me, buy why?

If you want to know the story, I can share it online.

They charge Singapore stocks that are traded in USD, based on US stocks commission structure, which is a lot higher.

When I got saw the commission, I was so angry that I called their support center, but they refuse to revert the charges, sighting it was stated in their T&C. I closed my account after that.

A look at their current website shows they may have already rectify this issue, maybe too many complaints or forced by MAS. But I've already loss my faith in them.

 

[GenerationX]

You can PM me, buy why?

If you want to know the story, I can share it online.

They charge Singapore stocks that are traded in USD based on US stocks commission structure, which is a lot higher.

When I got saw the commission, I was so angry that I called their support center, but they refuse to revert the charges, sighting it was stated in their T&C. I closed my account after that.

A look at their current website shows they may have already rectify this issue, maybe too much complaints or forced by MAS. But I've already loss my faith in them.

o ok.. what do u mean by sg stock in usd based? I just open acc. i can just withdraw rite?

 

[alexchia01]

o ok.. what do u mean by sg stock in usd based? I just open acc. i can just withdraw rite?

That meant Singapore stocks that are traded in USD, e.g. HPH Trust USD, HongKongLand USD, JMH 400 USD, etc.

 

[alexchia01]

can share more? how is it possible for the broking rate to be 10%?

Simple, for US stocks, they used to charge US$0.02 per share, not like Singapore Stocks which is $10 for all trades.

This is ok for US stocks because US stocks are more expensive and the minimum share to buy is 100 shares. So, if I buy US$10,000 worth of a US$80 shares, the commission is US$2.50, which is reasonable.

For Singapore stocks in USD, the value are usually a lot lower. Take Genting HK USD for example, it's US$0.395 now, let's round to US$0.400 for easy calculation. If I buy a US$10,000 worth of Genting HK USD at US$0.400, the commission will be US$500. If I sell, it's another US$500. That is US$1,000 commission for a $10,000 trade.

Understand?

 

[itsme220]

You should becareful with CityIndex. They have a lot of hidden cost.

I close my account with them after they charged me a $1,200 commission for a $12,000 trade, which is ridiculous to me.

Hi Alexchia

Thanks for the inputs. Do you mind to share your experience? When it happened? Which counter?