Opinion on CFDs

[Sparrow]

What's your opinion on CFDs? Are they any good?
I suppose it's a bucket shop type of thing, but that's only my suspicion.
My broker charges 40USD per round trip on them plus interests, that's why I won't go near them any time soon.

Thanks in advance

[cooter]

Your suspicion is warranted as trades are not executed on the regular markets.

Caveat emptor.

[mister ed]

There are different types of CFDs, depending on the CFD provider you
are dealing with. These are not standardised products and each provider
can have different brokerage rates, interest rates, dealing platforms, and so
on. Also, some providers are market-making in the CFD (these are most
likely to be a "bucket shop" operation) while other providers will have a
DMA model (Direct Market Access) where each deal you do is automatically
dealt into the exchange, such a provider is much less likely to be a "bucket
shop".

On the face of it, and with only the information you provided, a 40USD
round trip charge would seem to very strongly suggest that the CFD
provider you are referring to is indeed operating on the bucket shop
model.

[Sparrow]

thanks for your comments, i'll steer clear of CFDs.
i didn't see how i could have overcome being down 40USD from the start with little capital in the first place.

[adwebster]

Its not CFD's you need to steer clear of, but those who operate market maker platforms. The DMA models are fine as all trades are actually purchased the respective exchange

[Sparrow]

Thanks for clearing that up adwebster.
I did a bit of research and found out that my broker, which i am stuck with, has a bad record on FOREX. I suppose it's all the same with CFDs.