As a retail CFD trader, who benefits when I lose money?
As a retail CFD trader, who benefits when I lose money?
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gaut · External communityPost link
External question — Personal Finance Stack Exchange
Author: gaut
Original post: https://money.stackexchange.com/questions/152706
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Who wins when I lose money as a retail CFD trader? Unlike Futures or other regulated assets, CFD's may not require a buyer counterpart (or the broker might play this role)...
I suspect the broker loses when I make money on CFD's, not some other trader making opposite bets. Is that the case?
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D Stanley · External communityPost link
External answer — Personal Finance Stack Exchange
Author: D Stanley
Original post: https://money.stackexchange.com/a/152707
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Every trade requires a counterpart at some point. Brokers typically only facilitate transactions between parties and an exchange (who facilitiates the transaction with the counterparty(ies), or possibly between individual traders. It would be highly unusual for the broker to be the party on the other end of your CFD. They may be on the
contract
, but more than likely they would have an offsetting position with someone else in that case. They rarely have "skin in the game".
However, that doesn't necessarily mean that the other party "won" if you "lost". They may be using the CFD to hedge some other position, and come out even.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: D Stanley Source score (net votes, not local likes): 1 Original post: https://money.stackexchange.com/a/152707 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Every trade requires a counterpart at some point. Brokers typically only facilitate transactions between parties and an exchange (who facilitiates the transaction with the counterparty(ies), or possibly between individual traders. It would be highly unusual for the broker to be the party on the other end of your CFD. They may be on the contract , but more than likely they would have an offsetting position with someone else in that case. They rarely have "skin in the game". However, that doesn't necessarily mean that the other party "won" if you "lost". They may be using the CFD to hedge some other position, and come out even.
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