I know how to read a market chart from time spent trading Bitcoin, which I got out of never to venture into ever again, after I got two exchange accounts robbed (by the exchanges themselves imo) in as many weeks, just prior to the $500 - $20K ramp (yeah…I know).
Recently decided to check out a cfd broker as a platform to trade on. FXCM is FCA regulated so I guess they can’t just rob you blind, and then tell u; “Fk U, ur account got hacked, now fk off!”
Fortunately, I am only using a demo account for the time being, and just executed a BTC short trade.
The ‘spread’ when I opened the trade was ‘25’. I am totally add odds with what all the terms are and what the numbers actually mean, quite some departure from 0.1% trade fee, 0.25% margin cost, etc. But I took ‘spread’ to be the difference between the spot price and the price the broker will sell a ‘lot’ to you for. So I assume the cost of selling 1 BTC was $25 USD…‘Fair enough’ I suppose. On Bitstamp it would cost around $20 to make a 1 BTC trade…but then I came across this:
( Spread ) x ( Pip Cost ) x ( Number of Lots Traded ) = Total Cost
WTF!? Could anyone who understands this tell me what the fk this means?
Might this explain why after Bitcoin dropping some $200 from my paper trade Stop Sell order point, that my BTC short trade was only $20 in profit? I sold 30 lots (30K worth of BTC) and was actually expecting therefore to see around $700 in profit. At this point, I noticed that FXCM had increased the spread from 25, to 65, which is fkn insane!
…and then…as my short trade was approaching it’s target. FXCM stopped trading. Like I said, this is only a demo account, but had it been a real trade, could I expect to wake up the next morning, to find my short target had been hit, and Bitcoin had bounced whilst FXCM was offline, taking out my Stop Loss order, thus turning a successful trade into a nasty financial hit?
Is this why all these cfd’s are made to advertise things like 76% of all cfd accounts lose money? Or is there something I just aint understanding here? Who in their right mind would actually trade under these conditions?
Pricing structure that requires a calculus equation to estimate?
Broker moving goalposts regarding how much your exit trade is going to cost?
Broker suspending trading even though they advertise Mon-Fri 24 hours?
Had this been a real trade, I would be in knots chewing furniture…
…are there any good cfd alternatives where the rules are made clear and the goalposts don’t shift, or do I need to find some other trading outlet?