Contracts for Difference Roundtable

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Contracts for difference and CFD Trading

Contracts for difference have hugely increased freedom, flexibility and opportunity for the individual trader. But many more could benefit from the advantages that CFDs offer. Shares' David Jones and a panel of experts who work in the field discuss the exciting possibilities now open to you

David Jones, Shares: Contracts for difference have really exploded over the past four or five years. But for the benefit of some of our readers who may not be too sure what a CFD is, can you define it?

Nick Sparkes, GNI touch: I think the term CFD was invented by a politician just to confuse people. If we could wind back the clock, I would call them something like 'synthetic stock contracts', because that's effectively what CFDs are.

If a client wants to buy say, Vodafone CFDs, we go to the real market and buy the stock on behalf of that client. The stock is then held in a GNI holding account. Clients avoid paying stamp duty, because they do not hold the physical stock, and as CFDs have become so popular the commission levels have reduced dramatically.

Effectively there is very little difference between a CFD and the stock itself, apart from the fact that the voting rights are held by the company that holds the contract. Any movement in the underlying stock, up or down, will affect the client in exactly the same way as it would if he or she held the underlying stock. The ability to short the stock is an added bonus of CFDs.

Zak Mir, Blue Index: I think Nick's right when he suggests the name 'synthetic stock contracts' - we really believe CFDs will make further inroads into the traditional stockbroking business. If you can deal in CFDs with the right costs, the right firm and in the right direction a decent percentage of the time, it is the best tool to trade with by some way.

Tom Hougaard, City Index: We explain it as an agreement between two parties to exchange the difference between the opening price and the closing price in the contract traded. One party is City Index, the other party the client. The traded price is the current market price, with the actual market spread at the current time of the trade. In other words the client simply makes or loses the difference between the opening price and the closing price.

Jones: So as far as we are concerned as end users, it does exactly the same job as a share price with some added benefits.

Managing the risk of trading CFDs

Jones: There is still a reluctance among a lot of people to get involved with CFDs because they perceive them as risky, as being for gamblers. Why would I, as a private investor who has bought and sold shares over the years, start looking at CFDs, either side by side with my traditional share dealing or instead in certain cases?

Geoff Langham, CMC: There are some immediate benefits. It's just as easy to go short as to go long - there are no concerns about borrowing stock and the costs associated with that. With us there is no commission to pay, which I think is an extremely powerful argument and one that's not possible if you're dealing on the exchange.

Tom Hougaard, City Index: Many people prefer CFDs over traditional share trading: they realise that they gain the same kind of exposure in the market at a much smaller cost. This is much like buying a house where you only put down a marginal amount to control a much largern stake. That is a huge advantage to the active trader and investor who may be trading in and out of shares 50 to 60 times a year.

Jones: People don't have to go mad with leverage, they can use it in their favour - they can still have the same-size positions and put the rest of the money somewhere else.

How does shorting CFDs work?

Jones: How does shorting work? We know it's a way of profiting from a falling share price but how hard is it to do with CFDs?

Nick Sparkes, GNI touch: A lot of people misunderstand shorting. They think it's something strange. The way I explain it is this: say you wanted to buy a second-hand BMW and I said: 'Give me £20,000 and I'll sell you one'. I don't have the BMW but I might think 'I can buy one of those for £18,000 round the corner because I think I spotted one like that'. So I've shorted you a BMW.

Effectively shorting stock is the same thing. You want to make money out of the stock moving down, so you short it first. At some point in the not too distant future you're likely to buy that back.

One of the misunderstandings that a lot of clients have when they start trading CFDs is that there is a limited period of time you can stay short. That is not the case. There is a very remote possibility that the short stock that has been borrowed is recalled but in the five years I've been in this business I have never had to make a single phone call to a client to say, 'Your short position has been called in and we've got to close it out.'

Jones: We're all used to buying at £1 and selling at £1.50 - it's just buying and selling in reverse.

One of the misunderstandings that a lot of clients have when they start trading CFDs is that there is a limited period of time you can stay short. That is not the case.

Derivatives and the stock market

Jones: There's been a discussion in Shares over the past few months in which some people think derivative products like CFDs, are damaging the stock market and harming the private investor. In my opinion that's a misguided view but do you think there's any merit in it?

Zak Mir, Blue Index: Say you've bought Sainsbury at £2.50 and every hedge fund in town starts buying CFDs. The shares then go up to £2.90 whereas maybe 10 years ago, when things weren't so geared up, there would only have been a small advantage. You'd be quite happy about the effect of derivatives on the market.

These days markets move much more than they used to. They are more difficult but if you get it right you have greater rewards. If you get it wrong, hopefully you have a stop loss in and won't be hurt too much.

Tom Hougaard, City Index: Some people like to blame CFDs for increasing volatility in the market. While it may be true in cases where hedge funds have shown a particular interest in one select stock, it is generally not the case. More shares have become available because big pension funds managers are making their stock positions available to the market in what we call 'stock lending'. If someone is going short a stock, say AstraZeneca, in reality they are borrowing that stock from somewhere and selling it to the real market. They are selling something physical - they just promise to buy it back at some point when the fund manager wants the stock back. The more shares available on the market, the more it will tend to create a much more prompt equilibrium between buyers and sellers.

Nick Sparkes, GNI touch: You get a lot of spikes in certain stocks but with the introduction of CFDs over the past three to five years, the bigger price moves are not there any longer.

When I started, little stocks would blip up and down - they'd miss out pennies and they'd miss out 3p or 5p. Now they don't miss out anything because there are so many other people looking at them, so may private CFD traders.

Tom Hougaard, City Index: Because a CFD is a derivative, people associate it with S&P 500 futures or pork belly futures where you can increase the amount of open interest in the market. But we can't do that with a CFD because it will always be bound against the physical holding. The only thing we're doing is attracting back into the market stocks that would otherwise have been tied up in pension funds and institutional funds.

Jones: There is a lot of rubbish talked about shorting. Some people think it helped the bear market on its way down - and maybe it did but it wasn't responsible for the market sliding. We did have a bubble in stock markets that popped in early 2000.

Tom Hougaard, City Index: I should point out that even in countries where shorting is illegal it did not prevent the market from collapsing. The Hong Kong market is a classical example of that.

Jones: So is shorting a good thing for the man in the street to have at his disposal?

Geoff Langham, CMC: Absolutely. I think it's a good thing for all to have at their disposal - to be able to make up their own minds whether a stock should go up or to go down, and to be able to act on that belief, either long or short, with equal efficiency. There's no reason why stocks have to go up. If a company is underperforming, its share price should not go up nor stay the same, it should go down. Twenty years ago, it was very difficult to act on the idea of a stock going down. Nowadays with a CFD it's simple.

CFD Margins

Zak Mir, Blue Index: When you are trading on margin, you are essentially borrowing money equivalent to the consideration you're trading in. A few weeks ago, my father was trading in Amec. The shares went up 10p and he made £100, because he was just buying the physical shares. Even though he'd got it right he wasn't able to make a decent amount of money but if he'd bought a CFD he could have made five or 10 times that amount.

Tom Hougaard, City Index: A good example is if you buy £15,000 worth of physical stock. It goes up to £20,000 worth and you've made 33.3%. But if you are trading through a CFD you are trading with 10% margin so the £15,000 that you just bought will only cost you £1,500, which is frozen in collateral. It goes up to £20,000 and you've made £5,000 profit against an initial outlay of £1,500. So in reality you've returned 333% on your initial capital.

Nick Sparkes, GNI touch: 10-times gearing is the standard but there are people out there offering 20 times. To be honest, 10 times is about where you want to be.

We used to only allow our clients to use half their margin on any one stock, for the obvious reason that there is then less risk of being wiped out. Let's say you've got someone with £100,000 who buys £1 million worth of one stock which just happens to have a profit warning. The guy will have a serious loss on his hands.

Jones: But as a rule of thumb, margin used sensibly is a good thing?

Geoff Langham, CMC: I agree with that and you have to let the clients set their own risk parameters. With CMC you have 20 times leverage available, although clearly you can set your own level, be it 10 or five times. The generous margin facility is there should you choose to use it. We have many tools to help people do that, such as guaranteed stops or limits or normal stops, plus being able to access their accounts 24 hours a day, either on the system or over the telephone.

Zak Mir, Blue Index: We allow clients to choose whether they require 10 or 20 times leverage. 10 times is sufficient for most traders.

Jones: We've talked about shares mainly so far. What else can I trade CFDs on?

Zak Mir, Blue Index: Almost everything - commodities, indices, sectors. it's a very wide range.

Jones: A lot of people think, 'If I'm going to trade CFDs I need to be in front of my screen 10 hours a day, jumping in and out of Vodafone 150 times a day.' I'm sure there are people who trade that way, but how do you see your clients trading CFDs?

Geoff Langham, CMC: There is a wide variety of clients, not just from the UK but from all over the world. Our clients are diversified, representing a broad spectrum of experience and countries. Quite a number trade frequently and with the commission free it makes it very affordable to trade often. We also have a number who trade more on a weekly or monthly term or longer.

It also depends on what instrument you're trading in. Some are more applicable to shortterm trading while other instruments are more applicable to longer-term position-taking.

Zak Mir, Blue Index: We specialise in the advisory area - I advise on a technical basis normally on an hourly or daily charge. Most of the trades are what people know as 'swing trades' - the sort where you're in there for a couple of days, buying or selling ahead of results, with a 2% or 3% stop loss and hopefully 5%-plus profits. Most people prefer that approach, especially those who have a day job, rather than sitting at a screen watching the share price.

Nick Sparkes, GNI touch: We have a really broad spectrum. A lot of our income does come from people who are doing it professionally. You call these people day traders but actually there's more to it than that. Day trading gives the impression of some young person who's just jumping in and out of stocks hell for leather throughout the day. These people are experienced, know what they're doing, know the risk, and know the fundamentals behind the stocks. They know how to research and about technical analysis and they do it for a living.

Four years ago most CFD clients we had were on the long side. It's only in the last two or three years that clients have decided there's no greater risk from the short side.

Jones: If I'm trading CFDs, I am not actually owning the shares, I'm basically trading with my CFD broker. So if I go long, say, 1,000 CFDs in Vodafone, is it in your interest for me to lose money?

Tom Hougaard, City Index: No. When you're trading CFDs you will pay a commission. Whenever you execute a CFD we will hedge it in the open market. We do look after our clients as much as we can by providing them with economic data, news flow and Level 2 data. We have absolutely no interest in our clients losing money - we want them to win, the more the merrier.

Nick Sparkes, GNI touch: These trades are done straight away in the market. We have no other counter parties, we never take the other side of those deals and in fact the top 20 or 30 clients we have at GNI in terms of commission payers are the same ones as two or three years ago. They are profitable to both themselves and GNI.

Jones: And the same at Blue Index and CMC - I guess they want happy, profitable clients too?

Geoff Langham, CMC: Absolutely. We rely on trading flows from thousands of clients. A profitable client is a long-lasting client.

Zak Mir, Blue Index: They take it very seriously which is why I am responsible for all our advisory trades and am available to speak to all our clients personally.

Doing business

Jones: Right, let's get on to nuts and bolts. I've opened my CFD account, I've put some money in it and I think: 'the market's rallying, George Bush in back in for four more years, I'm going to buy some Vodafone because its going to go up'. Is it as simple as saying 'I'll buy 1,000 CFDs'? Or is it a bit more complicated?

Tom Hougaard, City Index: No, it's as simple as that. We need to ask you a few questions to make sure you understand exactly what CFDs are and what margin trading means. Once this is done and your account is open, you're free to trade.

Zak Mir, Blue Index: All of our clients need to prove they have sufficient experience to trade CFDs at Blue Index. Once the account is open, you can trade via the phone or online. The dealers at Blue Index are all experienced and most have appeared in the national press - no guarantee of making money - but each dealer has a limited number of accounts to look after. In a fast market, you need to know your broker will not be tied up with another client.

Jones: I think another reason people are a bit wary of getting involved in CFDs is they think they are complicated, like covered warrants and options where you have a time premium built in and you'll buy one contract that covers so many thousand shares. It's that straightforward.

Zak Mir, Blue Index: And there's no time period by which they have to get out of that position.

Jones: That's another good point. So if we really want to, we can hold on to our CFDs for ever in most circumstances.

Tom Hougaard, City Index: I always point out to people that from a price point of view you can't tell the difference between a CFD and the underlying share. You won't find two kinds of Vodafone to trade with one being the physical share and the other the CFD.

Jones: Let's say I've got my Vodafone shares, I think they're going to go up and I'm planning on holding them but over the course of the next six weeks these shares are going to go ex-dividend. What happens?

Geoff Langham, CMC: If you are long the stock then you receive the dividends on CFDs and if you short the stock then you pay the dividends. The price the following day will adjust for the price of that dividend as it will in the underlying market. There's nothing more to it than that.

Nick Sparkes, GNI touch: You can expand that to corporate actions too - it's generally the same whether you're holding the CFDs or the shares, except for the voting rights.

Jones: So if for example there was a 10-for-one share split and it went from £2 to 20p, you would have more CFDs.

Tom Hougaard, City Index: And the same applies to rights issues as well.

Jones: The mechanics of it sound straight forward enough. As far as clients are concerned, it's the same to all intents and purposes as buying the real shares but with extra advantages.

The mechanics of it sound straight forward enough. As far as clients are concerned, it's the same to all intents and purposes as buying the real shares but with extra advantages

Now I want to choose which company to trade through. There are companies which charge commission to trade and there are those which don't. What are the pros and cons of both approaches?

Nick Sparkes, GNI touch: At GNI, we give our clients direct market access and effectively they are up there with all the institutions putting their own prices into the real market. For that sort of privilege we charge a commission which is a percentage of the underlying transaction.

Beware of the spread. The person who is doing the deal for you has to make a living - we're not there for free, so check the spreads out.

Tom Hougaard, City Index: City Index charges a small commission on our CFD trading. We have an award-winning trading platform that allows our clients to execute their trades instantly. Many of our competitors don't have this 'instant execution' facility, which means their clients often don't get the prices they saw on the screen. In other words, the low dealing charges or even free trading can mean a worse execution price than elsewhere.

Another two very important points that potential CFD traders should consider when weighing up the pros and cons of the various CFD providers are price execution and,'segregated funds'. When you sign up as an 'expert user', as you do with many of our competitors, you waive the right to get the best possible price in the market and on top of that your funds are no longer held in segregated accounts. That is not the case with City Index, which lets the clients execute their trades at the open-market price without giving you an 'alternative' price, also known as a 're-quote'.

Traders and investors should also look carefully at how much the CFD provider charges in overnight funding as this varies from company to company.

We also have Level 2 data for those people who are more active, plus a very advanced charting package, all free of charge.

Geoff Langham, CMC: As the name suggests, at deal4free.com, which is owned by CMC, we don't charge commission on CFDs or spread betting. I invite anyone to come on to our website, sign up and view our spreads - they are the same as those offered in the underlying market.

Tom Hougaard, City Index: If you execute at the market and you don't charge commission, how do you make money?

Geoff Langham, CMC: We count on the spread, as small as it is, to provide some income. We also aggregate our trades and risks - match them off one customer against another, one sector against another, one country against another, and use a portfolio hedging strategy which relies on options and futures trades that are ultimately cheaper to deal in than shares are with a broker.

Zak Mir, Blue Index: Blue Index does charge commission. The difference with us is that we advise you on what to buy and sell and how to survive in the market. There's no point trading with a minuscule spread and great prices if you do not know when to click the buy and sell button, and our aim really is to help people make money.

Nick Sparkes, GNI touch: That's exactly what we do - there's a group of people on the desk at GNI who are brokers and advise clients. We've got on average 15 years' experience per person.

Jones: From the user's point of view, there is no law against having three or four CFD accounts, so I think the answer is to try everybody and find a provider who suits your style of trading.

Make it easy for yourself

Jones: Let's move on to controlling risk. Our client now fancies the idea of using CFDs but the leverage thing together with the market volatility we've seen over the past few years is a little bit scary. He doesn't really want to sit stuck to the screen all day watching all the numbers flash. Is there a way you can make his life easier?

Zak Mir, Blue Index: What I do at Blue Index is come up with buy and sell recommendations every day. I choose the stocks I think represent a good cross-section of the market. If people don't like a stock or are worried about it moving too much against them, I will choose a stock that is not too volatile. For instance, I might suggest they buy Lloyds rather than Barclays if they think the banking sector is going up, or buy the sector itself. It's that sort of tailor-made approach.

Jones: Do your clients trade on their own initiative at all?

Zak Mir, Blue Index: They might say 'I think Lloyds is a sell' and I'll say 'actually I think it's a buy'. They can come up with their own conclusions. But I always have on-tap recommendations for the day which people can choose.

Jones: But if I wanted to buy Vodafone.

Zak Mir, Blue Index: You are perfectly entitled to and I wish you good luck.

Jones: And if I want to buy it for 2p less than it's currently trading, can I put an order in and it just happens?

Zak Mir, Blue Index: Yes.

Jones: Is it similar at GNI - can I do limit orders where I buy if the stock goes a bit low? And stop losses?

Nick Sparkes, GNI touch: Limit orders have always been run of the mill. These are orders that are resting behind the market - buy orders lower than where the price is now or sell orders higher than where the price is. You can use stop orders but I always try and persuade our clients away from giving stop orders and to phone up their account handler or broker. Everybody has an account handler whose job it is to monitor the positions of clients and I would always advise clients to give their stop level to their account handler and ask for a phone call so they can make the decision there and then, rather than having it automated and maybe having a spiked fill.

Zak Mir, Blue Index: That's fine for some clients sitting on the ends of phones, looking at screens. But for example, BAE Systems had an SFO warning yesterday.

Nick Sparkes, GNI touch: Yes, but if you'd got the phone call you could have come to the same conclusion that I did, which was 'hang on a minute, this isn't new news'. Then you can make a decision based on why the stock has moved. You couldn't have picked a better example, because the stock has now moved back up.

Jones: The important thing to stress is that all this stuff helps minimise the risk involved with CFD trading and means you don't have to watch the screen all day. Whether it's a call from GNI or an automatic stop loss with Blue Index, there are ways of minimising the risk with CFDs.

The safety net of the guaranteed stop loss

Jones: We haven't touched on guaranteed stop losses.

Geoff Langham, CMC: These are very simple. With a typical stop order you're not guaranteed the price that you put it in at. Were the price to gap through it then you would be filled at the first available price after it has gone through. With a guaranteed stop, it doesn't matter if it gaps or not - as long as the price has been met then the price you put your stop loss order is the price you will get.

Zak Mir, Blue Index: So if I had been long on BAE Systems at 2.44 and had my stop loss at 2.39, I would have been filled at 2.39.

Geoff Langham, CMC: You would have been. You do have to pay for this privilege, which depends on the price of the stock or what the instrument is. Typically the cost to guarantee your stop is 0.52p for UK share CFDs.

Zak Mir, Blue Index: There's no way you can have guaranteed stop losses for free?

Geoff Langham, CMC: No, but it's like having an option.

Jones: Of course the flip side applies to going short - if you're worried about the stock exploding up in your face, you can limit your losses both ways round.

Nick Sparkes, GNI touch: One piece of advice I give to a lot of clients and something I've found works very well is that if a position gets to a level where you think you should be getting out, halve the position. Take half of it out and then see what happens.

Usually first of all when you start using that method you are already half way to admitting the position was wrong and you very quickly find yourself taking the other half out and saving a lot of money. It's a way of making sure you're more disciplined.

Zak Mir, Blue Index: Discipline is the one thing that separates those that make money consistently and those that don't. Our view is that anyone trading without a stop loss is putting off the inevitable.

Tom Hougaard, City Index: But we say the first cut is usually the cheapest.

Jones: The thing is, Tom, you're quite a successful high-profile trader and obviously good at what you do. Lesser mortals don't have the discipline. They buy stock at £10 and it goes to £9, £8, £7. they're still there.

Nick Sparkes, GNI touch: But if they buy it at £10 and it goes down to £9.70 and it wasn't supposed to go down and they halve the position, then if it goes to £12 like they thought all along they will still be all right. If it starts edging down again they have already halved it and will just get out and move on.

A lot of people don't like getting out of trades because they often don't have another one to get into. They think, 'Well, that was how I was going to make that £3,000 and if I get out of that and I haven't got anything else to do, how am I going to make it now?' Greed is definitely one of the reasons for people not wanting to stop themselves out.

Trading requirements and the bigger picture

Jones: How much money do I need to open an account?

Zak Mir, Blue Index: Our advisory clients normally start their accounts with anywhere from £10,000 to £500,000. I speak to clients each day with more and less than this. It's important that you have enough funds to give you flexibility but that you are not so exposed as to compromise your trading.

Tom Hougaard, City Index: £500 is generally the minimum required.

Geoff Langham, CMC: At CMC the minimum is £2,000 to open a CFD account.

Nick Sparkes, GNI touch: Our minimum is £5,000. It used to be £10,000. My personal experience is that it's easier to start with something like £20,000 to have a good chance of being successful. But £5,000 is our starting level and you'd be surprised how quickly you can turn £5,000 into £10,000 and how quickly £10,000 becomes £20,000.

Jones: Do you think the traditional stockbroking industry has had a nudge in the right direction over the past few years with all these products coming along?

Nick Sparkes, GNI touch: Totally. Some of the business we've picked up has been at the expense of the stockbrokers. Obviously a lot of the shorter-term traders would never have done that style of trading because of having to pay stamp duty and stockbrokers' fees. But I do think there are a lot of lesswealthy stockbrokers out there because they're having to compete with commission levels that they've never seen before.

Unfortunately the downside of that may be that if stockbrokers are seeing less business, they may have to streamline, which could mean the service of your stockbroker may go down rather than up even though it may be making the whole process a bit more efficient and providing more research to its clients to keep up with the likes of us.

CFD providers have leapfrogged stockbrokers. You get much more professional handling by people who are used to working in the City. I've got 17 years of experience in futures and these are the sort of people we have hired - City people who are giving an institutional type of service for privateclient money.

Geoff Langham, CMC: Companies like ours have given very good reasons for someone to change from a traditional stockbroker. If you intend to trade in shares, futures, commodities or FX on a semi-regular basis, then you should seriously consider doing it through a CFD or spread-bet provider for the reasons mentioned - that is: no stamp duty, with us no commission, margining abilities, and the ability to go short and long.

Jones: A lot of companies now offer CFDs. We could run off a big list of CFD providers out there - it has exploded since the start of the millennium. Gazing into a crystal ball, do you think they are here to stay and where do you think the industry is going over the next few years?

Tom Hougaard, City Index: City Index is one of the market leaders in white-labelling. This means we have among our clients some of the biggest stock brokers in the country, which are using our services to provide CFD trading for their own clients. I believe we will see more banks and brokers go down that avenue because it is a very cost-efficient method for them to use an existing platform and to provide a proven high-quality service to their existing client base. If they don't, I believe in time they may lose both clients and market share. CFDs are here to stay. It is a question of educating the investment public in the advantages of the instrument.

Zak Mir, Blue Index: I think this exercise shows that people still need to know a lot more about CFDs, they're not mainstream at all. Going up and down the country, there is still quite a battle to be won describing what CFDs are.

Nick Sparkes, GNI touch: As long as the stamp duty is kept out of the situation, then I do think the ratio of CFDs to stock transactions held in the original owner's name is going to change over the next five years. I don't know what the percentage is now.

Jones: I think 35% was the last figure I heard - more than a third of transactions on the LSE are CFD-driven.

Nick Sparkes, GNI touch: I would be surprised if it wasn't 50% in another couple of years and maybe 65% in five years' time. There are a number of people out there who will be kicking themselves that they haven't been aware of CFDs. There are potential new clients out there for all of us who do not know about CFDs. Having said that, CFDs are not for people who have just decided they want to open an account and invest. That's not what CFDs or spread betting are about. It's not about investing, it is about geared trading. Some people would term it gambling, I wouldn't. The other thing is that as people get more professional and more knowledgeable about what is available, they will start to move on to other things such as covered warrants and even higher gearing with options. And finally...

Jones: To wrap up, why in a couple of sentences should people consider trading CFDs through your firms?

Tom Hougaard, City Index: People should trade CFDs with City Index because we have some of the lowest, if not the lowest, commission rates in the industry. We provide a state-of-the-art trading platform with instant execution in a size that fits you. We offer Level 2 data free of charge, which in itself would otherwise cost you £30 to £50 a month. We offer a state-of-the-art charting package which can pretty much chart you anything in the world. And it's not just stocks that we offer. We also offer indices, commodities, even FX, and always on a maximum margin of 10% with FX at 2%.

Geoff Langham, CMC: At CMC we also have a very strong software offering, professional charting, news, a pricing of 1,500 products on a real-time basis plus all the back-office reports. We are commission-free, our financing rates are very competitive, our margin rates are 1% for FX and 5% for shares. I invite you to compare these features with our competitors and make your own choice.

Zak Mir, Blue Index: We believe Blue Index can help our clients make money, as simple as that. I think the relationship you have with your broker is as key to making money as commission, margin and strategy. I believe we offer clients the best chance of making money through our independent and unbiased advisory service.

Nick Sparkes, GNI touch: We've got cheap commissions plus the charting packages and analysis. But I think the edge we have is the experience you will get at GNI through having an account handler with the market experience you won't get anywhere else.

There are many pitfalls when you're trading geared products that your account handler can make you aware of. If you don't have that sort of hand holding in the initial stages, then I think every now and then one of the pitfalls will trap you. Also, we do give out market advice, we do point out charting levels - all things that I think our clients like.

 The CFDs discussion continues here...