Just wanted to get an advice. I’ve got 50 quantities of TESLA been holding them for long now. I remember when all 50 would cost me £20 per day now I pay £44.50 a day so in order for me to keep up my positions open it cost me £1,379.50 a month that’s £16,554 a year in current rate of -0.868404 that’s almost double in less than a month.
Is this normal? I understand this is to do with hedging becoming expensive but how much up would this rate go, it’s going up every single day and Im just worried that oneday it will cost me £200 a day to keep these positions open …
Yes and no, for most stocks to double in less than a month is not normal however this is quite normal on a stock with a lot of volatility or if the broker believes the risk level has drastically changed. The amount of interest a day is calculated using the long or short position swap rate, the rates (found in instrument details) are an internal risk management decision which are not disclosed therefore these rates could change at any moment.
I do find Trading 212 position swaps to be quite highly priced but I guess like any business they give us the rates and its our choice if we want to pay them or not.
Thank you for response. I understand that every business applies their own fees but Tesla fees starting to go up quite fast I’m worried it might get to the point where it will be no longer profitable to keep these positions open. The fact that you can no longer buy anymore quantities indicates that a lot of people keeping their poisitons with Tesla as long positions, therefore I wonder what they think of these rates?
I guess you’ve got some of Tesla positions set up as long positions?
It all comes down to how much risk trading 212 think they under through that particular stock therefore the more volatile it becomes the higher the swap interest will be, I have had this issue with other stocks whereby they are not worth holding because of the swap interest. CFD is not really made to kept for long periods of time, if there is a stock I am interested in keeping for longer periods of time I generally look to see if there is a 3x leveraged ETF (GraniteShares do a 3x long Tesla ETF) and invest through my ISA instead, this is what I have done for BP and Tesla.
Trading 212 have maximum trading quantities they give the below two reasons for this:
Underlying market conditions - which include insufficient liquidity and unfavorable trading conditions.
Control of exposure - Trading 212 manages its market risk to ensure it is not over-exposed to movements in any one particular stock.
As the TESLA price goes up so the interest to keep the positions on CFD open as long positions right? So what if the leverage goes down to 1:1 then I wouldn’t pay any interest?
Tesla current price $824.63
If Tesla goes up to $1,500.00 then I will make around £25k on these positions but the interest to keep them open as now is around £20k so it will cost me £20k over year to keep them open I’m hardly making any money for myself…
How is CFD even a good option to invest in long position?
Yesterday I paid £43.70 a day to keep these positions open. Now I have to pay £59.29 that’s £1,838 per month and £22,057 a year to keep these positions open.
I can’t say for certain as I’ve never seen this before and I’m not sure why any broker would offer 1:1 leverage! I’m sure there could be some quirk of the CFD platform that means you’d still pay a fee due to the swap price being calculated in terms of the price of the stock, even if leverage is 1:1. However, saying “1:1 leverage” is a bit strange, because at this point, you’re coming up with all the money yourself, and there is no leverage. Just buy shares.
Maybe I wasn’t too clear. The higher the value the stock, the more leverage is needed to access a single share of said stock, for the same amount of your money. The swap fee is calculated with regards the value of the stock.
You can find a description of the swap fee below from a staff member.
It’s not really. A lot of people on this forum, including myself gave up trading CFDs. It’s become too high risk for low profit margins.
I can see where you coming from as CFD for long position is just crazy waste of money I just did a quick maths and basically you hardly make any money over the year. I have £15k on CFD.
I’m better of buying shares on INVEST (25 shares of TESLA) my ISA is topped…
Thank you for your explanation,
Would it be better to put to ISA right but I have to wait until APRIL would you keep CFD open until April and then put to ISA or would you close CFD and put money to INVEST?
I used only use the CFD platform but there were recent changes to the leverage, interest rates, spread etc. that made it a very difficult platform to be profitable on. It wasn’t worth the risk for me. So I only use the invest side now.
Good question and I think that is your decision if you’re happy paying the interest fees every day. Where I live, we don’t have an ISA so I really can’t say!
Yes. Interest/swap fee/overnight fee. All the same thing.
Correct, the invest side does not have any fees. The main tax to be aware of it capital gains which is only due on profits. You also have a capital gains tax allowance. There is also a dividend withholding tax on foreign dividends which is calculated automatically for you within the T212 app.
Just checking something here, not trying to insult or offend by this (just trying to understand) but when you say long position are you refering to its actual meaning … Long position - purchase of an asset with the expectation it will increase in value vs a short position which refers to a trading technique in which an investor sells a security with plans to buy it later.
Or are you referring to a long position as an investment that you plan to buy and hold for a long time?
It almost bugs me that its currently only 1:2, when it changed from 1:5 to 1:2 I moved all my money apart from a few hundred pound over to Invest & ISA
Just to confirm: this option for dividend witholding is only for UK customers, right? I live in Belgium and I see no such option. Here I expect to pay my own transaction and dividend tax. Unless I am mistaken (?).
It is not an option. The dividend withholding tax is taken automatically in app. It is a tax from the American Inland Revenue Service for dividend income on US listed shares for non US residents.
would you keep CFD open until April and then put to ISA or would you close CFD and put money to INVEST?
