Turbos and CFDs are investment products, which an investor with a leveraged to invest in equities, indices and other underlying assets.
CFDs or Contracts for Difference are much more interesting than Turbos for the following reasons:
The offer
CFDs you have more than 7,500 underlying securities such as shares, indices, commodities and currencies. The range of Turbos, Sprinters, Speeders or Warrants is hardly as extensive and is limited by the band back to a 100 many underlying values.
The simplicity
The appropriate choice Turbo is a chore. Short or Long since you need to choose, then choose the lever (with the fixed stop-loss) ... Would you trade a Turbo on the AEX, then you should at ABN Amro Markets choose from more than 54 turbos on the AEX. Very cumbersome.
When CFD is a lot easier. You go Long or Short in the AEX (N25) and you decide how much risk you take with your investment account. With 1 click you put your order in the market through the trading platform and this for the amount you wish.
Also important, the Turbo has a fixed stop loss, you can not adjust. A CFD insert itself the stop-loss at the level you wish.
The spread
The spread is the difference between the Bid and Ask or sale and the sale price. The spread in turbos is the band around a lot higher than with a CFD. We take the AEX as an example.
In the left screenshot shows the Turbo offering on the AEX index on May 11, 2009. Click on image to enlarge. We take the 2nd Turbo with stop loss at 250 and lever 13. (With CFDs you can go to lever 100 on the AEX.). The bid-ask price is 1.58 to 1.59 or a spread of 0.63%.
In the left screenshot shows the CFD on the AEX index on May 11, 2009. Click on image to enlarge.
The bid-ask price is 257.4 to 257.6 or a spread of 0.077% or 9 times less than the Turbo.
The market maker
The bid and ask prices on Turbo's are "looked after" by market makers. They publish bid and ask prices. For CFDs on shares proceed WH SelfInvest the prices of the share on the market. More transparent is not possible. Note: some CFD brokers such Saxobank or Keytrade Pro (distributor Saxob ank) in Belgium adapt itself to a spread on stock prices in order to obtain a CFD course.
Liquidity
The liquidity of Turbos has boundaries. The liquidity is indeed provided by the market maker. For CFDs, the liquidity provided by the market itself. CFD brokers often open the CFD position in the stock market itself. The liquidity is not a problem.
Negotiability
This is an important problem in Turbo. A Turbo quoted on Euronext since. Suppose you have a Turbo on Google stock in the U.S. record. At 21h Google stock falls sharply. You can not close your position because ... Turbo your Google listed on a European stock exchange, which is closed.
With CFDs you have this problem. The liquidity is the same as the underlying stock. In the above example, you can keep up to 22h in the evening your CFD position on Google closing or opening or stopping places.
Transaction costs and exchange fees
Turbos buy and sell through a traditional online broker. Turbos are listed securities. You pay so as a Belgian stock exchange tax on these transactions.
On a CFD you do not pay fair tax because the transaction outside the market place. Also, the costs are a lot lower. The band around the costs are about 60% lower.
24h act in an index?
Off Turbos, or through CFDs, more info.
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