This is notable because in the United States the form of leverage common else where, a contract for difference, is banned. Outside America it is much easier to run these kinds of bucket shops. The key is offering leverage, Kelly's formula suggests that stocks should be traded with a rather narrow band of leverage, under two in most cases. Yet these shops always offer leverage ratios more similar to forex. You would be hard pressed to convince me that ten times leverage should ever be used with equities.
Meanwhile forex markets are even worse. Leverages there in the past were over a hundred. Which explains why there is so much money to advertise forex. Shady online ad markets are filled with ads offering high leverage online only forex accounts. One can be fairly sure those shady forex accounts are nothing more than bucket shops.
In general leverage is a mistake for most investors. Yet the appeal of hitting high returns with low investment (retail investors using leverage tend to measure return with no relation to risk), mean far too many retail investors are playing with options than is safe.
IG will offer me, here in Australia, 5% margin on shares (20x leverage), 0.5% margin on forex (200x leverage), 0.5% on indices, and form 0.7-4% on commodities [1].
I set up a demo account a while back, and it's pretty impressive the amount of money you can quickly make (and lose) with CFDs. It was possible on a $30,000 capital to make (or lose) over $1000 per day.
I'm a pretty risk averse guy, and also can't be bothered doing enough market research that short term trading is a sensible idea, so I didn't end up investing any real money.
I was trading while I was still at work doing my real job, so I wasn't putting 100% of my attention to it.
3.3% daily (if you could consistently make a profit) is a very good return, think about how fast that compounds. Most savings accounts aren't even 3.3% per annum.
Meanwhile forex markets are even worse. Leverages there in the past were over a hundred. Which explains why there is so much money to advertise forex. Shady online ad markets are filled with ads offering high leverage online only forex accounts. One can be fairly sure those shady forex accounts are nothing more than bucket shops.
In general leverage is a mistake for most investors. Yet the appeal of hitting high returns with low investment (retail investors using leverage tend to measure return with no relation to risk), mean far too many retail investors are playing with options than is safe.