The impact of provider-specific factors on the profitability of contract for difference traders

Authors

HŘEBAČKA Viktor

Year of publication 2022
Type Article in Periodical
Magazine / Source Finance Research Letters
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web https://www.sciencedirect.com/science/article/abs/pii/S1544612321002567?via%3Dihub
Doi http://dx.doi.org/10.1016/j.frl.2021.102201
Keywords Contract for difference; Retail trading; Minimum deposit; Dealing desk; Trading profitability
Attached files
Description This paper uses statistics about profitability of the provider's clients to examine whether the providers have an impact on the profitability of retail CFD traders. Using OLS method and estimated nonparametric confidence intervals, the influence of three provider-specific factors were tested: height of minimum deposit, height of transaction costs, and ability of the provider to trade on its own account. The model was estimated both using pre-COVID-19 pandemic data and data gathered during the pandemic. Statistically significant influence of the transaction costs was observed in both periods. The influence of height of minimum deposit was significant only before the pandemic.

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