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

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  • Hřebačka, Viktor

Abstract

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.

Suggested Citation

  • Hřebačka, Viktor, 2022. "The impact of provider-specific factors on the profitability of contract for difference traders," Finance Research Letters, Elsevier, vol. 45(C).
    • Handle: RePEc:eee:finlet:v:45:y:2022:i:c:s1544612321002567
    DOI: 10.1016/j.frl.2021.102201
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    References listed on IDEAS

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    More about this item

    Keywords

    Contract for difference; Retail trading; Minimum deposit; Dealing desk; Trading profitability;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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