The Dangers of Contra Trading in Stocks — Most People Don't Realise Brokers Actually "Win Big Every Time You Active Trade"
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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Many people don''t realise that the dangers of contra trading in stocks come from hidden costs and time pressure. It looks easy: buy today, sell before T+2 or T+3. But what happens when the price doesn''t move according to plan? The broker still collects fees and charges, while the trader bears the risk of capital, emotions, and margin calls.
Contra trading was not designed to help investors, but to help brokers generate more profits.
Let me explain from the beginning.
Contra means you buy shares without paying in full, and you must sell them back within 3 working days (T+3) before you are required to pay the full share price.
If the stock price rises within that period — you can sell quickly and take profit without putting up a large capital outlay.
But if the price falls — you still have to bear the loss using your own money.
On Bursa Malaysia, the contra facility is a short-term credit facility provided by brokers for active investors.
It allows you to make more transactions without needing to prepare full capital every time you buy shares.
Typically:
If you don''t manage to sell in time, the broker will force sell your shares.
Your account must be active and eligible for margin credit.
The credit limit is set by the broker (e.g. RM5,000 – RM100,000).
All transactions must be settled within T+3 working days.
1. You buy shares using broker credit.
2. Hold the position for a maximum of 3 days.
3. If the price goes up, sell quickly and take profit — you get a contra gain.
4. If the price doesn''t go up, the broker will force sell before or on T+3.
5. If you incur a loss, you must pay back the loss to the broker — that''s your contra loss.
Many think the loss is simply "capital gone". But in contra trading, you actually owe money to the broker.
When the stock price falls and a force sell is executed:
If you still don''t pay:
Long-term consequences:
Your name could be blacklisted, your CDS account suspended, and it becomes difficult to open an account with any other broker afterwards.
This is the part most people don''t know — and brokers rarely explain openly.
1. Every transaction = brokerage fee.
The more you buy and sell in a short time, the more fees the broker earns (typically 0.1% – 0.6% per trade).
2. Contra players are the active type — buy in the morning, sell in the afternoon, buy again tomorrow.
In a month, it could be dozens of transactions, and some who "revenge trade" can rack up hundreds of transactions.
For brokers, these are the "golden clients" because high volume = high brokerage.
3. Even when you lose, the broker still wins. They still collect brokerage from your buy and sell transactions. The broker doesn''t bear market losses — they only collect transaction fees and credit interest if there are outstanding balances.
4. The contra system also helps brokers increase daily Bursa turnover, which is important for the brokerage firm''s image among large investors.
In conclusion:
Contra traders are the most consistent source of income for brokers — even if the trader themselves is losing money. This isn''t limited to stocks either; those familiar with FX trading know that the ones who profit the most are the broker''s introducers.
You don''t truly own the shares — you''re merely "borrowing" to trade.
When the price falls, the broker can force sell at any time without your permission.
You only have 3 working days for the stock to rise. If the market is sluggish, don''t even hope for it — things get worse.
If it doesn''t work out, you''re forced to sell at a loss.
This isn''t investing — this is racing against time and emotions.
You can''t think calmly because time is very limited.
Every moment you feel like checking the price. Eventually, decisions are made not based on strategy, but driven by emotions of fear and greed.
If you don''t manage to sell in time, the broker''s system will force sell your shares at market price — which is devastating when the price is already falling.
You lose twice: not only are you force sold at a low price, but you still have to pay the transaction costs going back and forth.
If the loss is too large and the proceeds from "paid share" sales aren''t enough to cover it, the broker will demand the balance. If you don''t pay — your account gets frozen, you get blacklisted, or you get sued.
Contra is not a "casual game" — it is real credit.
The Malaysian market moves slowly, not like the US market.
Volatility is extremely low and volume is minimal, making it difficult to get significant price movement within 3 days.
Most contra players end up trapped in repeated small losses.
Playing contra only makes you panic-prone, not a wise investor.
You don''t learn to read charts, don''t understand fundamentals, and don''t train yourself with patience.
Eventually, you develop bad habits — "rushing to chase prices, while forgetting about risks".
Playing contra may look easy — buying is certainly easy, but selling is where it gets difficult.
But the reality is, it is a product that makes brokers profit even when clients lose.
If you want to build real wealth through stocks:
Understand technical and fundamental analysis first, not short-term credit shortcuts.
In stocks, knowledge that takes time to yield results — that is the most valuable.
At Mahersaham, we do not encourage contra trading, and in any case, Islamic cash upfront accounts do not allow it. We train beginners — and not just beginners, but experienced traders and investors too — from Zero to Hero using proper techniques and controlled risk.
All of this is provided in our Mahersaham Gold Package. A complete package for beginners, featuring not only basic-level learning modules but also advanced techniques.
Join the Mahersaham Gold Package here: /akauncds
Contra trading means buying shares without paying in full and selling them back within 3 working days (T+3) before full payment is required. If the price rises, you can take profit without putting up large capital. However, if the price falls, you still have to bear the loss from your own funds.
If you fail to pay contra losses, your trading account will be frozen, money in your account will be deducted directly to cover losses, and your paid shares may be force sold. In severe cases, you could be blacklisted by the broker''s internal system, your CDS account suspended, and the broker may take legal action to recover the debt.
Brokers earn brokerage fees from every transaction. Contra players tend to be highly active traders — buying and selling multiple times daily — which generates significant transaction volume. Even when the trader loses money, the broker still collects fees from both buy and sell transactions, making contra traders the most consistent source of income for brokers.
Contra trading is generally not suitable for the Malaysian market because it moves slowly compared to markets like the US. Volatility is extremely low and trading volume is minimal, making it difficult to achieve significant price movement within the 3-day contra window. Most contra players end up trapped in repeated small losses.
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Also Read:
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