# Technical analysis of CFDs (ASX 200)



## Duffenator (21 November 2008)

Hi All,

I am a technical trader, and only trade the ASX200 using a CFD. I have had a question on my mind, that I have not been able to find an answer to. Technical analysis is based on patterns in price and volume is used to confirm these patterns. 

My Question is this: Is it possible to confirm technical patterns in an ASX200 CFD with volume?

As an aside to my main question - Would I be wrong in saying that direct market access CFD's have volume, whilst market maker CFDs do not?

I'm looking forward to hearing from you guys- cos this has been bugging me for a while


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## peter2 (21 November 2008)

*Re: Technical analysis of CFD's (ASX200)*

Perhaps your question should have been: Is it possible to confirm technical patterns in an ASX200 CFD with NO volume?

Yes, you may confirm chart patterns with other indicators eg. divergence for a reversal, MA or MA crossover to confirm trend direction, etc. 

 If you need to see the volume then a chart without volume is no help to you.
 IMO a price chart must have volume.

All CFD's have no volume as they are an unregulated instrument. There is no formal reporting mechanism to record cfd volume. (I am ignoring the ASX CFD's like everyone should.). Most cfd providers provide bid/ask's that are very similar to the underlying instrument so it is possible to use the volume of the underlying as your confirmation. You will need access to the real market to see the real volume.


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## awg (21 November 2008)

*Re: Technical analysis of CFD's (ASX200)*



Duffenator said:


> Hi All,
> 
> I am a technical trader, and only trade the ASX200 using a CFD. I have had a question on my mind, that I have not been able to find an answer to. Technical analysis is based on patterns in price and volume is used to confirm these patterns.
> 
> ...






I phoned IG markets and asked them the exact same question.

They do not provide Volume on the ASX200 Indicies.

I do not know if other data providers do or not.

I have heard from several sources that E-signal is a very good provider.

maybe you (or me) should ring them!...they cost a fair bit

I believe Trembling Hand has posted details on what he uses, maybe you could search his posts. He has stated forcefully that u need the very best data to trade such instruments.

keep us re-posted on yr results


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## glenn_r (21 November 2008)

*Re: Technical analysis of CFD's (ASX200)*

You could trade a micro contract on the real SPI, starting @ .10 of a contract which gives you $2.50 per point using Go Markets MetaTrader 4 platform with a spread of 1 and a commission of .20cents each way and you get free data with volume on a great platform.


All Index CFD's are market maker based and not DMA.


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## sails (21 November 2008)

*Re: Technical analysis of CFD's (ASX200)*

Not sure if it is of interest to you, but Bourse supply live SFE data.  Their dynamic plans are not cheap though - dynamic meaning they update as the market trades.  I used it extensively when trading SPI futures for volume, market depth (actual SPI) and other useful indicators. 

Here is a link: http://www.boursedata.com.au/products/comparisons.asp

I see here they have a free trial on this page: http://www.boursedata.com.au/products/freetrials/default.asp

I still use Bourse as a live charting package where I can get several different time frames on one page all updating dynamically.  Delayed data doesn't work for my style of trading...

While I am only a customer, Bourse do have a referral system.  If anyone is signing up for it and doesn't have anyone to refer them, send me a PM as we both get $100 cash back 

I realise there may well be cheaper options out there now which may work just as well for the SPI - but thought it worth a mention...


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## Nick Radge (21 November 2008)

*Re: Technical analysis of CFD's (ASX200)*

The CFD is on ever going to be priced off the index or the SPI (depending on the provider) so you should be using the volume on the underlying index as the proxy.


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## Duffenator (21 November 2008)

*Re: Technical analysis of CFD's (ASX200)*

So....it is not possible to get volume data for a CFD. Makes sense for marketmaker platforms particularly.

I trade the 200 index with GFT. The reason I trade it is because I got into CFDs for equities and discovered I preferred trading the index. I never really thought about actually trading the underlying market that the CFD provider is basing their index on. I suppose the only advantage of trading it with a CFD provider is, in the case of GFT, that 1 pip is $1.(and the convenience of being able to trade a range of things in the one place.)

It seems if I want volume data, I will have to go to the futures market - I find this a little intimidating. Does the price behave the same? Are there other things to learn, e.g. effect of expiration of contracts and open interest?

I trade patterns and like to have volume data to confirm, the use of other indicators is new to me and I have been trying to work out which ones are useful in confirming the patterns I am concerned with. One thing about indicators that I find a bit off putting, is that at the end of the day, they are based only on price data (in the case of indicators I can use with CFDs as there is no volume!). SO in my mind they seem to be just another way of displaying price/s. Where as volume includes another aspect which in effect shows the power of a move. For instance, wouldn't it only take one person to move the price of BHP to $2000, if only for a second, if that is what they were willing to pay for a share? Volume would show this to be caused by a small buying pressure. But without volume, you don't have that insight. (Obviously a hypothetical and improbable example).

Feel free to tell me that indicator based on price are great - I would love to be convinced


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## Duffenator (21 November 2008)

*Re: Technical analysis of CFD's (ASX200)*



Nick Radge said:


> The CFD is on ever going to be priced off the index or the SPI (depending on the provider) so you should be using the volume on the underlying index as the proxy.





Thanks Nick - that makes sense.

I trade using 1min charts during market hours - and I believe GFT base their price on the index. Where/how would I get 1min volume data for the index.

p.s. thanks for the replies everyone!


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## >Apocalypto< (22 November 2008)

*Re: Technical analysis of CFD's (ASX200)*



glenn_r said:


> You could trade a micro contract on the real SPI, starting @ .10 of a contract which gives you $2.50 per point using Go Markets MetaTrader 4 platform with a spread of 1 and a commission of .20cents each way and you get free data with volume on a great platform.




what I want to know is how the hell can Gomarkets offer that????

lowest i thought is a spi mini and the spreads and liquidity is ment to be terrible.

I am thinking is it really on the SFE or do Gomarkets make it......

cheers


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