# ASX Minis



## Fab (10 September 2007)

Hi,

I just received an email from ABN Amro explaining their new Mini "CFD". I have been traing warrants for few years and I have never been really interested in CFDs because of the large downside risk I can see in it.
Nevertheless  minis sounds much more interesting as the downside is limited to what you invest. The interest on a long or short is 300 pts above the cash rate and there is an automatic stop loss and not time component .
Also the mini follows the underlying share price.

I am wondering if someone who has traded minis in the past could explain me what are the advantage and disadvantages of these products compared to for example warrants or CFDs.

Cheers


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## kerosam (30 October 2007)

anyone started using them, successfully or unsuccessfully, yet? i'm reading a bit on them... half way thru... might start trying them instead of CFDs.


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## Fab (12 November 2007)

I am using ABN Amro minis.They are a very good leverage product to my knowledge with the secuirty of never losing more than what you invest in them.
Only ABN Amro issue them and they come with a stop loss guaranted that change every day. By the way could anyone post the link to abn amro mini website where stop loss are updated daily.
Also I would be interested to know if you loose all your money when the stop loss is reached ??

Beside that my experience is that a lot of money can be made but also can be lost very quickly.


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## josh_in_a_box (12 November 2007)

Very intersting indeed, might have to do some homework on the matter. yay homework!


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## GreatPig (8 June 2008)

Any updates on this?

Can anyone using the ABN Amro Minis offer any information on how they've been finding them, especially compared to CFDs if they're used those as well?

Any particular problems or issues to watch out for (other than the normal trading risks as outlined in the PDS)? In particular, do ABN Amro act as an MM so that there's always reasonable liquidity, and if so, do they have a tendency like other warrant providers (I think including themselves) to disappear from the bid/offer screen at critical times, like when a stock has made a sudden large move and holders might be keen to take a quick profit? And are their spreads reasonable?

Thanks.

GP


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## bv2726 (25 June 2008)

I have been using ABN Amro Minis for quite a while - they are good and yes, the losses are limited, like warrants. You cannot lose more $ than the amount of minis you buy.

They have automatic stop losses built in, and because there is a direct relationship with the price of the share, the stop loss kicks in as soon as the threshold is crossed. (Which is good and bad). When the mini does trigger its stop loss, you can either sell them back to ABN Amro on market at 2pm the next day (for 24 hours) or wait 10 days and ABN will automatically buy them back and send you a cheque.  You will only get the value of the mini that it was worth when the stop loss was triggered.

ABN do provide liquidity - directly related to the amount of shares (buy or sell) on offer. So the liquidity of a mini is the same as the liquidity of the underlying share...maybe thats why they only offer minis on a limited number of shares.

One thing though, that I dont understand is the 20 cent difference between the buy and sell price of the minis. At least 20 cents. It wasnt there about a week ago - the buy and sell of the mini would be one cent apart if the price difference in the buy and sell of the share was 1 cent.

Now (on things like the big four banks) there is 1 cent difference in the buy and sell of the share, but there still seems to be more than 20 cents buy sell difference in the mini...I dont understand why, I am sure this was not the case before. 

Anyone else know?


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## bv2726 (27 June 2008)

*ABN Amro Minis - XJO Market Maker*

I just have to tell my story for today. The market is ugly - things are crashing everywhere...the XJO is down massively etc etc etc.

I connected early, expecting to watch (and maybe do a quick trade) on some ABN Amro Minis - particularly the XJO ones.  I thought I would do a quick put, knowing that that market would drop massively in the first few minutes.

I tried to watch - no market for any of the XJO minis. Nothing. No buy or sell. After 10 minutes of me thinking that there was something wrong with my software...(and checking other websites), i rang ABN Amros helpdesk.
(1 800 450 005)

I told them - the girl transferred me to a guy, who said words along the lines of "oh yes, you are right....try again now, it should be there". I did a refresh, and there was the buy and sell.

Then he said "thanks for letting us know".

Err...is it just me? Aren't we using real money to buy and sell here? Does the market maker for ABN Amro consist of a guy clicking a mouse button in the morning...and if he has a coffee and forgets...then there is no market and no one can buy and sell??? 

I was stumped. Anyone else think this is strange????


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## Trembling Hand (27 June 2008)

*Re: ABN Amro Minis - XJO Market Maker*



bv2726 said:


> I was stumped. Anyone else think this is strange????




Nope all these systems are automated. Some times they freeze. If they couldn't be automated they would not have them. Desk jockeys cost to much. Especially if you have to have a manual Market Maker for every instrument you offer.


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## Fab (27 June 2008)

bv2726 said:


> Now (on things like the big four banks) there is 1 cent difference in the buy and sell of the share, but there still seems to be more than 20 cents buy sell difference in the mini...I dont understand why, I am sure this was not the case before.
> Anyone else know?




I just talked to ABN Amro about spread of 20 cents on their Minis. They mentioned that normally it should be 2 cents but they had to make it 20 cents because another mini provider is not playing the game (talk to them about it so they will explain it to you - something to do with hedge buying).
My issue is that I can not do any intraday buying anymore with a spread of 20 cents also when I called them yesterday they said that they would be able to offer me a better deal if I call them and place my order on the phone (8 cents better I was told) this sounds very dodgy to me. How can they change the spread like that ?
Can anyone explain ? Don't they have an obligation to keep the spread to 2 cents ? If I invest $50 000 on a mini I want to know that ABN Amro is not going to change the rule during the time my investment is in the market.


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## Trembling Hand (27 June 2008)

Come on guys!! Just don't use this crap. Use Futures or Margined shares the rest is a licence for the market makers to rip off the desperate.


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## Fab (27 June 2008)

Trembling Hand said:


> Come on guys!! Just don't use this crap. Use Futures or Margined shares the rest is a licence for the market makers to rip off the desperate.




Not sure that I agree with that. It is still regulated and market makers should not be allow to do whatever they want. Who can I contact to report this ?


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## Timmy (27 June 2008)

Hi Fab, unfortunately if you check the PDS, or disclosure, or the contract, or whatever it is you signed it basically says (when you strip away the legalities) "we can do whatever we want (to you)"....  Maybe I am being too cynical...You can complain initially to the firm, there should be some dispute resolution process in place, well actually there most certainly is.  The overseeing authority is initially FICS (Financial Industry Complaints Service) and if that doesn't resolve it, ASIC (which I think is Latin for 'joke' ... sorry there is that cynicism again).

Best thing to do if you are unhappy is move your business elsewhere.  At the end of the day trading the instruments TH suggests is the best option.


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## bv2726 (27 June 2008)

Timmy said:


> Best thing to do if you are unhappy is move your business elsewhere.  At the end of the day trading the instruments TH suggests is the best option.




I agree TH has good suggestions for other products to use - for me its a case of learning. (Still.). I understand minis...they are just like warrants, only often with more leverage and no time decay. So, I have been able to make some money from trading with them, and profit is profit, isn't it? (Ok, I have also given ABN Amro fat profit as well...). 

I am trying to learn more about futures and "margined shares" (I have a very open mind) - I might check out THs website for a beginners guide. 

Any other pointers always welcome


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## GreatPig (27 June 2008)

Trembling Hand said:


> Just don't use this crap. Use Futures or Margined shares



Are you including CFDs in "this crap" - including DMA types - or just the minis?

GP


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## Trembling Hand (27 June 2008)

GreatPig said:


> Are you including CFDs in "this crap" - including DMA types - or just the minis?
> 
> GP




DMA good.

MM Crap.


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## RazzaDazzla (25 July 2008)

hmmmm I have just read all the previous posts.

I was serisouly considering giving Mini's a go.

I have previoulsy traded ETOs and was frustrated with lack of liquidity and basically being done up the bum by market makers.

I think that their it is possible to make money using minis, but ultimately (like any warrant product) the benfit is for the the organisation issuing the warrant.

I don't like the idea of 'changing rules' on me. In regard to 1c spreads and then 20c spreads.

Anyone got any +ve minis stories?

I stumbled accross Trembling hands website (http://tremblinghandtrader.typepad.com/) I might give it a read.


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## RazzaDazzla (28 July 2008)

Trembling hand,

I have recently become a fan of your blog.

Obviously Mini's are a product from ABN Amro that will ultimately (like all warrant products) benefit the institution.

In your opinion, the only 'vessel' worth using to trade is a margin loan or futures. Is that correct?

Could you llaborate on why in your opinion mini's are no good?

Cheers
Ryan

PS Im looking forward to your next blog article THT Day Trading Course Part 2


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## Trembling Hand (28 July 2008)

RazzaDazzla said:


> In your opinion, the only 'vessel' worth using to trade is a margin loan or futures. Is that correct?
> 
> Could you llaborate on why in your opinion mini's are no good?



Anything where a Market Maker is setting the price you are going to run into problems. With the warrants it’s always a huge spread and then when you do get a good trade they will not work the price in your favour. So you have to beat the market AND the MARKET MAKER. Why make it harder for yourself?? 
Even with MM CFDs as soon as you make any decent profit they start with the requotes and make it very hard to trade.

With stocks and Futs the price you pay now is set by the "market" not some dude in an unregulated, unsupervised market whose only concern is his monthly P& L.


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## RazzaDazzla (28 July 2008)

Thanks trembling, that makes sense with regard to market makers. I had experienced this first hand with non-liquid ETOs previosly.

But Minis claim to follow stock prices exactly. So if the stock moves 50c, the mini price will move 50c. So that protects me from the evil market maker?

Obvisouly ABN Amro are profiting with the hedging etc of the underlying trades that facilitate the mini, but is their still a market maker directly affecting the mini price? i.e. they claim the mini price tracks the underlying share price cent for cent. is this correct or is it a slight untruth?

also, if you don't mind, can you epxress your view on the best bang for buck product to be exposid to some leverage on ASX stocks and indicies?

Cheers
Ryan


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## Trembling Hand (28 July 2008)

RazzaDazzla said:


> But Minis claim to follow stock prices exactly. So if the stock moves 50c, the mini price will move 50c. So that protects me from the evil market maker?
> 
> Obvisouly ABN Amro are profiting with the hedging etc of the underlying trades that facilitate the mini, but is their still a market maker directly affecting the mini price? i.e. they claim the mini price tracks the underlying share price cent for cent. is this correct or is it a slight untruth?



 if it tracks it cent for cent then where do they get their profit from?? They aren't your broker so its not there. If they hedge your postion then thats extra cost to them and no potential to make money just transfer it between you and the counter party involved in the Hedge. Where does their profit come from??

I know nothing about the mini's but I can guess they will not hedge and their spreads are large!



RazzaDazzla said:


> also, if you don't mind, can you epxress your view on the best bang for buck product to be exposid to some leverage on ASX stocks and indicies?




Why has that any relevance to a good trading instrument????????
Bang for $ is just that. Explosive!! Min Margin has no relevance to anything. 

Here's a nice one. CMC dropped their margin on ANZ a couple of weeks ago to 1%. For F!#@ sake!!!!! Need I say any more.


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## RazzaDazzla (28 July 2008)

Thanks again.

I have just looked at HVNKZA, a 2c spread appears to be the norm. This doesn't seem excesively large to me.

In regard to my question, 'best bang for buck', I was asking, in your opinion, what is the best trading instrument to gain some leverage. Obvisouly you would recommend a product that doesn't rely on market makers.

If you don't mind me asking, what products do you use to trade short term? I'm assuming you would use stocks as a long term vehicle and from your blogs etc i'm guessing futures for short term.

Why has that any relevance to a good trading instrument????????
Bang for $ is just that. Explosive!! Min Margin has no relevance to anything. 

Here's a nice one. CMC dropped their margin on ANZ a couple of weeks ago to 1%. For F!#@ sake!!!!! Need I say any more.


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