# The Dangers of CFDs



## Trembling Hand

Out of a morbid sense of curiosity and genuine concern for traders trying to make money out of leveraged derivatives. How have peoples CFD accounts gone through this mess. I have always suspected that most CFD traders use dodgy value at risk calculations. Like having a large amount of longs thinking if they get stopped out they will lose X amount but don’t factor in the possibility of getting hit on every holding at the same time. On days like the last three and especially today some traders who are holding longs worth 50%of their account could see the account whipped out.  No wonder the CFD Market Makers love them.


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## R0n1n

When I saw what XAO was doing yesterday(the double top) I pretty much closed all my long positions. 

The good thing is that from this mess will emerge new runners.


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## Awesomandy

I'm not sure if we will hear from those who have severely lost out. They probably can't access asf, now that they probably don't own their computers to access their internet on anymore.


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## Trembling Hand

Awesomandy said:


> I'm not sure if we will hear from those who have severely lost out. They probably can't access asf, now that they probably don't own their computers to access their internet on anymore.




LOL. I was wondering that too.


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## caleb2003

I'll give an honest perspective of my account(s) as I think there are lots of lurkers who are too proud to admit these things and as far as I'm conerned making mistakes is good for learning properly (in a perverse way)

I have 2 cfd accounts one I trade share CFDs and the other Index. 

The share acount has taken a pummeling mainly because I had Rio as a long but I closed almost every other position yesterday but kept Rio open (bit of a mistake again!), this acccount has lost around 20% value but is bordering on margin call territory so unless RIO picks up this afternoon then I'll close that out but still be in the game.

THe other account is where I've made the biggest booboo by letting an spi long trade become an investment from around 10 days ago (which I dont think will see its price near for months now) and the worst one was that I had a long on dax the other day and for some bizzare reason did not put a stop loss even though I had pledged to myself in the last week to only daytrade the markets due to the subprime issues,  only to see it suddenly down thousands, I then made the classic mistake of hoping that the good old US would help it back up but of course that didnt happen, now this account is in dire straights and at risk of being kaput, even better as I saw it break down I had enough equity to put a short on the ftse which kept me balanced but because I put a stop loss on that and it was met then that didnt help at all!!

My options on that are a: put more money in and hope the market rallies soon and doesnt turn into the biggest crash since 87.

b: Close out the positions and lose all the equity completely.


As I write this I must point out that I have fully read and studied these situations prior to embarking trading but still managed to make the mistakes on more than one occasion.

Go on, all the experienced traders can now have a good gloat at what I think will be a very common theme, but at least from my point of view I now have some good old fashioned sense smacked into my head.


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## Trembling Hand

caleb2003 said:


> Go on, all the experienced traders can now have a good gloat at what I think will be a very common theme, but at least from my point of view I now have some good old fashioned sense smacked into my head.




Thanks for your post. You will not get any gloating form me. In my 7 years of trading early on I have blown many an account. The main theme of each blow up has been denial of a trend change while being highly leveraged. That's what the CFD issuers are looking for. I know that is deadly now and trade with derivatives in a completely different way.


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## Vicked

Forgive my ignorance, what exactly is a CFD?


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## Awesomandy

caleb2003 said:


> My options on that are a: put more money in and hope the market rallies soon and doesnt turn into the biggest crash since 87.
> 
> b: Close out the positions and lose all the equity completely.




How about taking a straddle strategy? Given that we are in a period of very high volatility, the chance of everything staying in a small range and consolidate is quite low. As long as it moves quite a bit higher or lower, you should make a little bit back.


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## R0n1n

Vicked said:


> Forgive my ignorance, what exactly is a CFD?




here you go Vicked. Hope this helps.
---------------------------------------------------

*What is a CFD?*
CFD stands for Contract for Difference. A CFD is a type of derivative: the price of a CFD is derived from the value of some other asset. Often with CFDs it is based on the price of a share, but it can relate to effectively any financial instrument.
Rather than trade or exchange the asset itself, a CFD is a deal whereby two
parties agree to exchange money according to the change in value of the
underlying asset between the point at which the deal is opened and when it is
closed. One party will be a buyer (of the value of the asset), and one will be a seller. The buyer will make money (from the seller) if the asset value increases and will lose money (to the seller) if it decreases. Conversely, the seller will lose money as the price of the asset rises and make money as it falls.
Put simply, therefore, CFDs are a means to gain exposure to the change in value of a financial instrument without actually being in possession of that instrument.
When dealing CFDs with IG Markets, we act as a CFD provider, meaning that
when you choose to place a deal, we will take the other side of the transaction.
You choose whether you are a buying or selling, and this defines us as being
either the seller or the buyer in the contract.
The ins and outs of how this work will become clearer if we look at an example of using a CFD to trade a share.

*Example: buying Oxiana*
When trading shares using CFDs, the procedure and terminology are all very
similar to normal share dealing (and in many cases are exactly the same, in fact).
It is April and Oxiana is trading on the Australian Stock
Exchange at $2.81/2.82. Being bullish about the prospects
of the mining sector in general, you feel that the stock is
undervalued and that a recent sell-off in Oxiana has been
overdone.
You decide to buy 10,000 shares as a CFD. This
means that rather than physically taking ownership of the
shares, you are instead opening a contract with the provider that gives
you the same financial exposure as if you had gone out and
actually purchased the same number of shares.
The price that is quoted for shares is always the same as the
price that is trading on the stock exchange(for DMA). You therefore
open your deal at $2.82, the offer price of the shares.
Just as with a regular share transaction, a commission is charged.
IG markets standard commission for Australian shares is 0.1%.
This means that your opening commission is: 0.1/100 x 10,000
shares x $2.82 = $28.20

*Margin*
A fundamental difference between trading a CFD and physically buying and selling shares in the conventional
manner is that when trading a CFD you only need deposit a small portion of the value of the stock that you are
commanding initially. This is known as margin.

The amount of margin required varies according to the liquidity and volatility of
the underlying instrument. For Australian shares the margin requirements range
from 5% to 50% of the underlying value, depending on which share you are
dealing.
Only having to put down a fraction of the value of the stock that you are
commanding obviously makes trading easier and more convenient. It means
that you do not have to tie up as much of your funds with a trade as would
normally be the case.
Should the share price move adversely, however, you need to be able to send
further ongoing margin.
Oxiana is margined at 10%.
You are dealing in 10,000 shares at a price of $2.82. This means
that the underlying values of the shares in which you are
dealing is 10,000 x $2.82 = $28,200.
The margin of 10% is therefore just $2820.


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## Judd

"Might just drop in here the distinction between investment and punting. You all know it but you may not know this. Over many years of stockbroking, the attrition rate of clients punting (rather than hedging) in futures, forex and CFDs is very high. Vastly higher than equities and vastly higher than equity portfolio investors.

Clients constantly have to put up more money. Dealers constantly have to replenish their client base. They are great products for the tiny, tiny minority that consistently get it right and for the brokers taking commissions on high turnover hopefuls, but there is little science and a lot of luck for Joe Blow.

That stake money will disappear as surely as your TAB credit balance. It's the truth."

For what it is worth, a view from Marcus Padley in The Age of 21 July 2007.


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## krisbarry

Yes some people will wake up after this latest nightmare to discover they are in serious debt.  I continually see all these flashy brochures about CFD trading and getting continued phone call from CFD companies to sign me up.  I say no thankyou!

Only trade with what you can afford to lose.  I borrow money from a bank and stick within my credit limit.  I know if I lose all that money I can afford to easily pay it back, but when you trade at 10 times the risk, then that is just foolish.


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## zuluwarrior08

My CFD account, whilst very small (read up a bit about it in begginers lounge-alternative trading strategies) would have taken an absolute walloping today, I would have been in severe margin call...BUT...closed all Long positions 3 days ago  ive only kept 2 trades open, a short on ANZ that i erntered on tues and a short on MBL.

That said, I think ive learnt a huge lesson, many lessons in fact, and caleb2003, Ill try and take out the same lesson as you today- this market truly has smacked some sense into my head too. 
Thanks to all for your input and opinions

:


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## whitta27

i had $5100 in my cfd account on monday..
by yesterday it had risen to $6300 on the back of some big gains from CIG, SDL and a few other smaller quicker trades.
I sold a few positions on open this morning..
and my account stands at $5500.. 
so considering the weeks events i've come out allright with cash to open long possies with today depending what happens this arvo.

what do people anticipate to happen next week?

cheers whitta


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## Awesomandy

zuluwarrior08 said:


> That said, I think ive learnt a huge lesson, many lessons in fact, and caleb2003, Ill try and take out the same lesson as you today- this market truly has smacked some sense into my head too.
> Thanks to all for your input and opinions
> 
> :




Absolutely. For those who have survived and are still around after this week, this is a very good learning experience.


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## zzodr

Hi, I'm fairly new here...

Im lucky I closed my MBL position about a week ago after it gapped down and hit my stop, I must say I was tempted to adjust my stop-loss down but this is a big no no! I told myself to stick to my trading plan. 
I lost $1000, but if I had of held on for this morning, when MBL gapped down around $5 on the open 
I would have got smashed!!

I have a long CSL position open that is doing ok considering the carnage this morning... a new drug being approved was welcome news today. 

CFDs are enticing, the leverage is a tempting Mistress... but you have to have discipline.. use stop-losses and stick to them. 

Preservation of your trading capital is THE MOST important thing.
Happy trading!


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## zzodr

Having said that,

February and the China jitters did me more damage than the sub-prime mortgage stuff going on now... so I'm guess I could say I'm getting better at managing risk. Can't retire yet though!


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## jempol

CFD vs Option which one better in term of leverage?

I can't find any broker in US market run CFD...They trade option.
CFD only familiar in Australia? Forgive my ignorance..I never try CFD usually i trade option in US.


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## SevenFX

New to CFD's with IGMArkets and reasonably pleased with their platform, but their service is Generally Exceptional, esp compared to Commsec's robotic scripted operators I deal with.

Anyway If I may ask Trembling Hand.

Would it be fair to say using a standard stop loss during the day would suffice most if not all [Indexes (trading SPI)] but not necessarily shares as they can gap up/down on news.

Wheres holding overnight one would very very wise, to use a (GSL)Guaranteed Stop Loss, on either Indexes or Shares.

Been reading your posts and appreciate your contributions... in XAO analysys.

Cheers
Thanks
SevenFX


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## CFD

I think cfd's originated in the UK before spreading through Europe and then Oz.


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## porkpie324

Dangers yes, but after last nights us market drop there was a more than good chance the aus mkt would be oversold this morning, and it was.
   So some great trading oppotunities came up, IGO o/sold down to a low of $5.45 (opened pos at 5.55, 5.58 closed 5.86, 5.92). SMY sold down to $3.55 (opened pos at 3.58,3.60, 3.65, closed all at 3.80) MCR still holding.
  OK my a/c still down on last nights close but clawing my way back.
  BTW I don't trade with stops  and going by todays action it's obvious why.
  As for loosing money I can say that I've never made so much in such a short time as with CFD trading. porkpie


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## Trembling Hand

SevenFX said:


> New to CFD's with IGMArkets and reasonably pleased with their platform, but their service is Generally Exceptional, esp compared to Commsec's robotic scripted operators I deal with.
> 
> Anyway If I may ask Trembling Hand.
> 
> Would it be fair to say using a standard stop loss during the day would suffice most if not all [Indexes (trading SPI)] but not necessarly Shares as they can gap up/down on news.
> 
> Wheres holding overnight one would very very wise, to use a (GSL)Guaranteed Stop Loss, on either Indexes or Shares.
> 
> Been reading you posts and apprec your contributions... in XAO analysys.
> 
> Cheers
> Thanks
> SevenFX




yes that would be a good Idea but still the problem remains that I think most new traders use CFD positions that are way to large for there account equity. And if you have a few positions on at times like this they all go bad, result being a big draw down that's very hard to come back from.

A general rule is stop loss at no more than 2% of your total equity. If you followed that rule you should be fine. But how many do.


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## >Apocalypto<

Come on guys,

what about the dangers of trading futures the dangers of options the dangers of trading shares, dangers of spread betting.

the dangers of just trading, 

If you do not research and understand what your trading then you are the fool and you will learn the hard way. As I did when i first started on options.

1. its up to you the trader to know what your trading and how it works.

2. its up to you the trader to know what the market is doing and how it will affect you and your postions.

3. its up to you the trader to understand money managment and position sizing.

So if you were smashed today and the last two days you have to ask youself some questions as to why that happened.

there are dangers every where and in trading I have found out most of them are self inflicted!


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## jempol

When doing CFD the broker need only 5% of the value of the contract right?
Worst scenario is do not meet the margin call and cut loss right?
Can we lose more than 5% originally we invested ? Do the broker automatically closed when the trade against us?
Thanks for any views


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## SevenFX

porkpie324 said:


> OK my a/c still down on last nights close but clawing my way back.
> 
> BTW I don't trade with stops  and going by todays action it's obvious why.
> 
> As for loosing money I can say that I've never made so much in such a short time as with CFD trading. porkpie




Although it may be obvious why, can you please explain why I would expose my account to overnight Gapping in the opposite direction... with NO GSL.

I rather pay the premium (insurance) for GSL, than find I free falling down the stairs....????

Ouch that would really hurt, and if I was leveraged high even worse....????

SevenFX


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## finnsk

trembling Hand said:


> yes that would be a good Idea but still the problem remains that I think most new traders use CFD positions that are way to large for there account equity. And if you have a few positions on at times like this they all go bad, result being a big draw down that's very hard to come back from.
> 
> A general rule is stop loss at no more than 2% of your total equity. If you followed that rule you should be fine. But how many do.




I think you are spot on most dont realise what financial problems you can be in "me included" if the market goes against you I learnt the hard way in May last year was setting on 10000 long ZFX will never bye that amount of shares again, I am starting to think that it is better with more smaller positions and then add if the trend goes with you if not SELL.


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## CFD

Money Management.

Capital Risk per Trade - 2% (excluding costs)
Bank say - $10,000-
Guaranteed Stop Loss - 5%

eg
Share entry price - $10-
Stop Loss Distance - $0.50 (5%)
Trade - Risk ($10,000- x 2%) $200- / GSL Distance $0.50 = 400 shares
         - Purchase 400 x $10-        = $4000
Outlay - Margin say, 5%               =  $200-
          - GSL fee say 0.3%           =    $12-
          - Buy Commission say 0.1% =    $40-
          - Sell    "                          =    $40- + or -


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## porkpie324

Fair comment the 2 above post's. I never over extend margin wise that is I do not like to margin more than free equity, last night was the largest mark down that I have had in just over a year trading CFD's. I alway's research the companies I trade, as I mentioned before I did make up some of that loss.
As for GSL's I think the cost is more than 0.3% on share cfd's, but I will enquire about that. porkpie


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## kerosam

anyone been shorting for the past few days? i'm sure u r making a killing in the market. Monday might be a good time to short again. my picks are MBL & RIO. no reason.


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## whitta27

I think cfds are actually illegal in US - i'm reading a book on cfds and this is what it said. dyo research tho..

cheers


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## Magdoran

caleb2003 said:


> I'll give an honest perspective of my account(s) as I think there are lots of lurkers who are too proud to admit these things and as far as I'm conerned making mistakes is good for learning properly (in a perverse way)
> 
> I have 2 cfd accounts one I trade share CFDs and the other Index.
> 
> The share acount has taken a pummeling mainly because I had Rio as a long but I closed almost every other position yesterday but kept Rio open (bit of a mistake again!), this acccount has lost around 20% value but is bordering on margin call territory so unless RIO picks up this afternoon then I'll close that out but still be in the game.
> 
> THe other account is where I've made the biggest booboo by letting an spi long trade become an investment from around 10 days ago (which I dont think will see its price near for months now) and the worst one was that I had a long on dax the other day and for some bizzare reason did not put a stop loss even though I had pledged to myself in the last week to only daytrade the markets due to the subprime issues,  only to see it suddenly down thousands, I then made the classic mistake of hoping that the good old US would help it back up but of course that didnt happen, now this account is in dire straights and at risk of being kaput, even better as I saw it break down I had enough equity to put a short on the ftse which kept me balanced but because I put a stop loss on that and it was met then that didnt help at all!!
> 
> My options on that are a: put more money in and hope the market rallies soon and doesnt turn into the biggest crash since 87.
> 
> b: Close out the positions and lose all the equity completely.
> 
> 
> As I write this I must point out that I have fully read and studied these situations prior to embarking trading but still managed to make the mistakes on more than one occasion.
> 
> Go on, all the experienced traders can now have a good gloat at what I think will be a very common theme, but at least from my point of view I now have some good old fashioned sense smacked into my head.



Hello caleb2003,


No, you will probably not hear gloating from the true professionals.  Because anyone who achieves real success in the market usually has probably had their own rite of passage “baptism of fire” of their own.  Me, I did some seriously risky things and learned the hard way too – there is nothing like a significant loss as a wake up call.  The market is a ruthless teacher.

I salute your honesty and your ability to take responsibility for your actions.  These are the hallmarks of a person who is capable of becoming a very effective player in the market.  The fact you can be open and relatively objective about this is commendable, and actually a very positive attribute, more than you probably realise right now.

The question is, can you recover, and learn from your mistake, and come back to fight another day?  The long term winners are those that can dust themselves off, pick them selves up and get back up again…

What have you learned?  Can you objectively assess why this happened?  Can you perceive how important risk and reward analysis is?  Can you incorporate better methods for the future?  Can you find ways to improve your discipline?  Are you prepared to really research and learn about derivatives in depth now?

I would suggest picking up Mark Douglas’ “Trading in the Zone” and perhaps “The Disciplined Trader”, because you have probably suffered far worse damage to your trading psychology than to your bank account, than you realise.  If this goes “untreated”, you may find that your future performance will suffer unless you confront your psychology and can be sure that you can regain a level of market objectivity.

Read the Douglas book cover to cover, even if it starts to seem repetitive.  If this doesn’t help you through this, and it isn’t of benefit, then you will be an exception… 

Also, since you were using leveraged instruments please read through the derivative area and consider the range of discussion on this subject – maybe this seems a bit like closing the gate after the horse has bolted, but if you are determined to continue, you really must devote time to improving your understanding of derivatives.  To just trade CFDs without having really worked out the mechanics of a range of derivatives is in my view a serious omission, which Is not obvious until the market delivers a “body blow” when events like this unfold.

Believe me, I’ve been where you are, and I can tell you, this is the hardest game in town.  It is all roses until a significant adverse event happens that you haven’t prepared for…

You have my sympathies, best of luck.


Regards


Magdoran


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## caleb2003

Magdoran said:


> Hello caleb2003,
> 
> 
> No, you will probably not hear gloating from the true professionals.  Because anyone who achieves real success in the market usually has probably had their own rite of passage “baptism of fire” of their own.  Me, I did some seriously risky things and learned the hard way too – there is nothing like a significant loss as a wake up call.  The market is a ruthless teacher.
> 
> I salute your honesty and your ability to take responsibility for your actions.  These are the hallmarks of a person who is capable of becoming a very effective player in the market.  The fact you can be open and relatively objective about this is commendable, and actually a very positive attribute, more than you probably realise right now.
> 
> The question is, can you recover, and learn from your mistake, and come back to fight another day?  The long term winners are those that can dust themselves off, pick them selves up and get back up again…
> 
> What have you learned?  Can you objectively assess why this happened?  Can you perceive how important risk and reward analysis is?  Can you incorporate better methods for the future?  Can you find ways to improve your discipline?  Are you prepared to really research and learn about derivatives in depth now?
> 
> I would suggest picking up Mark Douglas’ “Trading in the Zone” and perhaps “The Disciplined Trader”, because you have probably suffered far worse damage to your trading psychology than to your bank account, than you realise.  If this goes “untreated”, you may find that your future performance will suffer unless you confront your psychology and can be sure that you can regain a level of market objectivity.
> 
> Read the Douglas book cover to cover, even if it starts to seem repetitive.  If this doesn’t help you through this, and it isn’t of benefit, then you will be an exception…
> 
> Also, since you were using leveraged instruments please read through the derivative area and consider the range of discussion on this subject – maybe this seems a bit like closing the gate after the horse has bolted, but if you are determined to continue, you really must devote time to improving your understanding of derivatives.  To just trade CFDs without having really worked out the mechanics of a range of derivatives is in my view a serious omission, which Is not obvious until the market delivers a “body blow” when events like this unfold.
> 
> Believe me, I’ve been where you are, and I can tell you, this is the hardest game in town.  It is all roses until a significant adverse event happens that you haven’t prepared for…
> 
> You have my sympathies, best of luck.
> 
> 
> Regards
> 
> 
> Magdoran





Thanks for your comments, I'm not out of the game and realise that if I was to give up at this juncture then it would truly be a waste of time, I'm quite happy to learn the mistakes early on and would have been very annoyed if I had been successful for a year and then lost everything, as it stands I've lost a fairly small portion of my overall equity as I wasnt foolish enough to put to much money in the accounts.

I feel a bit lonely that I'm the only one that will admit failings today when there must surely be 100s or thousands in the same boat but nobodys talking?!?

As far as my own discipline goes I will read the books mentioned, currently reading Van tharp and completed the trading game of his which quite obviously points out the flaws I had. But that was the point I made, I am fairly well read on this matter but still managed to make the mistakes!

One major thing I've done is to not concentrate enough and allow family distractions (young kids!)to get in the way at trading time, its simply too important and should require my absolute concentration at the time of trading and that was a big failing.

The main thing I'm rueing is that I saw this correction coming and fully intended to short the market at the time, I would have done very well but perhaps would have just continued the same cycles and eventually come unstuck anyway.

Cheers for the comments, very helpful


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## Awesomandy

caleb2003 said:


> I feel a bit lonely that I'm the only one that will admit failings today when there must surely be 100s or thousands in the same boat but nobodys talking?!?




By coincidence (or not), it seems that truely successful traders are not very common either, and they may also feel quite lonely sometimes (apart from having some kind of a fan base).


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## R0n1n

hey Caleb, 

don't worry I saw it coming too and although I sold off all my big positions but kept some small ones like LLC and CTX. I had taken some small positions in them. The good thing is I had only put 20% of my funds instead of 100%. 
The bad thing is I still kept these on.


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## CFD

Was that a bad thing though? You didn't know what was going to happen, you established a view of what might happen and reduced your risk accordingly.
Sounds good to me. (You can always look back and say if only I'd closed out this or if I'd sold short, but it's what you did do and what you learned from the experience that counts.)


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## yonnie

Trade_It said:


> Come on guys,
> 
> what about the dangers of trading futures the dangers of options the dangers of trading shares, dangers of spread betting.
> 
> the dangers of just trading,
> 
> If you do not research and understand what your trading then you are the fool and you will learn the hard way. As I did when i first started on options.
> 
> 1. its up to you the trader to know what your trading and how it works.
> 
> 2. its up to you the trader to know what the market is doing and how it will affect you and your postions.
> 
> 3. its up to you the trader to understand money managment and position sizing.
> 
> So if you were smashed today and the last two days you have to ask youself some questions as to why that happened.
> 
> there are dangers every where and in trading I have found out most of them are self inflicted!




what a harsh way to put it this way.

no matter how much you research and understand, once you start trading you`ll make more mistakes than you have fingers and toes.

I`m sure you have been there yourself and even now you probably make mistakes and I think it`s excellent of caring people like trembling hand to point out the dangers of leverage in cfd`s, so people can learn.
how else can they learn if trade_it  doesnt say anything and leave it to others?


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## jonojpsg

caleb2003 said:


> Thanks for your comments, I'm not out of the game and realise that if I was to give up at this juncture then it would truly be a waste of time, I'm quite happy to learn the mistakes early on and would have been very annoyed if I had been successful for a year and then lost everything, as it stands I've lost a fairly small portion of my overall equity as I wasnt foolish enough to put to much money in the accounts.
> 
> I feel a bit lonely that I'm the only one that will admit failings today when there must surely be 100s or thousands in the same boat but nobodys talking?!?
> 
> As far as my own discipline goes I will read the books mentioned, currently reading Van tharp and completed the trading game of his which quite obviously points out the flaws I had. But that was the point I made, I am fairly well read on this matter but still managed to make the mistakes!
> 
> One major thing I've done is to not concentrate enough and allow family distractions (young kids!)to get in the way at trading time, its simply too important and should require my absolute concentration at the time of trading and that was a big failing.
> 
> The main thing I'm rueing is that I saw this correction coming and fully intended to short the market at the time, I would have done very well but perhaps would have just continued the same cycles and eventually come unstuck anyway.
> 
> Cheers for the comments, very helpful




Hey Caleb2003, Good to hear the general gist of this thread is one of taking this game seriously!  I just happened to decide on Thursday to use my CFD account with IG for the first time!  Put in $500 to start with.  Not sure why given the state of the market, but I bought in to BHP at 3754 - probably thought they were near bottom and would rebound.  Only 250 CFDs as I wanted to start small and I thought this would be OK.  Set a stop loss at 3700 which I thought was OK when they closed at 3730.  

Unfortunately when they opened Friday am at 3590, little did I realise that I would get stopped out there rather than at my 3700 because I didnt use GSL!!!  So instead of losing around $135 I lost $410.  A good lesson, which I followed up by having another crack during Friday when I watched closely.  Bought 250 BHP again, this time at 3602, set stop at 3552.  Watched while they muddled upwards and gradually increased my stop to 3615.  Missed the next couple of hours action though when they hit 3650 and then faded, otherwise would have lifted to 3640 probably.  Obviously would have stopped out when they sank in the last hour but above my purchase so didn't lose.

Good way to practice.  Do you use Comsec?  Their professional trader platform helps when watching market moves.

Anyway, I am looking forward to trying to use CFDs more professionally, eg as hedges against my equities trades.  Also looking forward to more discussions here!


----------



## R0n1n

CFD said:


> Was that a bad thing though? You didn't know what was going to happen, you established a view of what might happen and reduced your risk accordingly.
> Sounds good to me. (You can always look back and say if only I'd closed out this or if I'd sold short,* but it's what you did do and what you learned from the experience that counts.*)




*CFD*, you are right. What I really learned is:

Never rely on gut feeling. 
Stick to rules, if the indicator says sell .. bloddy hell sell..lol

Above all, what saved me was Money Managment. As I had devided my funds into lots and had only taken small positions with 20% in a few stocks. The balance of 60% was yet to be put in(the last 20% is only put in if it really runs). I had already sold my bigger positions.


----------



## >Apocalypto<

yonnie said:


> what a harsh way to put it this way.
> 
> no matter how much you research and understand, once you start trading you`ll make more mistakes than you have fingers and toes.
> 
> I`m sure you have been there yourself and even now you probably make mistakes and I think it`s excellent of caring people like trembling hand to point out the dangers of leverage in cfd`s, so people can learn.
> how else can they learn if trade_it  doesnt say anything and leave it to others?





LOL,

what a laugh, hey lets get something straight, when i blew over 50% of my capital on CFD's, I did not blame anything, I said what the hell r u doing and I worked my ass off to understand why it went wrong and how to fix it.

So hate to say, its not harsh its reality. if you were over exposed and you got caught *learn from it!*

Like it or not this is not a game, its a damn business, make sure understand that business and are prepared to the best of your abilities when u start. in every business understand risk! DO YOUR HOMEWORK! Hey why dont you ask Trembeling Hand about the dangers of futures, how lovely it is to be caught in limit for a week. now thats a blast.

yonnie,

you and the others can powder coat things all you want but if any member tells me they blame the product they are trading for there loss, I will tell them they are a damn fool and to wake up. If you and other members could not see the tips and advice in my post read it again and again, till u get it cuz help and tips are there, If you chose to see it.

that's my


----------



## barney

caleb2003 said:


> Thanks for your comments, I'm not out of the game and realise that if I was to give up at this juncture then it would truly be a waste of time, I'm quite happy to learn the mistakes early on and would have been very annoyed if I had been successful for a year and then lost everything, as it stands I've lost a fairly small portion of my overall equity as I wasnt foolish enough to put to much money in the accounts.
> 
> I feel a bit lonely that I'm the only one that will admit failings today when there must surely be 100s or thousands in the same boat but nobodys talking?!?
> 
> As far as my own discipline goes I will read the books mentioned, currently reading Van tharp and completed the trading game of his which quite obviously points out the flaws I had. But that was the point I made, I am fairly well read on this matter but still managed to make the mistakes!
> 
> One major thing I've done is to not concentrate enough and allow family distractions (young kids!)to get in the way at trading time, its simply too important and should require my absolute concentration at the time of trading and that was a big failing.
> 
> The main thing I'm rueing is that I saw this correction coming and fully intended to short the market at the time, I would have done very well but perhaps would have just continued the same cycles and eventually come unstuck anyway.
> 
> Cheers for the comments, very helpful





Howdy Caleb, 

Don't worry about being the only one to get nailed a bit over the past week .... There is no doubt plenty of "us"  ............. I've learned a lot since joining ASF, and part of what I've learned to date saved me from being smashed last week (although I'm still suffering a bit   ..............  I've still got a few open positions which I have to "manage" this week, so its been a nervous weekend ................ I'm actually angry and dissappointed in myself, because I "dropped my guard" ............... I knew this was coming, but relaxed just at the wrong time, because things were going well lately.  Even when it started to unfold, instead of cutting the losses early, I decided to "get cute" and try and "predict" the market .............. Bad move!!

My point is, we all have to stay vigilant ..........  no room for complacency in trading ............... trust our judgement and stick by our rules we have formulated PRIOR to the proverbial hitting the fan, because when the crunch comes and the "pressure" is on,  as humans, we are prone to making wrong decisions (at least I am anyway)  Good luck.


Hi Magdoran, 

Good to see you still bouncing in and out with great advice as in your post above ............. "Trading in the Zone" will probably have a lot more meaning to many after last week !!  ............ I've been in this position so many times I've lost count now  ................. but I'm still here to fight another day thanks to good advice from yourself and others ........ All the best, Barney.


----------



## Trembling Hand

Trade_It said:


> LOL,
> 
> what a laugh, hey lets get something straight, when i blew over 50% of my capital on CFD's, I did not blame anything, I said what the hell r u doing and I worked my ass off to understand why it went wrong and how to fix it.
> 
> So hate to say, its not harsh its reality. if you were over exposed and you got caught *learn from it!*
> 
> Like it or not this is not a game, its a damn business, make sure understand that business and are prepared to the best of your abilities when u start. in every business understand risk! DO YOUR HOMEWORK! Hey why dont you ask Trembeling Hand about the dangers of futures, how lovely it is to be caught in limit for a week. now thats a blast.




Hey Trade_It you’re doing a lot of LOL the last couple of days.

If you read the very first post it says " I have always suspected that most CFD traders use dodgy value at risk calculations. Like having a large amount of longs thinking if they get stopped out they will lose X amount but don’t factor in the possibility of getting hit on every holding at the same time." Not to mention to large a position.

As far as other types of derivatives the same problems exist but I am yet to see someone opening up a futures account with $1000. I think most CFD traders are retail/newbies attracted to the leverage of CFDs without factoring in the true risk. That’s all this post was meant to be about. Nothing more just a heads up, to be careful as to the large hit you can take with leverage.
I think the attraction to CFDs and the way they are pushed to retails traders not yet learned as to account blowups is a big tell as to how profitable the Market Makers game is. Most Futures brokers push Money/Risk management as they make money from you surviving, *where as CFD providers make money from you losing but do not tell that to there customers. * They do not directly hedge against you they carry the risk. They make money on risk just like an insurer. Betting against newbies put the risk in their favor anything that can change that like telling people to be careful and use money management wisely cannot be a bad thing.


----------



## juiceman

Although i have, and will continue to trade cfd's, i would not recommend their use to anybody.
They have, and will continue to ruin more live's than i would care to mention!
The product is ALMOST fair, and is not the problem.
Put this instrument into unskilled hands and you can have a real problem.
This post is meant for the information of those considering there use, or been lucky so far.
Yes you have or will read the books and all the information,but you won't have respected the WORDS.
Without experience the words won't mean anything, because your smarter than most RIGHT?
The first thing to learn is why stop losses don't work on any share the spikes or gap's overnight etc etc.
There a many smaller points that will bring you unstuck every time,so unless you are prepared to spend half your life infront of your computer screen, don't trade them!
If you feel you must try them, keep your bets ( iwill call them that ) very very small, and try to enjoy your learning experience.
If you are a gambler, don't even think about IT!
PS this post has nothing to do with the current state of the market, it just prompted me to warn those that are new to the game


----------



## Magdoran

trembling Hand said:


> Hey Trade_It you’re doing a lot of LOL the last couple of days.
> 
> If you read the very first post it says " I have always suspected that most CFD traders use dodgy value at risk calculations. Like having a large amount of longs thinking if they get stopped out they will lose X amount but don’t factor in the possibility of getting hit on every holding at the same time." Not to mention to large a position.
> 
> As far as other types of derivatives the same problems exist but I am yet to see someone opening up a futures account with $1000. I think most CFD traders are retail/newbies attracted to the leverage of CFDs without factoring in the true risk. That’s all this post was meant to be about. Nothing more just a heads up, to be careful as to the large hit you can take with leverage.
> I think the attraction to CFDs and the way they are pushed to retails traders not yet learned as to account blowups is a big tell as to how profitable the Market Makers game is. Most Futures brokers push Money/Risk management as they make money from you surviving, *where as CFD providers make money from you losing but do not tell that to there customers. * They do not directly hedge against you they carry the risk. They make money on risk just like an insurer. Betting against newbies put the risk in their favor anything that can change that like telling people to be careful and use money management wisely cannot be a bad thing.



Hello trembling Hand,


While I salute your attempts to help newer traders become more aware of the risks of using leveraged instruments, and the complexity of derivatives in general, I would suggest being careful about making factually incorrect statements. 

In particular, I would caution you to be more rigorous in developing your own understanding of derivatives when you are effectively publishing information in public forums, and avoid making sweeping comments such as “They do not directly hedge against you” referring to CFD providers not hedging CFD trades their customers make.

This in fact may or may not be true depending on the policy of the CFD provider.  My understanding is that in most cases that they do hedge in the market, and different providers may buy and sell stocks, options, futures, index options and futures and a whole range of other derivative and underlying instruments in order to hedge their exposure to the market as they see fit.

Another practice they engage in is to not offer shorts on some stocks for example when they perceive a high risk to the downside (which is again skewing the “game” in their favour).

It is well known in the derivative circles on this site that I am not in favour of using CFDs as a first choice of derivative instrument.  See Post 12 in "The idiots way to options riches::


Magdoran said:


> I would argue that at their best, options should outperform CFDs hands down when it comes to risk to reward, but to do this, that the options environment needs to satisfy specific conditions, and where these conditions are not met, that other instruments including CFDs may be more appropriate, but not the other way around.  What I’m saying is, given a general choice, options should be considered above CFDs.




I take issue with the erroneous impression that you have conveyed that the risks in using options is equivalent to the risks involved with CFDs.  This is not true and is a misleading impression to convey.

While in some cases it can be true that options carry considerable risk (like selling naked options for example which leads to essentially unlimited risk positions) the maximum risk when buying options is limited to the purchase price.  This is not so with CFDs, although a guaranteed stop loss can cap the risk.

It is my contention that experienced options traders can obtain the same level or better reward to a CFD position while being exposed to significantly less risk (in some cases as low as 20 times less the exposure in optimal conditions).  Of course every option has unique characteristics, and volatility and the movement of the underlying are variables which will effect outcomes and need to be considered when making future projections. 

However, this is only possible in acceptable circumstances as outlined in the post referred to above (please read this post which outlines the case with caveats in detail). 

Yes, (unhedged) futures positions carry similar risks to CFDs although each instrument will have its unique risks and advantages and characteristics.  The point is though that experienced traders assess the risk and reward of each derivative instrument and balance this against the probability of potential outcomes for the underlying.

However, I fully agree that a lot of caution is required when using any derivative, and have for years firmly suggested that newer traders paper trade a range of derivatives for at least a year before committing vital capital, or at least trade very small positions until a full understanding is developed.  Further, I really think that a trader should be fully across a range of derivative instruments before allocating vital capital to trading using derivatives (especially options, futures and CFDs).


Regards


Magdoran


----------



## Trembling Hand

Magdoran said:


> I take issue with the erroneous impression that you have conveyed that the risks in using options is equivalent to the risks involved with CFDs.  This is not true and is a misleading impression to convey.



Completely correct, sorry I did not mean to state that. One of the great advantage options have over CFDs and Futures is the max loss being 100% if you are a buyer. I didn't mean the risks are the same with each derivative but that leverage can hit you hard when you are wrong in derivatives. Reading my post now I clearly see that was a wrong statement. 

My point about not directly hedging your cfd positions is that they are on the other side of your trades and this is a zero sum game excluding commissions. They will manage their overall market exposure but the Market makers are on the other side of your trades.


----------



## Uncle Festivus

Magdoran said:


> Hello trembling Hand,
> 
> 
> While I salute your attempts to help newer traders become more aware of the risks of using leveraged instruments, and the complexity of derivatives in general, I would suggest being careful about making factually incorrect statements.........




I think you have missed your true profession Magdoran, that bit of prose would surely impress any Judge handing down a verdict .


----------



## >Apocalypto<

trembling Hand said:


> Hey Trade_It you’re doing a lot of LOL the last couple of days.
> 
> If you read the very first post it says " I have always suspected that most CFD traders use dodgy value at risk calculations. Like having a large amount of longs thinking if they get stopped out they will lose X amount but don’t factor in the possibility of getting hit on every holding at the same time." Not to mention to large a position.
> 
> As far as other types of derivatives the same problems exist but I am yet to see someone opening up a futures account with $1000. I think most CFD traders are retail/newbies attracted to the leverage of CFDs without factoring in the true risk. That’s all this post was meant to be about. Nothing more just a heads up, to be careful as to the large hit you can take with leverage.
> I think the attraction to CFDs and the way they are pushed to retails traders not yet learned as to account blowups is a big tell as to how profitable the Market Makers game is. Most Futures brokers push Money/Risk management as they make money from you surviving, *where as CFD providers make money from you losing but do not tell that to there customers. * They do not directly hedge against you they carry the risk. They make money on risk just like an insurer. Betting against newbies put the risk in their favor anything that can change that like telling people to be careful and use money management wisely cannot be a bad thing.




The reason for the LOL's is mainly cuz I find the comments amusing, 

NOT THE FACT TRADERS HAD NASTY LOSSES THERE IS NOTHING FUNNY ABOUT THAT.

TH,

I see what your doing and by all means hat's off to you for doing it. I think on these lines, As a trader with not even two years under my belt and never have sold or bought a share in my life, I am the demographic your aiming at. so i have excellent experience fresh in my mind to reply to this thread.

I do find it a little disturbing at the mass marketing of CFD's in all the trading magazines right now. But I opened a options account with 1200$ back in September 05, I also opened a futures account with 4000US in 06. So I disagree with you there.

the main reason I have made the comments I have is due to one fact all highly leveraged products are dangerous to the new trader.

So I personally think your one sided shot at CFD's is wrong, every man and women has to do the own due dilergence and except the responsibility of there own actions. Regardless of the slick marketing.

Now from my own exprience from trying to trade long and short on options futures and CFDs.

Unless your familure with the advanced option strategies to lower your risk like Magdoran and WayneL. I view options as very risky to just buy, to profit from rising and falling prices you have time decay to worry about and no stop losses.

CFD's offer you basic protection is a stop loss and a GSL but with the required distance you have to set them at I view them as not very useful. 

There is no expiry on a CFD only roll over on the forwards. which is great as you can hold out to a degree like u can with shares. Unless your margin is reached.

You have the option to trade spot 24 hour markets and never face the risk of limit which I view as a truly scary situation to have to expirence.

One thing with CFD's which I find makes it almost imposible to win in some markets is the spreads. truly criminal but again its up to the trader to choose that market or not. I never trade markets with spreads over 5 points. 

I have traded with CMC IG and Pacific Continental. I view CMC's 3% margin on some of the top 20 as a set up to beat the market player as they know markets like rio mbl can gap up and down by 4$ and smash that tiny margin but again its up to the trader to work this out.

Forex brokers are even worse then CFD providers with changing spreads hidden & costs. IG offer a set 2 pip spread on some of their crosses on my actual forex broker they had a three point spread that rose twice in the last 2 months.

So I do agree with your message in a sense I would have liked to see you raise Thread called the dangers of leveraged products for inexperienced traders.

Good trading TH,

So again I say all traders with little to very low experience in trading CFD's or any leveraged product, please I ask you to trade small parcels (CFD's) & minis (Forex, Futures)  get to know and understand leverage, have strict money management and position sizing rules and follow them. Leverage is a great tool if used correctly, but i can tell you all with real life exprience *LEVERAGE IS A DOUBLE EDGED SWORD*


----------



## binginbarrel

I opened a CFD account with $1000 in April or something with IG Markets. 
I did this in combination with the Australian Stock Report but jumped in with my own longs and shorts before I even had the chance to go over their Capital Management Model, which suggests buys and stops.

I like the Guaranteed Stop you can take with IG.  With E*Trade I had $10,000 worth of MPO at 10cents back just before the last correction. Overnight they dropped through my stop and sold to give me back $8K, which turned me off Molopo. Had this not triggered I would be $20k up. That was the first and last time I`ve used a stop with ordinary shares.

Now I have gained more knowledge in the CFD area I will top up the account and run it as I run the E*Trade account. I find I need to run both together as I haven`t found anywhere to input ticker codes in the IG platform.

Has anyone ever used the ASR I mentioned above? $2,500 for a years tips.
I`ve gone and paid for a year so I hope it pays for itself.
Being a mad spec buyer I find that there is more consistency in CFD`s, or is it that I`m more used to the volatility.

Luck to all newer CFD traders.


----------



## BunnyRocket

I find it strange that most of the opinions on CFDs are negative. One of the most positive features of CFDs is the option of trading long or SHORT. To a technical trader there were enough signs of last weeks dive before it happened. 
Its these times that CFDs offer great opportunities . EG Have a look at the Alumina daily chart with a 13 ema. 2 closes below the line before a huge gap downwards. 
Seems to me that if you have problems dealing CFDs, then perhaps you should not be dealing shares either, the principals of survival are still the same.


----------



## >Apocalypto<

BunnyRocket said:


> Seems to me that if you have problems dealing CFDs, then perhaps you should not be dealing shares either, the principals of survival are still the same.




Hi Bunny welcome to the ASF, I see its your first post.

Fundamentally share cfd's and stocks work from the same price that drives them to increase in value or decrease in value.

The main point here is new traders experiencing leverage trading and what the out come of that can be when that trader is over exposed to the market.

Just cuz you can trade shares well, does not mean u can trade leveraged products with the same success at the get go. In CFD's and futures example, entry and entry timing is critical and can be the difference between losing and winning. In futures and cfd's to a degree can can be right on the direction of the market but still make a loss on your trade due to your entry point.

Good trading.


----------



## yonnie

BunnyRocket said:


> To a technical trader there were enough signs of last weeks dive before it happened.




hi bunny,

I look upon these comments with a bit of suspicion.
is it all talk in hindsight? 

what were those signs you are talking about?

and you truly cannot find similar signs at other times in the last 5 months when nothing happened?


----------



## Magdoran

BunnyRocket said:


> I find it strange that most of the opinions on CFDs are negative. One of the most positive features of CFDs is the option of trading long or SHORT. To a technical trader there were enough signs of last weeks dive before it happened.
> Its these times that CFDs offer great opportunities . EG Have a look at the Alumina daily chart with a 13 ema. 2 closes below the line before a huge gap downwards.
> Seems to me that if you have problems dealing CFDs, then perhaps you should not be dealing shares either, the principals of survival are still the same.



Hello BunnyRocket,


Welcome to ASF.  Please read through the post I cited in the above post which goes into detail some of which is quoted below:



Magdoran said:


> ...
> 
> One key variable though is the capacity and actual knowledge of the individual trader/investor.  If you can’t develop a sufficient understanding of options to a level to trade them, then this effectively rules this instrument out of contention.  However, in my view, if you can’t figure options out, I would have serious doubt about such a person using any kind of derivative product period.  I’d tend to think they’d be better off getting someone else to manage their investments such as considering using a managed fund.
> 
> This may sound harsh, but if you don’t have the intellectual capacity to understand derivatives to this level, trying to use related leveraged instruments just doesn’t add up to me – either you’ve got the ability to learn or you don’t.
> 
> ...
> 
> The problem I have is that many CFD traders are not aware of their full exposure to risk, and often are not capable of evaluating the best instrument available to them based on their market view of a potential trade.
> 
> ...
> 
> While I understand when I hear the response that CFDS are ostensibly simpler than options, I would argue that in the broadest perspective that this is a misconception. CFDs are actually more complex than they seem.  Sure they are perhaps less complex than options, but they’re quite dangerous in the wrong hands, and certainly less flexible, and arguably can be much more exposed to risk.  Sure, it’s harder to work out an options strategy at first, but if you don’t do the due diligence, you’re really leaving yourself open to potential ruin.




I would agree with you if you’d said that if you can’t trade shares, then you probably aren’t ready to trade CFDs either.  Not always true though when dealing with options for example or selling short with CFDs in a sideways market, because some people can trade options for instance using clever risk to reward strategies where they would have lost money trading shares on margin.  

An example of this is using an options strategy such as selling to get premium with a hedge where the time decay erodes the value of the sold position which can either be bought back later at a cheaper price locking in profit, or even allow the sold option to expire worthless allowing the seller to keep the premium.  Think about it.  Some people are lousy share traders but can find arbitrages very well.

If you follow Ducati’s posts he actively looks for arbitrages, and can profit very handsomely at times with low risk or even risk free trades.  Just look on his blog for inspiration.

The problem that many have though is that they are pure directional traders, and face several problems that are fully outlined in the post I refer to above. So I agree with the concept of being able to trade with an appropriate style of analysis, and that without this, then the individual is tipping the odds of success against them. 

The point that you are missing is that the level of exposure is vastly different using leveraged instruments, and this magnifies both wins and critically LOSSES.

Where people often fall down is not realising just how exposed they are, and with shares while the potential rewards are significantly less, so is the rate of loss as well (harder to lose 100% like you can with leverage).  It is in the discipline of money management that newer traders often make critical mistakes.

Where I agree with you is that there were strong technical indicators that the current up trend was getting tired, and that some kind of pull back was highly likely from 16 July onwards – but respectfully, I would suspect that a large percentage of traders were not capable of discerning this, or did not have the discipline to apply the understanding and take sufficient action to protect their longs, or go short at the right time (of course many did take the appropriate action).



yonnie said:


> what were those signs you are talking about?




Hello yonnie, respectfully there were a range of views at the time based on technical analysis where warnings were issued.  If you look at wavepicker’s comments recently for example there were Elliott Wave patterns indicating some kind of an ending diagonal was evident in the major indexes (he even posted with warnings days ahead of the event – just read through his posts – particularly on the XAO analysis thread).

Because I’ve been busy elsewhere I didn’t get much of a chance to post, but did post my S&P 500 time projection for a potential high about a month before it happened (placed as I do now in obscure threads – I do this so I don’t panic the majority because I can get it wrong): 



Magdoran said:


> S&P 500




The price projection was wrong, but this is common with my style, it’s easier to get the time right for me, price is another matter.  Closer to the time, the actual price was evident about a week out before it came in, but didn’t hit the exact index level – but the time factor I would argue was fairly precise, and since I trade time over price, works fine for me.  Hence there was a probability of some kind of pull back, and risk to longs at this time.

Read through my various posts on ASF (try the “Handbags at 20 paces” spin off thread which has lots of links to previous posts where forecasts ahead of time have been made).  Especially look at my comments on the DAX (have a look at this in the “Trading the SPI Gann techniques” thread and the International index thread – specifically on the DAX for an example of where I suggest taking profits at key times when the trend may be at risk – my suggestion being to hedge or take profits at particular times).

Remember though that this is about probability, and that like Mark Douglas says “anything can happen”, and “every moment in the market is unique”.  Hence knowing failure criteria is critical so you can exit when you get it wrong, which you must.

However, I think that if you knew what you were doing technically there were significant red flags that signalled a high probability of at least some kind of top coming in and some kind of marked bearish action occurring.  The combination of wavepicker’s EW analysis and my cycle work for us gave a very high probability of risk to longs around the 16 July onwards.  I didn’t say as much as I usually do this time, but wavepicker did (although I did publish that S&P 500 chart a month in advance).

My contention is that if you know what you are doing, then applying the risk to reward with the right instrument goes hand in hand with the analysis.  Both disciplines combined with having the right trading psychology and system is critical to success.  By system I’m talking about entry and exit rules, position sizing, and hedging/profit taking approaches.

Also, just because some people can’t see these signals, doesn’t mean they don’t exist.  I’d argue that they do, hence this constitutes a trading edge.


Regards


Magdoran


----------



## Adventure Always

Hi Guys

CFD's are not allowed in the USA, they are seen as too risky.

With equities and options, the most you can lose is the amount you put into the transaction, whereas with CFD's you could lose more than your total account balance.

Of course to do this, you would have to have basically ignored all risk management and capital protection techniques.

Many traders apply the risk management on CFD's to the Total position size instead of the margin they are putting up, and this is a strategy which is fraught with danger.

Sensible use of proern effective strategies, can make CFD's a more efficient use of your capital than equities.

Pete


----------



## >Apocalypto<

Adventure Always said:


> Hi Guys
> 
> CFD's are not allowed in the USA, they are seen as too risky.
> 
> With equities and options, the most you can lose is the amount you put into the transaction, whereas with CFD's you could lose more than your total account balance.
> 
> Of course to do this, you would have to have basically ignored all risk management and capital protection techniques.
> 
> Many traders apply the risk management on CFD's to the Total position size instead of the margin they are putting up, and this is a strategy which is fraught with danger.
> 
> Sensible use of proern effective strategies, can make CFD's a more efficient use of your capital than equities.
> 
> Pete




lol,

well if your dumb enough to keep paying margin calls maybe trading is not for u!

what about with options were u have about 50 naked calls open, no risk there!

it's up to each person to work out the mechanic's of the product they trade, why is that point so hard to understand in this thread. *all leveraged products are dangerous to inexperienced traders!*


----------



## kerosam

hey guys,

off the topic a bit...

is it that important to have live data if i'm not a intra day trader? i think the most trades I'll do, in and out (total) is 6 times (max).  Just a starter in CFDs. I don't see its necessary to pay for the live data.

thanks in advance.


----------



## happytrader

kerosam said:


> hey guys,
> 
> off the topic a bit...
> 
> is it that important to have live data if i'm not a intra day trader? i think the most trades I'll do, in and out (total) is 6 times (max).  Just a starter in CFDs. I don't see its necessary to pay for the live data.
> 
> thanks in advance.




Hi Kerosam

No its not that important to have live data if you are not an intraday trader. However, the data must be current at the time of making a trading decision.

Cheers
Happytrader


----------



## juiceman

juiceman said:


> Although i have, and will continue to trade cfd's, i would not recommend their use to anybody.
> They have, and will continue to ruin more live's than i would care to mention!
> The product is ALMOST fair, and is not the problem.
> Put this instrument into unskilled hands and you can have a real problem.
> This post is meant for the information of those considering there use, or been lucky so far.
> Yes you have or will read the books and all the information,but you won't have respected the WORDS.
> Without experience the words won't mean anything, because your smarter than most RIGHT?
> The first thing to learn is why stop losses don't work on any share the spikes or gap's overnight etc etc.
> There a many smaller points that will bring you unstuck every time,so unless you are prepared to spend half your life infront of your computer screen, don't trade them!
> If you feel you must try them, keep your bets ( iwill call them that ) very very small, and try to enjoy your learning experience.
> If you are a gambler, don't even think about IT!
> PS this post has nothing to do with the current state of the market, it just prompted me to warn those that are new to the game



Hi Kerosam
With respect the cost of live data will be the least of your problems, if the market is moving quickly against you (most operaters supply it anyway ie marketmaker )
Good luck and enjoy (look at surviving FIRST before you look to making lot's and lot's of money


----------



## kerosam

thanks fellows.

appreciate the info. 

again, diverting. nothing about CFDs... i am watching the news and the media has made the indian doctor, chargeD being a terrorist, a rich man... and a hero in his homeland. sigh.


----------



## CFD

kerosam, if that's 6 trades a month, you may be interested in IG. They do not charge for their web platform and for a minimum of 4 trades a month do not charge for the live data.


----------



## bailz

binginbarrel said:


> I opened a CFD account with $1000 in April or something with IG Markets.
> I did this in combination with the Australian Stock Report but jumped in with my own longs and shorts before I even had the chance to go over their Capital Management Model, which suggests buys and stops.
> 
> I like the Guaranteed Stop you can take with IG.  With E*Trade I had $10,000 worth of MPO at 10cents back just before the last correction. Overnight they dropped through my stop and sold to give me back $8K, which turned me off Molopo. Had this not triggered I would be $20k up. That was the first and last time I`ve used a stop with ordinary shares.
> 
> Now I have gained more knowledge in the CFD area I will top up the account and run it as I run the E*Trade account. I find I need to run both together as I haven`t found anywhere to input ticker codes in the IG platform.
> 
> Has anyone ever used the ASR I mentioned above? $2,500 for a years tips.
> I`ve gone and paid for a year so I hope it pays for itself.
> Being a mad spec buyer I find that there is more consistency in CFD`s, or is it that I`m more used to the volatility.
> 
> Luck to all newer CFD traders.




I have started trading about 2 months ago with the same setup as you..IG & ASR..I would love to hear how you have gone so far...I started with 5K capital and so far are about even...few scary moments with my own "I think the market will go this way...because it has for the last 4 minutes.." Stop losses are so important..but your wallet will teach you faster than anyone.

Anyway I see CFDs as the financial equivalent of a loaded firearm, if you respect and understand them, they are useful....and in the wrong hands...well....


----------



## hangseng

bailz said:


> .... I see CFDs as the financial equivalent of a loaded firearm, if you respect and understand them, they are useful....and in the wrong hands...well....




Exactly, take care and they are a useful short term trading medium. Get greedy and place position sizes past your capability (easily done) and you are in a high risk zone.

They are market makers and they will use you to take your money (they love stop losses as they know where you placed them). Just be aware that that is what they do, they are not your best mate.

Don't believe the "guarantee of market prices", that is just plain bull excretion. 

If you have the knowledge and financial control they are useful. Live market trading for buying can be achieved but you won't ever get live market selling. When you get a message that you can't sell "due to current market conditions" when you place and order you will realise the limitations and high risk exposure that can apply.

I trade CFD's, but only to my advantage and not as a replacement for direct market shares. I see this as an addition to short term trading and not as investing.

Want to make real investment money, then trade open market shares or buy/sell property. CFD's will not provide the 'holy grail', unless you believe you will win lotto one day.


----------



## dj_420

hangseng said:


> Exactly, take care and they are a useful short term trading medium. Get greedy and place position sizes past your capability (easily done) and you are in a high risk zone.
> 
> They are market makers and they will use you to take your money (they love stop losses as they know where you placed them). Just be aware that that is what they do, they are not your best mate.
> 
> Don't believe the "guarantee of market prices", that is just plain bull excretion.
> 
> If you have the knowledge and financial control they are useful. Live market trading for buying can be achieved but you won't ever get live market selling. When you get a message that you can't sell "due to current market conditions" when you place and order you will realise the limitations and high risk exposure that can apply.
> 
> I trade CFD's, but only to my advantage and not as a replacement for direct market shares. I see this as an addition to short term trading and not as investing.
> 
> Want to make real investment money, then trade open market shares or buy/sell property. CFD's will not provide the 'holy grail', unless you believe you will win lotto one day.




I like them because it just gives longer trading hours, I have been playing medium short term stocks on ASX and then trading indices at night.

Not much time for sleep though. Personally I think the positions left open for several hours gives the bext exposure to trends, I have taken profits or sold with small loss way way too many times in my experiences, when if I had just left the position open and not stressed about it would have been miuch more profitable.

Only learning on CFD's though, started on CMC markets about a month or so ago.


----------



## nathanhulls

Well I wish I had spent 9 months reading a forum like this back in 2005 before I lost a good solid 5 figures (middle of the 5 figure range too) of *borrowed* money trading CFDs and I'm only 28.

So rather than repaying a mortgage with a house to show for it i'm working to pay off debt which i have nothing but an expensive learning curve to show for it, and the market maker smiles all the way to the bank as another one bites the dust.

Anyway my sob story over, i'm up out of the dust, brushed myself off and I'm looking to educate myself, develop a solid trading system which suits my profile and lifestyle and I'm going to build some wealth for the long term.

Surely CFDs are a tool which if used wisely can benefit a traders overall strategy, if anyone has any good CFD trading strategies I'd love to hear from them.

Nathan
- its more blessed to give than to receive!


----------



## acouch

hi nat,
i suggest first you learn how to chart..
as a chart usually will let you know what is cooking ..
no point trading blind..
if you want to do that, i am sure there are a lot of charities out there are more than
willing to take your money ,and help the less fortunate 
ac


----------



## acouch

a couple of examples..
one is eod chart, which i watch and look for a entry to hold..then look at a cfd to
take a postion at the best possible entry you can get on the day, as you know that you want to enter this stock, so it is just a matter of getting the entry right..bad entry = bad trade sometimes..
hope that these examples are of some help..
ac 
as i have printed one aed  from cmc i hope that this chart is the right one


----------



## Trembling Hand

nathanhulls said:


> Surely CFDs are a tool which if used wisely can benefit a traders overall strategy, if anyone has any good CFD trading strategies I'd love to hear from them.




If you developed a good system with proper position sizing you will soon find out that they are of little use. The only advantage that they supposedly have is the leverage but that is, as you have found out, Their BIGEST disadvantage.

Once you have a system that doesn’t expose yourself to large drawdown and certain ruin you will see that the leverage is of no use if not dangerous.

When setting a stop you find out how much you will be able to lose as a percentage of your account. You would base this on where you would admit you were wrong and close out the position.

If you have $50,000 account and willing to lose 2% max per trade that is $1000

if you buy XYZ @ $10.00 and set the stop at $9.50 then you can buy 2000 shares. You should only buy that many weather you are using CFDs or direct shares.

The only thing leverage should be used for is to possibly take on more positions. But that leads to problems to as most shares swing together if you have 10 positions on and they all gap down one morning you will find your account hit 20% or more in one day. Not Good.

Find a system that works without leverage first then ram it up with leverage once you know you are safe.


----------



## Magdoran

nathanhulls said:


> Well I wish I had spent 9 months reading a forum like this back in 2005 before I lost a good solid 5 figures (middle of the 5 figure range too) of *borrowed* money trading CFDs and I'm only 28.
> 
> So rather than repaying a mortgage with a house to show for it i'm working to pay off debt which i have nothing but an expensive learning curve to show for it, and the market maker smiles all the way to the bank as another one bites the dust.
> 
> Anyway my sob story over, i'm up out of the dust, brushed myself off and I'm looking to educate myself, develop a solid trading system which suits my profile and lifestyle and I'm going to build some wealth for the long term.
> 
> Surely CFDs are a tool which if used wisely can benefit a traders overall strategy, if anyone has any good CFD trading strategies I'd love to hear from them.
> 
> Nathan
> - its more blessed to give than to receive!



Hello nathanhulls,

While perseverance is critical to success, so is applying what you learn, employing the right amount of caution, and doing the requisite amount of research.

There is a wealth of commentary on this site that can give relevant perspectives which directly addresses your question.  All you have to do is to read it.

Respectfully, I've commented in reasonable depth on the CFD question several times now (ironically, even on this thread).  Please do yourself a favour and read the comments by people like WayneL, sails, and ducati for example.

All you need to do is to scroll back through a range of threads and follow the posters that you like.  Then you can search their posts in detail using the search functions.

I can tell you now that you can spend the next 9 months learning, but with a lot less risk.  Please consider doing this before you venture out to risk another $50,000 +/-.


Best Wishes


Magdoran


----------



## ithatheekret

I take my hat off to successful CFDers , they are the real day traders with grit . Having tried CFDs as it was too expensive to short with my brokerage , even though it [the entry] was successful , I had a couple of sleepless nights over my position ....... it was AMP at a $26 short . I literally couldn't leave my desk during market time ...... even for a coffee and a doodoo . For fear of it blowing up in my face ........ it didn't as history showed but I managed a few new grey hairs out of it .


----------



## jonojpsg

I've only been into CFDs for a little while (six months) now and i can certainly see the dangers!!  Definitely agree with position sizing and setting your stops right - it's all about protecting capital - if you want a look at a prime example (trading shares not CFDs) look at the AED thread.  AEDblunder put 495000 into AED at $11 then watched it plummet while his paper value decreased by 65%!!!!  Mate, if that's not a lesson in setting stop losses I don't know what is.

Anyway, I've been looking at the possibility of making a living just out of trading BHP CFDs!  If I earn $300 a day, I can go close to that by buying 1000 BHP say at 43.00 then selling again at 43.30.  I only have to put up 5% which is about $2000.  With the sort of intraday moves you get on BHP, you could just about do this.  Haven't perfected yet - but working on it


----------



## ithatheekret

I have a friend who only plays the banks , nothing else .

He says the mining boom is somebody elses story , each to their own . He is making a steady income from it though and is with CMC . He too doesn't care which way the market goes as long as it moves .

PS.. he has nothing to disturb him though ..... you know kids etc ..


----------



## finnsk

jonojpsg said:


> Anyway, I've been looking at the possibility of making a living just out of trading BHP CFDs!  If I earn $300 a day, I can go close to that by buying 1000 BHP say at 43.00 then selling again at 43.30.  I only have to put up 5% which is about $2000.  With the sort of intraday moves you get on BHP, you could just about do this.  Haven't perfected yet - but working on it



Most days the range on BNB is bigger if you can get it right both long and short and with only 500 BNB CFDs but be careful because when it moves it moves very fast


----------



## Uncle Festivus

ithatheekret said:


> I have a friend who only plays the banks , nothing else .
> 
> He says the mining boom is somebody elses story , each to their own . He is making a steady income from it though and is with CMC . He too doesn't care which way the market goes as long as it moves .
> 
> PS.. he has nothing to disturb him though ..... you know kids etc ..




Same here, I trade CBA almost exclusively on a daily basis now, PDN also a good day trade CFD leverage stock. Usually 1k or 2K shares at a time, maybe hold overnight sometimes. After a while each stock get's it's own personality, so you get to see predictable ticker patterns emerge, at roughly the same time of day sometimes.

After a checkered CFD career so far I have found that setting a daily profit from a smaller position is far less stressfull than trying to milk a single large position for the maximum gain. Be happy with lot's of smaller gains than a few big ones. If I make or exceed my daily profit target then I turn the 'puter off & go and do something that resembles a life .

The current market gyrations is or should be a CFD traders heaven, if played correctly.


----------



## ithatheekret

Can't agree more Unc little but often is marvellous .


----------



## lbradman

Positions sizing is number one when it comes to CFDs because of their leverage you can get. I'm only trading a maximum of $2500 for each trade and I only buy stocks on 5% or 10% margin meaning I only put in $250 for a deposit. I also do this because I've set my stop loss to be at $250 so as soon as my loss hits my deposit amount I get the hell out. Its a small amount to trade I know but slow and steady is the way I like to go about it.


----------



## hangseng

lbradman said:


> Positions sizing is number one when it comes to CFDs because of their leverage you can get. I'm only trading a maximum of $2500 for each trade and I only buy stocks on 5% or 10% margin meaning I only put in $250 for a deposit. I also do this because I've set my stop loss to be at $250 so as soon as my loss hits my deposit amount I get the hell out. Its a small amount to trade I know but slow and steady is the way I like to go about it.





The main problem being you are not trading in the 'REAL MARKET'.

As long as you know these and realise the CFD provider is who you are trading against and they know where your stops are placed. If you have total faith in what you are trading in then fine, otherwise you are CFD provider fodder and they know it. Position sizing is so important as is realising they are targetting your stops.

Just be aware OK.

Cheers to all of my friends (and chops 

ASF is a great sharing forum, keep it up you are the protection from the manipulators.


----------



## chops_a_must

hangseng said:


> Cheers to all of my friends (and chops
> 
> ASF is a great sharing forum, keep it up you are the protection from the manipulators.



Lol! And a good evening to you as well. 


jonojpsg said:


> Anyway, I've been looking at the possibility of making a living just out of trading BHP CFDs!  If I earn $300 a day, I can go close to that by buying 1000 BHP say at 43.00 then selling again at 43.30.  I only have to put up 5% which is about $2000.  With the sort of intraday moves you get on BHP, you could just about do this.  Haven't perfected yet - but working on it




Why not just trade futures and look at trading opens or something? Very high probability plays with good returns. I'm sure some people make a killing just trading the various opens around the world.


----------



## hangseng

chops_a_must said:


> Lol! And a good evening to you as well.
> 
> 
> Why not just trade futures and look at trading opens or something? Very high probability plays with good returns. I'm sure some people make a killing just trading the various opens around the world.




Just stirring chops, keep up the good work mate.


----------



## glenn_r

hangseng said:


> The main problem being you are not trading in the 'REAL MARKET'.
> 
> As long as you know these and realise the CFD provider is who you are trading against and they know where your stops are placed. If you have total faith in what you are trading in then fine, otherwise you are CFD provider fodder and they know it. Position sizing is so important as is realising they are targetting your stops.
> 
> Just be aware OK.
> 
> Cheers to all of my friends (and chops
> 
> ASF is a great sharing forum, keep it up you are the protection from the manipulators.





I trade CFD's using a DMA (direct market access) provider which means I'm trading in the "Real Market" and really if your trading shares profitably there is no reason why you cannot trade CFD's profitably as they are just another margined product (i.e. margin loan) and if used correctly with the same position sizing and risk management as shares they are a very handy tool in the trading tool box.

But they are not the magic bullet for bad traders and I suggest new traders should stay away from them until they work through their trading plan and begin to trade with a positive expectancy.

Finally stay away from the "Market Maker" CFD's as HS suggests some MM providers do not play on a level playing field.


----------



## dovetree

Whether it is DMA or not is of little importance, even if DMA and the other side of you trade is your broker then the broker is actively working against you.
The final question you should ask is are CFD's subject to the same regulation as futures.... if not then ???


----------



## Trembling Hand

dovetree said:


> Whether it is DMA or not is of little importance, even if DMA and the other side of you trade is your broker then the broker is actively working against you.
> The final question you should ask is are CFD's subject to the same regulation as futures.... if not then ???




I got to say you don't get much protection with Futures. It’s pretty much buyer beware. For example during the meltdown in August the Open interest was massively out. The SFE was saying that the SPI had 400,000 contracts open giving the impression that one side was going to get squeezed to hell but some large broker was not reporting matched trades. When they slapped the broker on the wrist the next day the Open interest dropped to 100,000. Pure and simple manipulation with no consequences.

Still I would always chose futures over CFD as I want my brokers interested in me hanging around rather than blowing up.


----------



## Timmy

dovetree said:


> Whether it is DMA or not is of little importance, even if DMA and the other side of you trade is your broker then the broker is actively working against you.
> The final question you should ask is are CFD's subject to the same regulation as futures.... if not then ???




Trading DMA is of critical importance, completely different to trading with a market-maker.


----------



## glenn_r

dovetree said:


> Whether it is DMA or not is of little importance, even if DMA and the other side of you trade is your broker then the broker is actively working against you.
> The final question you should ask is are CFD's subject to the same regulation as futures.... if not then ???




Dovetree,

Your wrong, when you use a true DMA provider the other side of your trade is either a equity seller or a buyer, the provider has no control or input in the trade.


----------



## dovetree

Trembling Hand, Hi I did say regulated futures markets (like the CME) I don't trade the SFE that much because whilst giving the impression its regulated its really no better than other asian markets (casinos).

Currency futures on the CME are what you see what you get whether your a bank or an individual... the quotes are the same unlike forex, and unlike CFD's which have less regulation than the SFE.
Having worked on the CME floor, I would not touch CFD's or the forex.


----------



## Timmy

dovetree said:


> Having worked on the CME floor, I would not touch CFD's or the forex.




Dovetree - would love to hear your comments on the CME, in another thread if you would like to start one and leave this one for CFDs of course.

Always very interesting getting an "insider's" perspective.  When were you there, your perspective on the electronic matching markets, different execution methods and technologies you have encountered, anything you care to expand on really..?  Be very interesting to me and I have no doubt others too.


----------



## Boggo

I have posted this on another forum too as I believe it is a valuable discussion on forex.

This is on the MTPredictor forum site but the discussion has nothing to do with their software.

http://www.mtptrader.com/showthread.php?t=1363


----------



## dovetree

Good article and quite accurate. Boggo.

Those people estolling the vitues of forex trading (and cfd's) for the small retail trader should look at this article and investigate what actually happens a bit further.


----------



## Trembling Hand

Boggo said:


> I have posted this on another forum too as I believe it is a valuable discussion on forex.
> 
> This is on the MTPredictor forum site but the discussion has nothing to do with their software.
> 
> http://www.mtptrader.com/showthread.php?t=1363




Good to see someone spreading the news about their evil ways!

The "Brokarge free" stuff that CFD Market Makers hype as well as Forex really gets me 
The newbie never knows how much that is really costing them. That spread and always Buying/Selling at market cost you at least double if not much more than any brokerage on futures. 

No such thing as a Free .........


----------



## amy997

I don't really see the problem with cfd's if you know how to use them. I have been using index cfds fulltime for a year and am still going. I treat them exactly as if they were a futures contract. I have 10,000 in my account and only ever purchase one contract at a time. I do have a very strict trading plan based on probabilities that only allows me to trade within certain bands and in certain directions depending on the market and so far my cfd account has survived the volatility.
I think if you respect the leverage they allow then you will be ok.

I know you pay the extra point in spread and TH I have read your "cfds not free" article on your blog and agree with your point but for the time being  while i am still learning i find cfds to be entirely satisfactory.


----------



## Wysiwyg

I was going to lie down but have decided to add my negative experience of the cash for difference system.

Some of the traps that snared me (and i`m sure others will think they can beat them )

1)making up the spread difference 
2)stop losses are tripped no matter where they are set 
3)sharp direction changes (probably the biggest killer)
4)trailing stops are tripped (no. 3) and then moves back on trend 
5)if they let you make a profit expect to have some removed (wittled see 2. or lump sum )
6)carrying a trade into the next session can lead to a severe loss on reopen
7)long (time wise) holds not recommended(see 6)

It is controlled, manipulated and if they want then every trade you will make a loss or have your profits minimalised (see 3 & 4)I`m glad i won`t be finding the other snares that i missed.

It`s their game, your money and the old saying .... *it`s too good to be true* rings loud and clear now.


----------



## Aviator33

Hi Wysiwyg

All of the probs you mention are very valid for MMs. Obviously sudden direction changes can even happen on the underlying but none of the other points really  exist with DMAs except:



> 6)carrying a trade into the next session can lead to a severe loss on reopen




...and that same rule applies to any instrument you are carrying overnight. Not trying to start an arguement here, just don't like it when DMA CFDs get lumped in with MMs. Apologise in advance if this was not your intention 

Cheers
AV


----------



## Wysiwyg

Aviator33 said:


> Hi Wysiwyg
> 
> *All of the probs you mention are very valid for MMs*. Obviously sudden direction changes can even happen on the underlying but none of the other points really  exist with DMAs except:
> ...and that same rule applies to any instrument you are carrying overnight. Not trying to start an arguement here, just don't like it when DMA CFDs get lumped in with MMs. Apologise in advance if this was not your intention
> 
> Cheers
> AV




Hello aviator 33, no argument from me too.So are you saying that stops/limits get "taken out" on purpose if this  doesnt happen on a direct market access trading platform??

It angered me greatly to have my stops/limits get taken out consistently and then move back in the money soon afterwards.This coupled with my inexperience trading indices, commodities & foreign exchange rates was a bad mixture. Trading shares with CFD might be a better alternative as the volatility is generally within acceptable limits and control.I won`t be going back in a hurry if ever.Very suss.


----------



## Trembling Hand

Wysiwyg said:


> It angered me greatly to have my stops/limits get taken out consistently and then move back in the money soon afterwards.This coupled with my inexperience trading indices, commodities & foreign exchange rates was a bad mixture. Trading shares with CFD might be a better alternative as the volatility is generally within acceptable limits and control.I won`t be going back in a hurry if ever.Very suss.




Are you saying that the MM are moving the quotes away from the underlying cash market?? I have never seen that in spite of it being claimed many a time. Give us an example and I will compare it to the futures.


----------



## Wysiwyg

Trembling Hand said:


> Are you saying that the MM are moving the quotes away from the underlying cash market?? I have never seen that in spite of it being claimed many a time. Give us an example and I will compare it to the futures.





No, i checked the 1 second tick chart and they were legitamately hit, (they only have to touch the stop and not through it to trigger) some for a brief moment and others completely through.The cash markets they offer are not point for point with the indices so i really don`t know how you could compare them anyway.I hope i save some other poor bastad but unless you play live it is difficult to fully comprehend the gist of what this thread is about.


----------



## CFD

CFDs' are an instrument for trading shares (or indexs etc). What you are frustrated with is your trading in the prevailing market conditions. For the most part your problem is not with CFDs themselves, as the same thing would have happened if you had traded the shares direct.


----------



## Aviator33

Wysiwyg said:


> .So are you saying that stops/limits get "taken out" on purpose if this  doesnt happen on a direct market access trading platform??




Well, obviously it can happen that other traders take out your stops in the market but that is always a risk. What I am saying is that a DMA CFD provider does not take out your stops and cannot take them out anymore than any other trader can take them out as you're trading in the underlying market, not the pseudo market created by a MM. With a MM, they can adjust the prices they are offering and take out your stops damn easy - it's their market!

Having said all of this, I've never seen any evidence that an MM has done this but have heard so many horror stories. Yours is another one to add to the list.


----------



## robots

hello,

CFD=Contracts for difference

these things are nothing more than "a deal" between you and the provider,

you get no rights or ever own the "underlying" whether you are with DMA or MM, its all smoke and mirrors

they want to fleece your whole account say goodbye and then enlist another sucker with glossy brochures, advertising etc

I traded the spi with spread bet when IG were offering, had to have huge stop loss to maintain position, then went to spi with futures broker (tricom) 

cleared out and found far easier ways of making money

thankyou

robots


----------



## Wysiwyg

CFD said:


> CFDs' are an instrument for trading shares (or indexs etc). What you are frustrated with is your trading in the prevailing market conditions. For the most part your problem is not with CFDs themselves, as the same thing would have happened if you had traded the shares direct.




Yeah for sure the volatility is there combined with the spreads plus the stop distance really do eat into the capital.No spread on shares direct though so the loss to stop would be less.I also held 4 contracts over night that opened 140 points away.That was my lack of experience and as it turned out all the tricks in the bookies bag did me in.I know better now.
It`s all good once you know how the game is played hey.


----------



## Wysiwyg

Aviator33 said:


> What I am saying is that a DMA CFD provider does not take out your stops and cannot take them out anymore than any other trader can take them out as you're trading in the underlying market, not the *pseudo market *created by a MM. With a MM, they can adjust the prices they are offering and take out your stops damn easy - it's their market!




Can you tell me of a DMA sevice with a good rep. by private mail if you don`t want to say here please aviator33.


----------



## Trembling Hand

Wysiwyg said:


> The cash markets they offer are not point for point with the indices so i really don`t know how you could compare them anyway.




Completely incorrect. They are ALL linked to the futures market. This I know as a FACT. CMC for example will link their Aussie200 to the SPI Bid price and add 2 for the Ask price. Have a look at the times the CMC Aussie200 trades, its EXACTLY the same as the SPI. You got taken out by the SPi traders not the MM.


----------



## Trembling Hand

Aviator33 said:


> With a MM, they can adjust the prices they are offering and take out your stops damn easy - it's their market!
> 
> Having said all of this, I've never seen any evidence that an MM has done this but have heard so many horror stories. Yours is another one to add to the list.





Yes Aviator many have said this has happened but they never give any evidence. If someone would just post a chart or a price, which wouldn't be that hard, we could see it. But they never do.

Don't get me wrong I'm against the MM but they don't have to adjust their prices to blow up traders just give them huge leverage and they do it themselves.


----------



## Wysiwyg

Trembling Hand said:


> Completely incorrect. They are ALL linked to the futures market. This I know as a FACT. CMC for example will link their Aussie200 to the SPI Bid price and add 2 for the Ask price. Have a look at the times the CMC Aussie200 trades, its EXACTLY the same as the SPI. You got taken out by the SPi traders not the MM.




Sorry mate, the Wall Street Cash (in the provider i was with) varied 50 points + or -  different.


----------



## Trembling Hand

Wysiwyg said:


> Sorry mate, the Wall Street Cash (in the provider i was with) varied 50 points + or -  different.




What does this mean? Show us a chart. PLEASE


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## Wysiwyg

Trembling Hand said:


> What does this mean? Show us a chart. PLEASE




I just had to reload the platform so here they are.


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## Trembling Hand

And here is the Dow Futures. Identical. 100%. Tick for Tick. post any CFD index and I will give you the futures. Ftse is the LIFFE Z contract. S&P500 is the Globex ES and on and on. The cash chart is not what you are trading.


----------



## Wysiwyg

O.k. i got it.March,June September and December.Like the Australia 200 Cash isnt the XJO and the Wall Street Cash isn`t the DJIA.Thanks hand.


----------



## wayneL

Wysiwyg said:


> O.k. i got it.March,June September and December.Like the Australia 200 Cash isnt the XJO and the Wall Street Cash isn`t the DJIA.Thanks hand.




The differences relate to cost of carry.


----------



## kransky

can someone summarise a little in slightly simpler terms as i am a little lost?

considering getting into gold via CMC so keen to hear...

surely gold on the MM follows the live gold spot price pretty closely? 

actually.. how closely?


----------



## Trembling Hand

kransky said:


> can someone summarise a little in slightly simpler terms as i am a little lost?
> 
> considering getting into gold via CMC so keen to hear...
> 
> surely gold on the MM follows the live gold spot price pretty closely?
> 
> actually.. how closely?




CMC gold instrument is linked to CBOT ZG GOLD 100 TROY OZ Futures contract. Tick For Tick.


----------



## CFD

Thanks for your input TH.

You would think the CFD Providers could save themselves a lot of complaints and bad publicity, if they made it clear what market one trades with their respective indexes.

When you buy (long) a CFD over shares the provider makes the same transaction on the share market, however an MM may carry the risk or balance the risk against other customers who have shorted the same share. With an index they have to have some way to hedge the risk and I guess the answer is the futures market.

I doubt an MM would move a price too far from the market value to take out customers stops, as they could easily lose more than they would make, from people like TH being astute enough to enter their market knowing the price would have to move back to market value.


----------



## Trembling Hand

CFD said:


> I doubt an MM would move a price too far from the market value to take out customers stops, as they could easily lose more than they would make, from people like TH being astute enough to enter their market knowing the price would have to move back to market value.




yeah that's right if they did noticeably move from the underlying market I tell ya I would spend all my life doing arbitrage trades loading up a bucket full of their cfds and going opposite with the Futures. And not just 1 or 2 contracts I would really go nuts and I doubt I would be the only one. 

What they would gain from taking out small stops they would lose 10 times over from bigger punters arbitraging them.


----------



## Wysiwyg

Trembling Hand said:


> CMC gold instrument is linked to CBOT ZG GOLD 100 TROY OZ Futures contract. Tick For Tick.





Hi again hand, can you see above 20:46 and explain why there is a gravestone doji on CBOT ZG Gold and there is a hammer on the Spot Gold chart.Matter of fact many of the candles are different.Where is the tick for tick comparison matey.


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## Trembling Hand

Wysiwyg said:


> Hi again hand, can you see above 20:46 and explain why there is a gravestone doji on CBOT ZG Gold and there is a hammer on the Spot Gold chart.Matter of fact many of the candles are different.Where is the tick for tick comparison matey.




because a Futures chart is the actual trade price. Where a CFD chart is a Bid Price. That makes a big diff matey. With ZG that could be 10 ticks or more at times.


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## Trembling Hand

If you still don't think so pull up a 1 min of BHP CFD and compare it to a cash BHP. Same thing not ever candle is the same because the bid chart is not the trades, but the bid for bid will be tick for tick!!


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## peter2

Whenever I see a "Dangers of cfds" thread I like to post an example of one of the real dangers with shorting. One of the big advantages of using cfds is the ability to sell now and buy it later (to short). The expectation is to sell high and then buy low. There have been and continue to be many opportunities to short in this market. This chart of *MIS* shows one of the dangers. 

This typical setup to short *MIS* shows price moving below a support line to trigger the entry. The stop loss (SL) is placed immediately after the entry to protect the risk. The possible reward looks good as price might go back to the previous pivot low. Let me risk $400 (=2% capital) on this trade. 

# MIS cfds = 400 / (4.90-4.55) = 1142.9 =  SELL 1140 MIS cfds

*EOD 130308*. The trade is looking good with an open profit of 1140 * (4.55-4.15) = $456 (less com.)
You notice that the day's price range was huge and that price did get to where you thought it might. A buy order at 3.75 would have realised a profit of 1140 * (4.55 - 3.75) = $912. Nevermind, the trade is profitable and you move the SL to breakeven. You are pleased to have a "free" trade going.

[Consider the benefits of using price targets when shorting and include them in your trading plans.]

*AM 140308*.  Your SL is triggered on the open as price rockets to 5.43 after news of an offer to buy MIS.
Your loss is 1140 * (4.55 - 5.43) = $1003.2   This is 2.5 times what you had originally allowed. This is the danger of using cfds. 

[Consider the benefits of using GSLOs and include them in your trading plans.]

This trade lost 5% of the account balance. This is not a disaster as the trader risked a small amount of the account in this trade. If the trader had risked 10% this trade would have lost 25% of the account balance.


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## netbank

Hi guys,

Instead of posting a new thread, I might continue under this one..

Excuse my lack of knowledge but I have a question on position sizing models with CFDs. I don't really understand how it works with CFDs (w/ the leverage). 

Say, for example, my trading capital is only $10,000, I am willing to put 1% at risk per trade which equates to $100. 

So say I would like to buy ABC which is at $2.00 and I have set a stop-loss say at $1.90 (5% away from the entry). Using a fixed model, I calculate my position to be: $100 / (2-1.90) = 1000 Shares. 

So, if this were a normal equity I would require a $2 X 1000 shares = $20,000 initial outlay. But for CFDs I only require 10% of that - which is $2000.

OK, so the scenario is set (lol), say later in the day my stop-loss is hit at $1.90 (5% away from my entry) and my position gets closed. From a share point of view I only would have lost $100 (1% of my capital). BUT from a CFD view, I would have loss $1,000... equiv to 10% of my trading account. 

So I am guessing position sizing models don't work with CFDs (or any other leveraged instruments)?

Is any one able to correct me or explain why some people say your position sizing strategy should remain the same when using CFDs... even though as you can see from the above your losses are 10X's!!

Lol, as you can see, I am still exploring this wonderful world of CFDs.

Thanks!


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## JimBob

Your position sizing remains the same when using CFD's.  With your example, you would still buy 1000 shares of ABC, the difference being the capital outlay you need.  If your stop is activated, you should only be losing $100 whether you are trading shares or CFD's.  Just because you CAN buy 10x as many using CFD's, doesnt mean you should.  Your losses are only 10x as much if you brought 10,000 shares, if you buy 1000, your losses are the same.


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## tech/a

JimBob said:


> Your position sizing remains the same when using CFD's.  With your example, you would still buy 1000 shares of ABC, the difference being the capital outlay you need.  If your stop is activated, you should only be losing $100 whether you are trading shares or CFD's.  Just because you CAN buy 10x as many using CFD's, doesnt mean you should.  Your losses are only 10x as much if you brought 10,000 shares, if you buy 1000, your losses are the same.




Jim's spot on here and points out a misconception and perhaps a miss use of Leverage wether it be CFD or anything else.

The lower cost of entry allows positions to be taken larger than normal due to initial capital restraints while still leaving your risk profile relative to total capital your using to trade.


----------



## MichaelD

netbank said:


> Say, for example, my trading capital is only $10,000, I am willing to put 1% at risk per trade which equates to $100.
> 
> So say I would like to buy ABC which is at $2.00 and I have set a stop-loss say at $1.90 (5% away from the entry). Using a fixed model, I calculate my position to be: $100 / (2-1.90) = 1000 Shares.
> 
> So, if this were a normal equity I would require a $2 X 1000 shares = $20,000 initial outlay. But for CFDs I only require 10% of that - which is $2000.




As more-or-less mentioned in other responses, just because you can trade large doesn't mean you should - it's a guarantee that you'll blow up your account.

If you have $10,000 in cash to trade, then trade CFDs as if you have $10,000. All it means is that most of your cash will be in your bank, not tied up in the trade.

Also, there's a second account killer in your scenario; the % of trading capital in one trade. With your example, you're suggesting committing 200% of your trading capital to the trade - another sure fire way to blow your account. A more realistic limit would be 25% per trade (ie in the scenario above, your maximum position size would be 125 shares).


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## Wysiwyg

I have here an example of what can happen with trading these instruments and to be prepared if looking into them. 
I compared the German 30 to Wall Street Cash charts to show something that happened to me which i think was aarrrr unusual.Text on the charts explains my 2 long positions on the German 30  at 6450 ans 6448.5 with my stop losses set at 6435.Notice the sharp drop just before the uptrend.Tripped my stop loss (and other persons) then went on uptrend as i damn well anticipated and sat patiently for.Notice wall street chart shows no move at the same time.


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## Trembling Hand

Wysiwyg So your point is??


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## Wysiwyg

Trembling Hand said:


> Wysiwyg So your point is??





My post is self explanatory and  i cannot make it simpler or provide an interepreter.


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## wayneL

Did the futures do the same thing at the time, or was it just the CFD?


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## peter2

Wysiwyg: The chart indicates to me that you started a trade in this cfd-index before the market that the cfd is based on opened. Spikes in the opening price bar of an index future is a natural occurence as the funds buy/sell the index to catch up with any overnight (and world) moves.  

Please wait until the market that you are trading is open. You can see the difference in the size of the bars and their movement when the market is open.


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## Trembling Hand

Wysiwyg said:


> My post is self explanatory and  i cannot make it simpler or provide an interepreter.




I assume then you are saying the CFD provider fudged you out of a trade. But the DAX doesn't always follow the YM. What date is that from and I will check the Futs?


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## Wysiwyg

wayneL said:


> Did the futures do the same thing at the time, or was it just the CFD?





Wayne, i can`t get a detailed March futures chart but as i posted the indices track the Wall Street Cash chart closely but this drop off didn`t happen on the Wall Street Cash chart.

Peter2, these CFD instruments were both open together.


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## peter2




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## wayneL

Wysiwyg said:


> Wayne, i can`t get a detailed March futures chart but as i posted the indices track the Wall Street Cash chart closely but this drop off didn`t happen on the Wall Street Cash chart.
> 
> Peter2, these CFD instruments were both open together.



It strictly doesn't matter what WS30 is doing (though high correlation noted), the German 30 should be tracking the DAX.

So the question is: What did the Dax do? I would be very interested in the answer.


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## Trembling Hand

Sorry Wysiwyg as you from the Futs from that day the DAX chart is pretty much the same as the CFD chart. The DAX DOESN"T ALWAYS track with the YM.


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## Wysiwyg

Ok .... the lesson was DONOT trade before markets open and DONOT hold overnight.Thankyou world.


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## acedrum

Hi all,

Being fairly new to CFDs this sort of thing has happened to me a few times.

Normally I would put it down to experience but last night at 10:30 on the dot I was stopped out of a CFD Aussie 200 trade only to watch the market reverse almost instantly. 

I entered short at 3:29pm at 4938.5 after EMAs crossed and some resistance at 4972 expecting more falls with my initial stop at 4978.5 (possibly not seeing the slight uptrend??)

At 9:35 I moved my stop 10 points to 4988.5 to allow a bit of breathing room for increased spread etc. All seemed fine when the market fell from 4984 then jumped slightly higher to close my second stop.

The price on this chart didn't actually get to 4988.5 but the spread was about 11 points by then.

The chart is from IG markets pure deal platform. I checked the Australian 200 Sep 08 on City Index and it looks like the same movement happened.

I know if I hadn't have been stopped out then, I would have woken to a nearly stopped position this morning anyway. Although if I hadn't been stopped out last night I would have been able to get out at break even at least...

I'm pretty sure it's just one of those things but if anyone has any ideas I welcome them!

Feel free to pick as many holes in my style as ya like!


----------



## Trembling Hand

acedrum said:


> Normally I would put it down to experience but last night at 10:30 on the dot I was stopped out of a CFD Aussie 200 trade only to watch the market reverse almost instantly.
> 
> I know if I hadn't have been stopped out then, I would have woken to a nearly stopped position this morning anyway. Although if I hadn't been stopped out last night I would have been able to get out at break even at least...
> 
> I'm pretty sure it's just one of those things but if anyone has any ideas I welcome them!




Just a bad trade.  :


----------



## acedrum

Trembling Hand said:


> Just a bad trade.  :




Haha, yes indeed. Always learning.
The previous 5 good trades in a row were probably flukes! :


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## Trembling Hand

acedrum said:


> Haha, yes indeed. Always learning.
> The previous 5 good trades in a row were probably flukes! :




The reason I said that is we have lost 160 odd points this week touching new 2 years lows. Yesterday we made the low on the open and went up all day, making higher lows. You are shorting a stretched market with a tight stop in after hours trading. Thats a bad trade IMHO.


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## acedrum

Trembling Hand said:


> The reason I said that is we have lost 160 odd points this week touching new 2 years lows. Yesterday we made the low on the open and went up all day, making higher lows. You are shorting a stretched market with a tight stop in after hours trading. Thats a bad trade IMHO.




Thanks TH, point taken.

I actually closed a 109 point short trade yesterday morning at 4909 then went long at 4918 only to be stopped at break even as I had to leave the house! I've not traded at this point of the market before so I'm having some fun figuring out what's going on.


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## nomore4s

Trembling Hand said:


> The reason I said that is we have lost 160 odd points this week touching new 2 years lows. Yesterday we made the low on the open and went up all day, making higher lows. You are shorting a stretched market with a tight stop in after hours trading. Thats a bad trade IMHO.




While nowhere near TH's skill level, I tend to agree.

On that chart, price was making higher highs and higher lows, then you shorted the market near the bottom of a largish move down, not a good way to put the odds in your favour imo.

I would have actually been looking to go long where you went short with a stop under the previous major low after I'd seen some signs of that leg down coming to a finish.

Also I would have been tightening my stops not making them wider after I'd seen the 2 candles with long tails just after you'd gone short. In fact those candles would have had me seriously looking to stop and reverse my position if I was short.

Easy in hindsight:


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## acedrum

nomore4s said:


> Easy in hindsight:




Yep, I realised it was all bad not long after I got in, I guess the point I was trying to make is that it reversed as soon as it hit my 2nd stop.

I also forgot to mention I had been at the pub before I moved my 1st stop...
Ah well. Live and learn.


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## nomore4s

acedrum said:


> I guess the point I was trying to make is that it reversed as soon as it hit my 2nd stop.




lol, If I'd had a dollar for everytime that had happened to me I'd be a wealthy man.:


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## acedrum

nomore4s said:


> lol, If I'd had a dollar for everytime that had happened to me I'd be a wealthy man.:




All part of the fun I suppose.


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## barney

Trembling Hand said:


> The reason I said that is we have lost 160 odd points this week touching new 2 years lows. Yesterday we made the low on the open and went up all day, making higher lows. You are shorting a stretched market with a tight stop in after hours trading. Thats a bad trade IMHO.





Much wisdom in those two sentences ..... 

Trading the IG Aussie at night is a recipe for "donating" cash to IG unless you are brave enough or crazy enough to run without stops.  If the spreads don't get ya' the high/low spikes sure will.:shoot::ald::bigun2:

Out of interest TH, Wayne, (anyone) .... is the IG Aussie 200 following a "real" index during after hours trading (ie while the Dow is open)?  or are the punters actually at the mercy of the MM's.


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## Trembling Hand

barney said:


> Out of interest TH, Wayne, (anyone) .... is the IG Aussie 200 following a "real" index during after hours trading (ie while the Dow is open)?  or are the punters actually at the mercy of the MM's.





I never follows an index. It's ALWAYS linked to the SPI.


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## acedrum

barney said:


> Trading the IG Aussie at night is a recipe for "donating" cash to IG unless you are brave enough or crazy enough to run without stops.  If the spreads don't get ya' the high/low spikes sure will.:shoot::ald::bigun2:




True, but there are also plenty of opportunities to benifit from big moves if you're on the right side.

FYI went long Aussie 200 about 30mins ago haha .


----------



## Trembling Hand

acedrum said:


> True, but there are also plenty of opportunities to benifit from big moves if you're on the right side.
> 
> FYI went long Aussie 200 about 30mins ago haha .




And no doubt sold out at the top 10 min ago.


----------



## acedrum

Well maybe not right at the top...


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## barney

Trembling Hand said:


> I never follows an index. It's ALWAYS linked to the SPI.




Ok Thanks.  
So the high/low spikes at night are mainly due to the lower liquidity, yes? 

Are the spreads adjusted after hours on your Pro platform (Sorry if these seem dumb questions, but CFD providers are all I can afford  

Any chance of posting a chart of the real Futures showing the difference in volume during after hours trade..........  Just curious.   Cheers.


----------



## barney

acedrum said:


> True, but there are also plenty of opportunities to benifit from big moves if you're on the right side.




G'day Ace, Sorry if my other post seemed directed at you ... wasn't having a dig at all ........... Actually speaking from my own "lack of" experience a few months back .....

Pointing out we can all learn a bit reading between TH's lines.  Cheers.


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## Trembling Hand

Here is the last couple of days. You are lucky to do 1000 contracts during out of hours compared to 15,000 - 20,000 during cash hours.


----------



## barney

Trembling Hand said:


> Here is the last couple of days. You are luck to do 1000 contracts during out of hours compared to 15,000 - 20,000 during cash hours.





Thanks, Appreciate that.

PS Re the spreads?  Do they change?


----------



## acedrum

barney said:


> G'day Ace, Sorry if my other post seemed directed at you ... wasn't having a dig at all ........... Actually speaking from my own "lack of" experience a few months back .....
> 
> Pointing out we can all learn a bit reading between TH's lines.  Cheers.




No need to apologise! That's why I posted here. I've been stopped out heaps only to see a reversal straight after, both at night and during the day, as I'm sure so many people have.

I don't really know anyone else who trades so ASF is a great place to learn.


----------



## Trembling Hand

barney said:


> PS Re the spreads?  Do they change?





Of course. Futures trade just like stocks in that the spread will be at whatever level traders place orders. Overnight it can be 15 or more points. During the day its normally 1 to 3.

Here is a vid for download if you want to have a look at the SPI trade. This is today various bits around the close.

http://tremblinghandtrader.typepad.com/SPIDepth.wmv


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## IFocus

Trembling Hand said:


> Here is a vid for download if you want to have a look at the SPI trade. This is today various bits around the close.
> 
> http://tremblinghandtrader.typepad.com/SPIDepth.wmv




What sort of trading video is that, no laptop, no palm trees and where is the hot looking chick sheez TH


----------



## macca

Hi TH,

Thanks for posting the chart and the video, very informative.

One question if I may, the last big volume spike on your 15min chart, is that from 4.00 to 4.15 or from 4.15 to 4.30 ?


----------



## Trembling Hand

macca said:


> Hi TH,
> 
> Thanks for posting the chart and the video, very informative.
> 
> One question if I may, the last big volume spike on your 15min chart, is that from 4.00 to 4.15 or from 4.15 to 4.30 ?




It would most likely be the 4.15 to 4.30 , its a wild time. As the Cash is closed its a time for some serious squaring off and you get some angry volume thrown into the market.


----------



## macca

Hi TH,

Yes, I have watched it a lot, it can do a little or gap 10 - 20 points in a couple of seconds, leading to a plunge of 50+, I actually thought that may be because of low volume, hence my question.

Thanks again for your info


----------



## nomore4s

acedrum said:


> I've been stopped out heaps only to see a reversal straight after, both at night and during the day, as I'm sure so many people have.




Based on that trade you posted, if you continually move your stops out instead of in, imo you will end up having that problem alot.

Stops should only move in one direction. The original stop should be your *max* loss, by moving your stop like you did you are increasing your risk not reducing it.

You need to be able to recongise when the trade is moving against you and get out, what you have done is widen your stops hoping that the trade will eventually go your way. There were plenty of signs that the trade was going against you and opportunities to get out of the trade with a lot smaller loss.


----------



## acedrum

nomore4s said:


> Based on that trade you posted, if you continually move your stops out instead of in, imo you will end up having that problem alot.
> 
> Stops should only move in one direction. The original stop should be your *max* loss, by moving your stop like you did you are increasing your risk not reducing it.
> 
> You need to be able to recongise when the trade is moving against you and get out, what you have done is widen your stops hoping that the trade will eventually go your way. There were plenty of signs that the trade was going against you and opportunities to get out of the trade with a lot smaller loss.




Thanks to everyone who has replied!
It's hard sometimes to see things for what they are when you're right in the thick of it. Great to get an outside perspective. Cheers.


----------



## lasty

Just reduce your size (if you can ) for overnight trades.


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## white_goodman

whats the best CFD provider by your guys consensus in terms of easyness to use and fees...

can someone explain to me the fees that you pay after paying the initial margin, like to do with the daily fluctuations in price?

say the price goes up 10 cents that day, do they credit your account even though you havent sold out?


----------



## kam75

Trembling Hand said:


> Out of a morbid sense of curiosity and genuine concern for traders trying to make money out of leveraged derivatives. How have peoples CFD accounts gone through this mess. I have always suspected that most CFD traders use dodgy value at risk calculations. Like having a large amount of longs thinking if they get stopped out they will lose X amount but don’t factor in the possibility of getting hit on every holding at the same time. On days like the last three and especially today some traders who are holding longs worth 50%of their account could see the account whipped out.  No wonder the CFD Market Makers love them.




It does not matter what you trade.  The trick is in how you manage your money and how you control your risk.  This is where most traders fail.
Trading CFDs is no different to trading shares.  It's just stock on margin.  Instead of paying 50k for your stock you get to control 50k's worth for 5 or 10k.  Where people go wrong is by incorrectly using leverage - believing they can control a million bucks with their 50k account.  BETTING TOO MUCH!

Regards
kam75
_____________________________
http://www.sharesmadeeasy.com


----------



## Trembling Hand

If you needed any evidence that the MM don't hedge your positions but take the other side.........


----------



## BentRod

Here is MBL's version of events.



> Short Selling Banned - 22 September 2008
> 
> Dear Investor
> 
> Over the weekend the Australian Securities Exchange (ASX) and Australian Securities and Investments Commission (ASIC) announced a package of interim measures related to the banning of short selling. ASIC has announced that from the opening of the market on Monday, 22 September 2008 both naked and covered short sales will not be permitted for a period of 30 days, at which time they will reassess for non-financial stocks.
> 
> Links to the ASIC and ASX announcments can be found in the table below:
> ASX 	ASIC
> Announcement 	View 	View
> 
> As a consequence of these actions you will be unable to open new short positions in shares or CFDs on the Trading Platform effective immediately. This does not affect existing short positions you may hold but any unfilled orders for short share or CFD positions will be cancelled.
> To Close Positions
> 
> Please note that you will need to use the Close Position button (located on the Positions Window) in order to close a long position in shares or CFDs rather than the Sell button (located in the Market Depth and Orders windows).
> 
> Kind regards
> 
> 
> MQ Prime


----------



## Trembling Hand

Makes sense MQ Prime don't use the MM model?


----------



## BentRod

Yep DMA.


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## glenn_r

Saxo's version of events.

System User: ASX opening has been delayed 30 minutes. 
System User: *IMPORTANT NOTIFICATION: Australia - ban short selling for 30 days. We refer to ASIC's decision on 21 September 2008 to ban all short selling of Australian listed securities. This means all ASX CFDs on the platform have been disabled for shorting until further notice. Existing shorts will be allowed to stay open for now. The ASX 200 index tracker will trade as usual.


----------

