A couple of ideas for trading in CFDs

[tedwilliams]

Hi everyone,
I have just started to trade what I believe is the best alternative to trading shares-CFDS.
They are geared, so be careful what you buy and sell.
I have made many mistakes, however, I have made 46 percent profit, after commissions, interest and dividends paid, in the last four weeks.

Some tips on mistakes I have made.
1. Do not panic.
2. Do not use emotion when buying shares
3. They are a tool to make money, not lose money.
4. If you buy a stock and it starts to drop right after you buy it-pause go back to why you bought it in first place. Do not
5. Always stick with shares that pay dividends. Unless you want to spectate.
6. Remember, there are thousands of traders who look for short selling profits,
causing shares to peak and trough.
7. Do not follow the crowd and pump your hard earned money into shares like Telstra and BHP. Telstra is going nowhere, it has been around for along time and it does not explode in prices, except on bad news generally. BHP is alright for very, very conservative investors, do not expect great massive returns.
8. Buy stocks that are underpriced, pay dividends, and have exceptional management behind them. Example MQG coughing up a dividend soon, these shares have gone from $15.80 five weeks ago to trading today at $26.45. BEN is another sound share, underpriced, not a major bank, so alot of the market noise is filtered out. Five weeks ago,trading at $6.80 now $7.85. Recently paid dividend a couple of days ago.
9. If you see a profit to be made- MAKE IT! Regardless of how much more you think you can make, everyone else is out there to make money, not hold shares for twenty years and see them rise and fall, take BHP for example, some people have held them for years, they could have sold them back in MARCH and made profits, like CBA, you hear stories trading at $63.00. Do not get emotionally attached to shares, they are shares, not pets.

That is about all I can think of.
Kind Regards
Ted

 

[nomore4s]

Hi everyone,
I have just started to trade what I believe is the best alternative to trading shares-CFDS.
They are geared, so be careful what you buy and sell.
I have made many mistakes, however, I have made 46 percent profit, after commissions, interest and dividends paid, in the last four weeks.

Some tips on mistakes I have made.
1. Do not panic. - That's why you need a plan.
2. Do not use emotion when buying shares - See above
3. They are a tool to make money, not lose money. - But it is easier to lose money than make money consistantly.
4. If you buy a stock and it starts to drop right after you buy it-pause go back to why you bought it in first place. Do not - When do you know you were wrong and exit the trade though?
5. Always stick with shares that pay dividends. Unless you want to spectate. - Spectate or speculate:, Shares rise or fall whether or not they pay a d/e.
6. Remember, there are thousands of traders who look for short selling profits,
causing shares to peak and trough.
7. Do not follow the crowd and pump your hard earned money into shares like Telstra and BHP. Telstra is going nowhere, it has been around for along time and it does not explode in prices, except on bad news generally. BHP is alright for very, very conservative investors, do not expect great massive returns. - BHP has gone from $20 - $32 in 5 months and that's not a massive return? It also pays a d/e:
8. Buy stocks that are underpriced, pay dividends, and have exceptional management behind them. Example MQG coughing up a dividend soon, these shares have gone from $15.80 five weeks ago to trading today at $26.45. BEN is another sound share, underpriced, not a major bank, so alot of the market noise is filtered out. Five weeks ago,trading at $6.80 now $7.85. Recently paid dividend a couple of days ago. - Plenty of stocks in that boat atm but how do you identify the good from the bad?
9. If you see a profit to be made- MAKE IT! Regardless of how much more you think you can make, everyone else is out there to make money, not hold shares for twenty years and see them rise and fall, take BHP for example, some people have held them for years, they could have sold them back in MARCH and made profits, like CBA, you hear stories trading at $63.00. Do not get emotionally attached to shares, they are shares, not pets. - How do you know they aren't still in profit. Could have brought BHP for under $10 in early 2003 and received d/e's in that time as well.

That is about all I can think of.
Kind Regards
Ted

I understand what you are trying to say but there are some serious holes in your theories especially for trading CFDs imo. No money management or trade management for starters.

You've made some good profits during this last bullish period but how much are you going to give back during the next down leg?

 

[Sunder]

Sounds like me the first time I traded CFDs. Made a killing the first 3 months, then lost it all again and then some in the next leg down.

And the scary thing was, what it took 3 months to earn, took 2 weeks to lose - not because the market was falling down, but because volatility went from about 2% per day movements, to up to 15% per day in some of my CFDs. That's 1.5x of the starting payment in 1 day.

 

[nomore4s]

Exactly Sunder. 4 weeks successful trading during the best 4 weeks the market has seen in a while means very little.

 

[CanOz]

Exactly Sunder. 4 weeks successful trading during the best 4 weeks the market has seen in a while means very little.

Hows it go again?? "Never confuse brains with a bull market" - W.Buffet.

Anyway Ted, good luck when it rolls over into this month.

It was and still is for the time being, a very tradable bounce. Due for a correction though...like what Frank is saying.

Cheers,


CanOz

 

[Newkid]

Will of course you can make good money with CFD trades on the down leg. That's the very point of them, their simplicity and the ability to exploit profits on the up or down. I understand not all types of stocks are covered for shorting, but there are still quite a few good ones.

 

[emilov]

Guys I can only relate!

First, Ted let me congratulate you to a great trading month. May your next months be as profitable as this one!

I'm an options trader (same principles apply for money management) and last year during April and May I made 50k in 1.5 months out of a trading bank of around 60k. I thought I was god. Now I know I was risking way too much (I had almost all of that money in the market) and way too much on a trade.

Having had 20 successful trades in a row (seriously, not a single loss) I thought I'd discovered the "secret of printing money" and will never ever lose (no brains in a bull market). Well, when all 5 trades of mine started going against me (all longs, another mistake) I was too slow to realize how wrong I was. I hoped everything will turn up fine (it has before) and didn't cut my losses short (another grave mistake).

I lost it all in less than 3 weeks and the "rest" over the next few months when I was desperately trying to make it back with risky trades.

My trading bank is much smaller now but two months in a row I've been pulling consistent profits with less risk. And this month looks well too (I'm in STO (up over 40% atm) and NCM).

Ted mate, be very careful. Never risk more than 5% of your trading bank on a single trade and make sure you trade with stops (which you never touch once set). Never put more than 50% of your trading bank in the market (that is too much already). Have both longs and shorts (on different stocks of course) to hedge against a sudden movement (the stops might not hold 100%). It is much much better to achieve consistent returns and STAY in the market than to risk it all and lose it all. Because then a big opportunity will come and you have no money to get on board.

Cheers, Emil

 

[sammy84]

There is some really bad advice in that initial post. Remember we are currently experiencing a period of tremendous upside momentum, its not hard to make money. Wait for a leg down and see how some of those rules and your overall account fairs then. I think you need to have a god read around this site.

 

[Wysiwyg]

Good vision from all.
This line may be what Ted Williams Pty. Ltd. are in for.

5. Always stick with shares that pay dividends. Unless you want to spectate.

 

[clayton4115]

i wouldnt be too harsh on Ted, he has some very valid points there.

 

[sammy84]

i wouldnt be too harsh on Ted, he has some very valid points there.

But the bad advice negates the good stuff. Not being harsh, just making sure that others don't follow this advice too throughly