CFDs anyone?

[wayneL]

Re: CFD's anyone?

You're kidding, so back to the last empire Wayne? As the night sets in you set out....into the depths...you must have been a bat or owl or something in a previous life ?? Guess it'll be good for mod work as I prefer not to have the night shift...so be warned folks, 24hrs surveillance on ASF!

eeerrrr... I think I was a bat...sorta

btw Wayne, which ones did you think were the most reputable CFD spruikers when you did your research? Things will probably change once Comsec comes on board, the market dynamics would be different.

Well it's just my opinion on what I thought was important (and price wasn't the main consideration) but is was out of MAN/etrade or Macbank.

One of the main considerations was financial security/ transparency of financial affairs.

Cheers

 

[Ageo]

Re: CFD's anyone?

Hi Wayne and others (Thought id move into a forum that is active hehe).


I mainly trade options but have recently looked into CFD's. More of a fact trading index CFD's like the aussie200. Now i have been paper trading with no intraday charts just basically going long and short with the click of a refresh button in the Trading room website and i can tell you now it is very easy to make 1 point per day (you can make more but greed will end up eating you). I have now made 7 points in the last 2 days (about 2 hours of trading all up). Now 1 point equals $1 per move so 100 contracts would only require you to put up $5250 (100 x 5250 asx200 price = $525,000 x 1% (1% margin is only required to trade CFD's of indicies).

So for risking $5250 i made $700 in 2 days (100 contracts x 7 points).

Of course the same happens if you lose points, so thats why i developed a system where my goal is to only acheive 1 point per day and then have the day off. To make 1 point per day is pretty easy and thats without and intraday charts, Technical Analysis etc..

1 point per day = around 20 points per month (very achievable) so on 100 contracts ($5250 margin) that would equal a return of $2000 for the month which is almost 50% return on your risk. So if you want you could go for 10 points per month and still earn fantastic results. Now Imagine the same principal 20 points per month, you trade 1000 contracts ($52,500 margin) you return $1000 per day or $20000 p/m. Imagine 10000 contracts?

With the right tools (intraday charts, T/A etc..) you can earn 1 point positive within 10min and have the rest of the day off). The reason it can be risky is because people can become greedy which sometimes means trying to make more and instead having a loss for the day. Apparently with http://www.cmcmarkets.com.au the commissions are free with index CFD's and $10 for shares. There is a free seminar on the 27th of May in Sydney which myself and a few others will be attending. There online software makes it very easy to buy and sell fast without fuss.

The good thing with CFD's is if its 1 point down i close for a loss of 1 point and then basically wait and see if it will move a few more points down which basically then triggers me to place a short (down) position. The beauty is that weither its going up or down if you jump onto a short trend and make 1 point positive that means you can have the day off. To me it makes alot of sense hence its leveraged @ 1:100 which if you use it wisely like any leverage can be very very powerfull.


Adrian

 

[professor_frink]

Re: CFD's anyone?

hi ageo, welcome to ASF! what your talking about doing is pretty well the same as trading futures. have you looked into what the spreads are like? If your looking to scalp out a couple of points here and there, then the spread could be a killer, especially when your not paying comms, as that's where they'll make a profit, so check that first.

 

[Ageo]

Re: CFD's anyone?

Hey Frink, i will have to check out the spread on it so thanks for the heads up. With futures thow i thought its only traded on commodoties and can you have the same leverage capabilities as CFD's?

 

[professor_frink]

Re: CFD's anyone?

you can trade indexes and lots of other things too(although alot of things trade overseas). With the spi here(which is the futures equivalent of the asx 200) you'll have to fork out roughly $5500 a contract(not sure of the exact amount), and you'll make/lose $25 for every point it goes up or down.

edit: check the sfe's website to find out what the margin is currently.

 

[Ageo]

Re: CFD's anyone?

you'll have to fork out roughly $5500 a contract(not sure of the exact amount), and you'll make/lose $25 for every point it goes up or down.

edit: check the sfe's website to find out what the margin is currently.

You see fork with $5500 (actually whatever the asx200 is x 100) i can trade 100 contracts which is $100 per point move. According to your figures its 4 times more leverage. I just have to see how much it costs.

Ill get the details and post it here

 

[professor_frink]

Re: CFD's anyone?

The next question you should also be finding out after you find out how wide the spreads are, is how many contracts you can reasonably trade at any one time. Do you know if you can easily scalp 100 at a time?

You don't want be putting yourself in the position where you can't get your whole order filled at once if your only looking to make 1 or 2 points at a time.
Following on from that, how are you going to control your losses? where will your stop be placed? If your looking to make 1 point, how are you going to keep your losses smaller than your wins?

Just make sure you have good answers for all of these questions, not for my sake, but for your own, because playing with futures or cfd's can be a risky game if your not sure of what your doing.
lots of leverage in trading is alright if you know exactly what you are doing, but if you don't it's going to be a fast track to the poor house.

 

[Ageo]

Re: CFD's anyone?

Frink i have some answers!, i spoke with a representative and they assure me that if i come onboard with them and sign its commission free on index and sector CFD's (i said i want it in writing before i commit myself to anything) so thats a thumbs up.

2nd, yes i can trade 100 or 1000 contracts and make 1 or 2 points here and there. He said his single clients do that where is instituitions do 60-100 points over a month and of course with the aussie200 the liquidity is enough to handle big contracts (over 100,000) and once if get to that point i might move onto the Nikkei or Dow for more liquidity.


3rd Well basically my plan is to have real time intraday charts monitoring the movement and as soon as it moves even .1 of a point against me i close to minmize my loss. But once i have achieved 1 point in the positive (i.e 10 points - 9 points loss = 1 point positive) then ill call it a day. Greed is not my game here, consistency and compounding. Because i know that its easier to take 1 point positive than 2 points or more. Eventually ill be happy to make 1 point on 10,000 contracts etc..

Apparently they make interest off my margin money, but CMC is a global company so im sure it has its reasons.

P.S Your orders gets filled within 2 seconds of placing it (live tutorial showing it). If i have problems with liquidity ill just move onto other indicies with higher volume.

I can place a limit stop order (which is no good for overnight but good in throughout the day) but it has to be 5 points minimum away. So ill use that as my backup if for whatever reason it moves too quick for me to close. The trading platform thow that they offer is super fast and takes seconds to perform a trade.

 

[chemist]

Re: CFD's anyone?

...I mainly trade options but have recently looked into CFD's. More of a fact trading index CFD's like the aussie200. Now i have been paper trading with no intraday charts just basically going long and short with the click of a refresh button in the Trading room website and i can tell you now it is very easy to make 1 point per day (you can make more but greed will end up eating you). I have now made 7 points in the last 2 days (about 2 hours of trading all up)....

I used to make a fortune watching Sale of the Century too. Real life is more difficult.

cheers,
Chemist

 

[Ageo]

Re: CFD's anyone?

Chemist forgive me for asking but are you trading CFD's? and if so how long?


thanks

 

[mit]

Re: CFD's anyone?

Ageo,

Good luck . Don't be impatient. Try it with 1 contract first for at least a month and get the hang of it. The only problem is that the spread (2pips) is twice the size of your daily budget. So if you have a bad day then your losses mount up quickly. A quick scenario:

Aussie 200 is 5086/5088. You buy at 5088. To make a 1 pip profit the market must move 3 pips to 5089/5091. If you have a tight stop of 1 pip and get stopped out (Not that they let you have stops that tight) you are 3pips in the red. The next trade will have to make six pips to bring you back to a 1 pip profit.

If you have a bad day it wont be long until you are 30pips down which is a months profit.

MIT

 

[professor_frink]

Re: CFD's anyone?

another thing I just thought of- do you know if the 'aussie 200' they offer directly mirrors the XJO? if so you can do some paper trading on the XJO first.

If so and you've got a program like quotetracker and an online broker already, you can get free charting to do some more testing on.

Did they tell you what the average spread is? This is crucial for this type of trading

My final warning- if your going to do this don't jump in the deep end and do 100 contracts straight up. Start small and work your way up if your good at it.

edit: thanks for posting the spread info mit- I now know why this hasn't been mentioned as a serious alternative to futures

 

[mit]

Re: CFD's anyone?

another thing I just thought of- do you know if the 'aussie 200' they offer directly mirrors the XJO? if so you can do some paper trading on the XJO first.

If so and you've got a program like quotetracker and an online broker already, you can get free charting to do some more testing on.

Did they tell you what the average spread is? This is crucial for this type of trading

My final warning- if your going to do this don't jump in the deep end and do 100 contracts straight up. Start small and work your way up if your good at it.

edit: thanks for posting the spread info mit- I now know why this hasn't been mentioned as a serious alternative to futures

4 pips on the overnight market. It doesn't follow the XJO exactly. I don't know if it follows the spi (corrected for fairvalue) but I have heard that it doesn't. My feeling is that you trade the Aussie200 as practicing on the SPI or XJO is different.

The big advantage is the small contract size. If you were to trade 25 contracts or more then you'd be crazy not to use futures due to the cost of the spread.

MIT

 

[professor_frink]

Re: CFD's anyone?

good point mit. at least the spread on the spi is usually only a point. It could be used as a traing ground for the spi to get someone used to daytrading if very small positions are used.

Ageo, you still may be able to trade the aussie 200 intraday, but maybe looking for larger intraday swings might be the way to go.

 

[Ageo]

Re: CFD's anyone?

Hey Guys, thanks for the heads up Mit


i just said the aussie200 because its aussie but im open to other indicies, commodities etc...

As for trading of course ill start very minimal and test it for at least a month to have a very good idea and become comfortable with it, and as my experience increases so does my contract size.

Mit can you please confirm this which is confusing:

Aussie200 5086/5088 and i buy at 5088 now your saying if it moves 1 point (pip is short?) then im still only .5 of a profit so i need for it to move 2 or 3 points actually to make a 1 point profit (vica versa)? if thats right could you please explain indepth the reason (sorry the last post is still a bit hard to understand).

One last thing, is there a instrument that trades instead of 3 pips just 1 pip?


thanks heaps

 

[professor_frink]

Re: CFD's anyone?

by pip he means point.
If the spread is 5086/5088- you pay 5088, meaning you are automatically down 2 points before the trade goes anywhere.
the index the needs to go up 3 points for the bid to rise to 5087 so you can get out with your point profit. If it moves down by 0.25 of a point and your stop is triggered, then you will lose 2.25 points on the trade. Not a very good risk/reward senario.

 

[Ageo]

Re: CFD's anyone?

Thanks for the heads up Frink, is there a spread in any index, commodotie or share thats 1 pip?

 

[robots]

Re: CFD's anyone?

hello,

be careful trading indices like aussie200 with CFD or spread bet providers as they can have massive shifts in there price around opening and closing times (of the spi), why I dont know

I had to have around a 200 point stop loss with IG to overcome this

a stop loss will not protect you 100%, as with the last couple of days, if the SPI opens below your stop loss that will be the price your closed at

futures brokers will often set up a day and seperate night stop loss

thankyou
robots

 

[professor_frink]

Re: CFD's anyone?

Thanks for the heads up Frink, is there a spread in any index, commodotie or share thats 1 pip?

If your asking if there are cfd's with this, I don't know for sure but I doubt it. The spi from what I've seen is normally 1 point. It should provide more than enough leverage for what you want to do.

 

[Ageo]

Re: CFD's anyone?

If your asking if there are cfd's with this, I don't know for sure but I doubt it. The spi from what I've seen is normally 1 point. It should provide more than enough leverage for what you want to do.

Frink is the SPI based on futures?, im a newbie at that so any info would be handy.


Robot i do not intend on holding any positions over night simply due to the fact that im highly exposed to a downside in the overnight move.

cheers