CFDs anyone?

[professor_frink]

Re: CFD's anyone?

spi(share price index) is the index futures contract for australia. go to the sfe website, or search through the forums here for some more info on it.

 

[Ageo]

Re: CFD's anyone?

Frink sorry but i didnt explain myself

is there anthing that basically allows you to buy at the price.

ie 5000 price Buy and sell is at 5000?

so 1:1 win/loss ratio

 

[professor_frink]

Re: CFD's anyone?

no such thing my good man! there will always be a difference. For what you want to do, you will just have to find a product with the tightest possible spread.

edit: what I meant before by risk/reward was the fact that you were going to be risking more on each trade, ie the 2.25 points, than your 1 point profit target.

 

[Ageo]

Re: CFD's anyone?

Well that sux now doesnt it lol


looks like ill have to go back to the drawing board

 

[professor_frink]

Re: CFD's anyone?

yes it does! that's why scalping is a tough gig. If your looking at daytrading, looking for bigger intraday swings are a better way to go, and futures are the best vehicle for this. small spreads, high leverage, and its possible to get very low brokerage.
But be warned futures aren't for the faint hearted, and most definately not for the inexperienced, so do alot of research before committing any hard earned to it.

 

[chemist]

Re: CFD's anyone?

Well that sux now doesnt it lol


looks like ill have to go back to the drawing board

You should learn the basics of finance and economics before you start drawing any plans. Not to be rude, but the questions you ask show that you don't have a clue.

cheers,
Chemist

 

[professor_frink]

Re: CFD's anyone?

You should learn the basics of finance and economics before you start drawing any plans. Not to be rude, but the questions you ask show that you don't have a clue.

cheers,
Chemist

chemist I think it's great that he's on here asking questions. It might just save him a fortune down the track.

 

[Ageo]

Re: CFD's anyone?

Chemist the reason im asking questions is because i have no idea in this area. As for finance and economics whats your point? I trade options successfully but im looking at further leveraging my money.


You're quick to make sarcastic comments and criticize but you dont back it up with any info or help? you would make a fantastic financial advisor

Frink i had a look at the S&P 500 which has a 0.6 pip spread. Now each contract is worth $250US but check this out, IG markets

http://www.igmarkets.com.au/content/sites/aum/en_GB/cd_indices_index_aum.html

They have a limited risk order (like a Gauranteed Stop) at 0.5 away which means that for every 1 pip against me i only loose 1.1 so it gives me more room to lose a few more and then get onto a couple of good swings in my favour.

i.e 10 losses would = 11pips loss

So if i had 3 wins with 4 pips each win that would mean im 1 pip up

Whats your thoughts?

 

[professor_frink]

Re: CFD's anyone?

It won't be that much different. the difference in the spreads when you consider the value of the indexes means your not really getting a better deal.
They refer to it as a 'limited risk premium', not an order, which I think means that they will add this amount onto the spread when you open the trade, costing you more money.

 

[Ageo]

Re: CFD's anyone?

ah ok so basically 0.6 is the max i can loose on each pip?


So if i lost 5 pips = 8 pips negative


To make that up i would need


to make 20 pips which would = 8 leaving me with a clean sheet

So a 1:4 win/loss ratio

Yuk thats digusting hehe

 

[mit]

Re: CFD's anyone?

Ageo,

I think that if you are keen to go forward, I would still look at CMC at $1 per pip. Even though it is a high relative spread. You can go for a single contract. Even though if it all pans out you'll only make $30 for a month. The issues of slippage timing and just getting your act together could cost you hundreds of dollars a month. However, compare this with thousands it could cost you using full futures contracts.

CMC also has a S&P500 like contract SPX500. The spread is 0.5 point. This looks good but remember the movement of the S&P 500 is around a quarter of the daily movement for the ASX 200. The contract size is $1USD per point.

MIT

 

[professor_frink]

Re: CFD's anyone?

ah ok so basically 0.6 is the max i can loose on each pip?

not quite. It's the spread, ie bid 1200, ask 1200.6. The limited risk premium will then be added on if you take it, making the inital spread 1.1. At $250 a point this is a big impact.

So if i lost 5 pips = 8 pips negative


To make that up i would need


to make 20 pips which would = 8 leaving me with a clean sheet

So a 1:4 win/loss ratio

Yuk thats digusting hehe

not quite sure what you mean by this bit.

working out how much you can potentially win or lose out of any trade should come about from whatever system you use to get your buy and sell signals. Once you have a system in place that you are happy with, determine wether you can make that system work with this kind of product. If not, either look for another product to trade your system in, or redesign your system.

Before going ahead with this, it's important to read the fine print at the bottom of the page.

"1) Spreads are subject to variation, especially in volatile market conditions."

I'd want to find out their definition of volatile market conditions first.

6) Limited Risk positions on stock indices are closed if the middle of our quotation reaches the selected stop level. There may be nothing against which to measure our quotation, particularly at times when the underlying market is closed.

I'd walk away right here.

 

[Ageo]

Re: CFD's anyone?

SO Frink what your saying is find a product that obviously suits the system im trying to implement?

 

[professor_frink]

Re: CFD's anyone?

exactly. workable system first. products later.

 

[professor_frink]

Re: CFD's anyone?

ageo, I've posted a chart of todays XJO action.

Have a look at the size of the moves available. If you don't mind me asking, what exactly is the appeal of trying to scalp out a point when there is potentially 20-30 points on offer for an hour or two trade? There's still no overnight risk trading this way, and the spread on the cfd would be alot less of an issue if you were going for a bigger move.

 

[Ageo]

Re: CFD's anyone?

Thanks for the chart Frink, the thing is that if i lose 5 points it will require me to make 45 points to come even again (based on the Aussie200 2 pip spread).


As for the S&P 500 if i lose 5 points it will require only 20 points to recover the losses.

Obviously if i were to go with the S&P 500 i would basically look for signals that allowed me to ride a nice wave.

What spreads do you trade on futures frinks?


Just to add,

the Aussie200 is 1:9 win/loss ratio

the S&P 500 is 1:4 win/loss ratio

thats more than half so wouldnt it be wiser to trade the S&P?

 

[professor_frink]

Re: CFD's anyone?

I'm actually not that far ahead of you ageo, I'm moving into futures soon, but I want to be 100% confident that I can turn a profit first. which for my discretionary trading method means alot of papertrading!! I've been preparing for the move for the last 4 months, researching, papertrading, looking for a broker, trying to organise data, etc. Planning on starting live at the start of july.

This move for me is coming after 5 and a bit years of share and option trading, and I'm still spending months working on it before I make the move so that when I do, I do it right. That's why I've been telling you to make sure you do your research and look at what you want to do thoroughly before you commit any money to it.

I'm still not sure what your getting at by your risk reward ratios that your posting. Could you clarify it a bit for me.

 

[Ageo]

Re: CFD's anyone?

Hehe ok ill try and explain it



*1st the aussie200

1 point down = 3 pip loss

3 points up = 1 pip profit


So a 5 x 1 point losses (5 points in total) = 15 pips down

45 points up = 15 pip profit


45 profit pips divided by 5 loss pips = 9

So basically you need 9 wins to 1 loss to make up the losses.
9:1 win/loss ratio

So i would prefer 4:1 win loss ratio with the S&P 500

Even thow my goal would be to cut the loss a 1 point and let my profits run into 10-20 points before taking the profit. Im trying to have my system allow me to lose a few times before i win but as you can see even 5 points of losses force me to make 45 points to break even.

So like i said before the tighter the spread the better win/loss ratio

 

[professor_frink]

Re: CFD's anyone?

Ok gotcha. Do you see the problem with that situation?

 

[Ageo]

Re: CFD's anyone?

With the aussie 200 i can but with the S&P 500 if i lose 1 point i only need to make 4 to break even.


So even if i lost 5 times (@ 1 point trades) then if i made a 20-30 point swing trade i would cover myself if not make a nice profit.

This is based on worst case scenarios

im sure 1 out of every 6 i can guess right

Now look at the flipside, imagine getting 3 swing trades right out of six.

looking better than before