Shares, Options, Futures, CFDs - what do you trade and why?

wayneL · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

theasxgorilla said:
If there are 200 constituents the likelihood of a single exchange affecting eventing causing all of them to fall out of bed is pretty slim. But if you were in a single constituent, like for example NAB during the traders scandal in 2004, you would have really felt the pain.

You don't tie risk up in a "chart"...no matter what you trade there is always an underlying reality eg. a commodity, a currency, a company.

Gorilla

Now we're getting really pedantic: "Chart" = synonym for "instrument". I thought that bleedingly obvious.

Now granted that price shocks are cushioned because of the diversification within the index. I have already pointed this out myself so we are regurgitating old points here.

By this argument, buying only BHP is diversifying because it activities are across many sectors... oil, gold, nickel, gas whatever. The truth is that your not.

I'm not saying this is a bad thing or a good thing, just that you are not diversified in the true sense. Your risk is in the general sentiment of equities and you are leveraged. Need we look any further than last tuesday for this point to be glaringly obvious... all world indices tanked together.

Trade the SPI, Cotton, Oil, Gold, Soybeans etc. and you are genuinely diversified.

wayneL · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Bronte said:
So are you now in agreement?

NO!

This is futile!

Ciao

theasxgorilla · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

wayneL said:
Trade the SPI, Cotton, Oil, Gold, Soybeans etc. and you are genuinely diversified.

Diversification (to me) isn't an absolute. You can be more or less diversified. I would say that trading the SPI is more diversified than trading BHP. But trading BHP is more diversified than say, MCR. I know someone who trades only the S&P500 and this presents sufficient diversification for him.

Bronte · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

To be fully diversified you probably require to own:

Property
Shares
Cash

Then to go overseas and own:

Overseas Property
Overseas Shares
Overseas currency

Don't stop here:

Invest in Real Estate on the moon
Luna shares
Moon rock

theasxgorilla · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

...and you can't take money with you so you should also be Jewish, Muslim, Christian, Hindu, Buddhist

wayneL · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

theasxgorilla said:
Diversification (to me) isn't an absolute. You can be more or less diversified. I would say that trading the SPI is more diversified than trading BHP. But trading BHP is more diversified than say, MCR. I know someone who trades only the S&P500 and this presents sufficient diversification for him.

Non diversification (my definition for the sake of this point) may not be a bad thing.

There are a lot of factors involved. If I was exclusively day trading like the Brontemen are, the SP500, or the SPI, or the Dow, HS whatever is absolutely fine all on its own. Some are even comfortable swing trading one instrument.

Absolutely nothing wrong with that.

Even using the futures as an index fund is fine as it offers diversification within the index.

Nothing wrong with any of these. But as a "trading instrument", you are not diversified. Subtle, but important difference.

Bronte · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

wayneL said:
Non diversification (my definition for the sake of this point) may not be a bad thing.

There are a lot of factors involved. If I was exclusively day trading like the Brontemen are, the SP500, or the SPI, or the Dow, HS whatever is absolutely fine all on its own. Some are even comfortable swing trading one instrument.

Absolutely nothing wrong with that.

Even using the futures as an index fund is fine as it offers diversification within the index.

Nothing wrong with any of these. But as a "trading instrument", you are not diversified. Subtle, but important difference.

So what was the point of:

????????????????
Post #3

wayneL · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Bronte said:
So what was the point of:
????????????????
Post #3

You stated you trade the SPI for diversification.

You are not diversified in the context of your method.

professor_frink · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Pager said:
We all trade to basically make a buck, but which markets/instruments do those on this forum trade and why?

All have there pros and cons but why do you favour a particular market over another, many may trade 2 or 3 or maybe all instruments but I would expect even these traders favour 1 market over the others.

I trade Index Futures and on a short term basis, very rarely hold past the close of any market, for me Index Futures are the simplest form of trading and I would go as far to say that trading these types of futures is a far more even playing field for all participants in the market.

Costs involved are very low compared to other markets, buying 1 contract on the Spi for example costs from $5 to $20 depending on the broker, that contract at current prices controls about $140,000, markets are liquid and spreads generally pretty tight, although slippage in some markets can be bad when they are moving quickly.

Cheers

Pager

I'm with you Pager- daytrading index futures
Nikkei and Hang Seng for me.
Nikkei is quite similar to the SPI, but about 50 times more liquid, which is why I like it.
Hang Seng is fast and volatile, so it satisfies my need for activity on a regular basis

wayneL · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Bronte said:
To be fully diversified you probably require to own:

Property
Shares
Cash

Then to go overseas and own:

Overseas Property
Overseas Shares
Overseas currency

Don't stop here:

Invest in Real Estate on the moon
Luna shares
Moon rock

This is true, but such diversification may be negative. I am not making the the point whether you should or shouldn't, or how much, oe whether it's good or bad, just that you aren't.

Simple point made complicated.

theasxgorilla · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

wayneL said:
This is true, but such diversification may be negative. I am not making the the point whether you should or shouldn't, or how much, oe whether it's good or bad, just that you aren't.

Simple point made complicated.

Simple as it was I think you missed it. Internal diversification of the instrument you trade can reduce volatility making price action smoother, making technical analysis easier and high leverage trading safer.

"Internal diversification" is a valid reason for wanting to trade the SPI. Subtle, but important.

>Apocalypto< · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Great Topic Pager

Traded options over aussie stocks and traded US Futures.

Now trading Options over XJO

CFD's over aussie stocks and Aussie200 XJO index + Oil & Gold.

Looking to start trading the SPI but that will be later.

When I have more avalible cash to let sit in the market I want to start trading shares. :bananasmi

wayneL · 4 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

theasxgorilla said:
Simple as it was I think you missed it. Internal diversification of the instrument you trade can reduce volatility making price action smoother, making technical analysis easier and high leverage trading safer.

"Internal diversification" is a valid reason for wanting to trade the SPI. Subtle, but important.

Gorilla

Reread this thread particularly post #8. Your point, is a point I raised before you even entered the thread. I repeat, you are regurgitating old points and applying them outside of the context of the discussion between me an the Brontemen and women.

In your context I agree, in Bronte's context I disagree.

Temjin · 11 March 2007

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Trading the SPI index along using one single trading system is not necessary a diversification at all regardless of volatility or how easy it can be traded.

My definition of real diversification (from the perspective of trading only) is to have multiple uncorrelated systems trading in uncorrelated markets. (equities, futures, commondities, etc, etc)

A portfolio of such systems trading in those markets will have a much higher chance of having a lower maximum drawdown than trading a single system on a single market. This is simply because drawdowns from these different markets/systems will rarely occur at the same time as they are uncorrelated, and thus, have limited cumulative downside effect.

Anyone who thinks buying an Australian share managed fund is true diversification simply because it has lower volatility is simply wrong.

Shares, Options, Futures, CFDs - what do you trade and why?

wayneL

VIVA LA LIBERTAD, CARAJO!

wayneL

VIVA LA LIBERTAD, CARAJO!

theasxgorilla

Problem solved... next bubble.

Bronte

Trading The SPI for 20+ years

theasxgorilla

Problem solved... next bubble.

wayneL

VIVA LA LIBERTAD, CARAJO!

Bronte

Trading The SPI for 20+ years

wayneL

VIVA LA LIBERTAD, CARAJO!

professor_frink

Moderator

wayneL

VIVA LA LIBERTAD, CARAJO!

theasxgorilla

Problem solved... next bubble.

>Apocalypto<

20.03.2012

wayneL

VIVA LA LIBERTAD, CARAJO!

Temjin

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