Shorting the XJO - CFD or Options?

[waza1960]

Assuming that we may have a correction in the next 3 months anyone have an opinion on the best way to short the market over this time frame Options or CFD's

 

[reece55]

Waza
I prefer CFD's because they will pay you interest on the open position, low cost to open/close the position and you don't a the same valuation risk that an option has (i.e. price could go down but volatility decreases rapidly, hence the option value decreases). But it's horses for courses I would have thought.....

Cheers
Reece

 

[>Apocalypto<]

Assuming that we may have a correction in the next 3 months anyone have an opinion on the best way to short the market over this time frame Options or CFD's

Wazza,

I agree with Reece,

CFD's are the way to short as your paid interest and volitity does not come into it.

The only advice I will give is for some one new to CFD's going against the trend can be very dangerous.

I only ever short now on day trades.

I woud suggest you concentrate on finding the point where the correction finds support (it's bottom) then look to go long again once confirmed.

getting your short on at the right time can be a task all in its self you can't be two early or just to late.

But I will leave it to you.

 

[CanOz]

Wazza,


getting your short on at the right time can be a task all in its self you can't be two early or just to late.

But I will leave it to you.

TI, its the spread isn't it. Damb spread's take away your profit, cut your expectancy too. I think they're criminal on IG Markets.

Cheers,

 

[>Apocalypto<]

TI, its the spread isn't it. Damb spread's take away your profit, cut your expectancy too. I think they're criminal on IG Markets.

Cheers,

Yeh I am very put off by the spreads Can, that's why I am only looking to trade only a hand full. I won't trade anything with more then a 9 point spread it just kills you when u get it wrong Aussie200 aus/Usd are good only 2 points but some of the others are murder!

I want to go back to futures in the near future. no spreads. but the margins can be real tight!

I am thinking of talking to IG about asking them to offer day trade spreads, maybe half of what they offer now.

eg the S&P us contract they offer has a massive spead it's imposible to trade. from what i gather all CFD providers are all the same.

my Q is why do they need a spread?

 

[yonnie]

hi all,

personally I would never go short the indice right now, `cos you dont know where it will go.
It might go up a lot more and your position will sink and sink and sink.............

however I`m playing with an idea where you are in the market without having a position.

say you know from the last year that the most the ASX or SPX indices or whatever fluctuate on a daily basis is 2.5%.

Why not set a stop sell price at 3% under the close of the day and adjust daily and when the big day comes around
you`ll be right in with the first of the bunch.

I would not do it with CFD`s though; those market makers will kill you in a fast moving market on that day.

I would go with futures myself and trade the ES where there is a lot of liquidity.
Also that market is open almost 24 hours a day, so something happens at night, you`re right in and dont have to wait until the market opens here.

Any thoughts

 

[waza1960]

I should have added this idea was more of a hedge against shareholdings but still nice to enter trade near the peak

 

[>Apocalypto<]

I should have added this idea was more of a hedge against shareholdings but still nice to enter trade near the peak

Same prob Wazza,

Just say you have 1000 shares in the market and you want to protect your self agaist a fall you sell 1000 on a CFD contract it may fall then very quickly recover, you could end up losing some actual profit. It all comes down to picking the top then getting in fast enough to protect your holding.

I am no hedging expert.

Personally I live by a rule of not trading against the trend on daily and weekly trades.

I treat corrections and pull backs as new opportunity to add more to you winning trade or renter.

Each to there own.

But hedging with options can much more dangerous then CFD's as you have no protection when you buy put option(eg stop).

 

[>Apocalypto<]

hi all,

personally I would never go short the indice right now, `cos you dont know where it will go.
It might go up a lot more and your position will sink and sink and sink.............

however I`m playing with an idea where you are in the market without having a position.

say you know from the last year that the most the ASX or SPX indices or whatever fluctuate on a daily basis is 2.5%.

Why not set a stop sell price at 3% under the close of the day and adjust daily and when the big day comes around
you`ll be right in with the first of the bunch.

I would not do it with CFD`s though; those market makers will kill you in a fast moving market on that day.

I would go with futures myself and trade the ES where there is a lot of liquidity.
Also that market is open almost 24 hours a day, so something happens at night, you`re right in and dont have to wait until the market opens here.

Any thoughts

Nice post yonnie,

agree with you, trying to short in a major uptrend can be suicide and best left to the pros.

What is the ES? what is the margin requirement per contract?

I trade the IG XJO which is also 24hours based on our XJO. loads of fun

yonnie I worked it ES is the Electronic S&P500US

 

[CanOz]

ES - Eurostocks? oops, got it ...