The Dangers of CFDs

[acedrum]

Well maybe not right at the top...

 

[barney]

I never follows an index. It's ALWAYS linked to the SPI.

Ok Thanks.
So the high/low spikes at night are mainly due to the lower liquidity, yes?

Are the spreads adjusted after hours on your Pro platform (Sorry if these seem dumb questions, but CFD providers are all I can afford

Any chance of posting a chart of the real Futures showing the difference in volume during after hours trade.......... Just curious. Cheers.

 

[barney]

True, but there are also plenty of opportunities to benifit from big moves if you're on the right side.

G'day Ace, Sorry if my other post seemed directed at you ... wasn't having a dig at all ........... Actually speaking from my own "lack of" experience a few months back .....

Pointing out we can all learn a bit reading between TH's lines. Cheers.

 

[Trembling Hand]

Here is the last couple of days. You are lucky to do 1000 contracts during out of hours compared to 15,000 - 20,000 during cash hours.

 

[barney]

Here is the last couple of days. You are luck to do 1000 contracts during out of hours compared to 15,000 - 20,000 during cash hours.

Thanks, Appreciate that.

PS Re the spreads? Do they change?

 

[acedrum]

G'day Ace, Sorry if my other post seemed directed at you ... wasn't having a dig at all ........... Actually speaking from my own "lack of" experience a few months back .....

Pointing out we can all learn a bit reading between TH's lines. Cheers.

No need to apologise! That's why I posted here. I've been stopped out heaps only to see a reversal straight after, both at night and during the day, as I'm sure so many people have.

I don't really know anyone else who trades so ASF is a great place to learn.

 

[Trembling Hand]

PS Re the spreads? Do they change?

Of course. Futures trade just like stocks in that the spread will be at whatever level traders place orders. Overnight it can be 15 or more points. During the day its normally 1 to 3.

Here is a vid for download if you want to have a look at the SPI trade. This is today various bits around the close.

http://tremblinghandtrader.typepad.com/SPIDepth.wmv

 

[IFocus]

Here is a vid for download if you want to have a look at the SPI trade. This is today various bits around the close.

http://tremblinghandtrader.typepad.com/SPIDepth.wmv

What sort of trading video is that, no laptop, no palm trees and where is the hot looking chick sheez TH

 

[macca]

Hi TH,

Thanks for posting the chart and the video, very informative.

One question if I may, the last big volume spike on your 15min chart, is that from 4.00 to 4.15 or from 4.15 to 4.30 ?

 

[Trembling Hand]

Hi TH,

Thanks for posting the chart and the video, very informative.

One question if I may, the last big volume spike on your 15min chart, is that from 4.00 to 4.15 or from 4.15 to 4.30 ?

It would most likely be the 4.15 to 4.30 , its a wild time. As the Cash is closed its a time for some serious squaring off and you get some angry volume thrown into the market.

 

[macca]

Hi TH,

Yes, I have watched it a lot, it can do a little or gap 10 - 20 points in a couple of seconds, leading to a plunge of 50+, I actually thought that may be because of low volume, hence my question.

Thanks again for your info

 

[nomore4s]

I've been stopped out heaps only to see a reversal straight after, both at night and during the day, as I'm sure so many people have.

Based on that trade you posted, if you continually move your stops out instead of in, imo you will end up having that problem alot.

Stops should only move in one direction. The original stop should be your max loss, by moving your stop like you did you are increasing your risk not reducing it.

You need to be able to recongise when the trade is moving against you and get out, what you have done is widen your stops hoping that the trade will eventually go your way. There were plenty of signs that the trade was going against you and opportunities to get out of the trade with a lot smaller loss.

 

[acedrum]

Based on that trade you posted, if you continually move your stops out instead of in, imo you will end up having that problem alot.

Stops should only move in one direction. The original stop should be your max loss, by moving your stop like you did you are increasing your risk not reducing it.

You need to be able to recongise when the trade is moving against you and get out, what you have done is widen your stops hoping that the trade will eventually go your way. There were plenty of signs that the trade was going against you and opportunities to get out of the trade with a lot smaller loss.

Thanks to everyone who has replied!
It's hard sometimes to see things for what they are when you're right in the thick of it. Great to get an outside perspective. Cheers.

 

[lasty]

Just reduce your size (if you can ) for overnight trades.

 

[white_goodman]

whats the best CFD provider by your guys consensus in terms of easyness to use and fees...

can someone explain to me the fees that you pay after paying the initial margin, like to do with the daily fluctuations in price?

say the price goes up 10 cents that day, do they credit your account even though you havent sold out?

 

[kam75]

Out of a morbid sense of curiosity and genuine concern for traders trying to make money out of leveraged derivatives. How have peoples CFD accounts gone through this mess. I have always suspected that most CFD traders use dodgy value at risk calculations. Like having a large amount of longs thinking if they get stopped out they will lose X amount but don’t factor in the possibility of getting hit on every holding at the same time. On days like the last three and especially today some traders who are holding longs worth 50%of their account could see the account whipped out. No wonder the CFD Market Makers love them.

It does not matter what you trade. The trick is in how you manage your money and how you control your risk. This is where most traders fail.
Trading CFDs is no different to trading shares. It's just stock on margin. Instead of paying 50k for your stock you get to control 50k's worth for 5 or 10k. Where people go wrong is by incorrectly using leverage - believing they can control a million bucks with their 50k account. BETTING TOO MUCH!

Regards
kam75
_____________________________
http://www.sharesmadeeasy.com

 

[Trembling Hand]

If you needed any evidence that the MM don't hedge your positions but take the other side.........

 

[BentRod]

Here is MBL's version of events.

Short Selling Banned - 22 September 2008

Dear Investor

Over the weekend the Australian Securities Exchange (ASX) and Australian Securities and Investments Commission (ASIC) announced a package of interim measures related to the banning of short selling. ASIC has announced that from the opening of the market on Monday, 22 September 2008 both naked and covered short sales will not be permitted for a period of 30 days, at which time they will reassess for non-financial stocks.

Links to the ASIC and ASX announcments can be found in the table below:
ASX ASIC
Announcement View View

As a consequence of these actions you will be unable to open new short positions in shares or CFDs on the Trading Platform effective immediately. This does not affect existing short positions you may hold but any unfilled orders for short share or CFD positions will be cancelled.
To Close Positions

Please note that you will need to use the Close Position button (located on the Positions Window) in order to close a long position in shares or CFDs rather than the Sell button (located in the Market Depth and Orders windows).

Kind regards


MQ Prime

 

[Trembling Hand]

Makes sense MQ Prime don't use the MM model?

 

[BentRod]

Yep DMA.