Trading CFDs

[Bobby]

Re: Trading CFD's

That is why I stopped trading, studied what I was doing, and started using GSL's.
Say I had $100000 for a bank and wanted to go unprotected via CFD's in BHP, then by risking no more than 15% (or $15000) on a complete wipeout scenario then the amount I purchase would be 15000/26.5=566 shares.
a) Via CFD= 5% margin + (5% margin*10% for divi allowance)=$825 with $14175 put away in case of disaster = $15000. Total risk = $15000....
b) Via normal purchase of shares = $15000. Total risk = $15000....
c) Via CFD DMA GSL = 5% margin + (5% margin*10% for divi allowance) + 0.3% GSL premium = 750 + 75 + 45 =$870. Total risk = $870.
Should also mention that under my trading guidelines (another contentious issue on another thread ) that no one position (total share value) will represent more than 15% of my bank and my total use of funds available (margin etc) will not represent more than 30% of my available funds.
Now why would I use a or b over c, in fact why would I bother with leveraged a as opposed to b, apart from a small interest gain? In a and b I could have approx 7 open BHP type positions with all my $100000 committed and ultimately all at risk whereas with c I can comfortably have 15 BHP type positions open with less than 15% of my funds committed and at risk. If I am going to use leverage I want to know my total liability under a worst case scenario and I want to be in control of my risk, not at the mercy of external factors ( and unexpected earnings downgrades ).

Kauri your above post was an eye opener, most interesting !
Thank you.

Bob.

 

[>Apocalypto<]

Re: Trading CFD's

Apart from market crashes, what would happen if (God forbid) you had a stroke, car accident..... and were comatose, would anyone manage your account for you?? (Sorry about the gloom, bad night.. )

That is such a good point.

When I had surgery end of 05, three days before I gave my girlfriend a run through of how to exit my positions if anything nuts happened while I was in the hospital.

Nothing happened.

Also my mum knows all my account passwords in case anything happens to me.

 

[mft06]

Re: Trading CFD's

Solid info Kauri, will add that to my education bank!!!
Am interested in trading auzzie index’s with CFD’s
Am looking at the All Ords at the mo, waiting to see how the US markets fair tonight.
My thinking is if they fail there may be a short trade on the XAO at open on the morning??
I’m using Incredible Charts, Twiggs money flow shows distribution late this arvo, if this is supported from the US markets I reckon it might be on.

would look at entry, short @ 58.380 with a tight GSL of 58.450 if I get on.
trailing bout 4 ticks once i'm in the red.

$1500 on this trade

Would be interested in the thoughts of you guys.

Cheers

Luke

 

[Uncle Festivus]

Re: Trading CFD's

I'm already into short index cfd's, the IG Markets Mini 200. Looks like an income generator now with short interest plus capital gains. I wonder what happens to the cfd providers in the event of a big market correction. I wouldn't mind betting they will put restrictions on short selling or bump up the margins.

 

[Kauri]

Re: Trading CFD's

I'm already into short index cfd's, the IG Markets Mini 200. Looks like an income generator now with short interest plus capital gains. I wonder what happens to the cfd providers in the event of a big market correction. I wouldn't mind betting they will put restrictions on short selling or bump up the margins.

The spread om MM cfd's will widen, with the deal flag possibly being replaced with call (phone) .. on DMA cfd's nothing much will change except they will probably not be able to access stock to short,

 

[wahoo]

Re: Trading CFD's

Hey - heres last nights 2min tick chart of 'mini wall st cash' from IG markets - between the two red lines was the trading day

Now maybeez I'm jus paranoid - but 15 mins after close there's an inexplicable 200 point spike 15mins after close - does anyone have a chart from another source that verifies this spike - cos it sure looks like a 'shake out the shorts' for absolutely no reason (unless ur the provider....)

 

[professor_frink]

Re: Trading CFD's

Hey - heres last nights 2min tick chart of 'mini wall st cash' from IG markets - between the two red lines was the trading day

Now maybeez I'm jus paranoid - but 15 mins after close there's an inexplicable 200 point spike 15mins after close - does anyone have a chart from another source that verifies this spike - cos it sure looks like a 'shake out the shorts' for absolutely no reason (unless ur the provider....)

no spike on the futures.

 

[wahoo]

Re: Trading CFD's

Hey frinky

So basically IG charts made a 400point movement in 4mins of trading with no external forces coming to bear on their index

nice trade if u can catch it

sure looks suss.........

 

[professor_frink]

Re: Trading CFD's

Hey frinky

So basically IG charts made a 400point movement in 4mins of trading with no external forces coming to bear on their index

nice trade if u can catch it

sure looks suss.........

yep, gotta love em, don't you! Surprised they didn't spike it up above the high of the day to get rid of more of the shorts(it's a fairly common area for stops to be placed).

Having some problems with my datafeed's backfill today, but you can get the futures chart from futuresource-

http://www.futuresource.com/charts/charts.jsp?s=EYM1!&o=&a=V:2&z=800x550&d=HIGH&b=bar&st=#

 

[wahoo]

Re: Trading CFD's

cheers frinkster - thats the chart I tried to access first of all!

So who do you trade with frinky - after seeing this its gonna blow out my risk factor to push my stoploss out far enuff to protect me from my provider

 

[professor_frink]

Re: Trading CFD's

cheers frinkster - thats the chart I tried to access first of all!

So who do you trade with frinky - after seeing this its gonna blow out my risk factor to push my stoploss out far enuff to protect me from my provider

I don't trade CFD's wahoo, that chart you posted is one reason why. I trade futures through Interactive Brokers.

If you want to trade the indexes, this IMO is the way to go. That way it's just you against the market, not you against the market, and your broker!

 

[wahoo]

Re: Trading CFD's

hmmmmm

futures hey

uhoh........... think I'm in for another learning curve - pretty mus the same as trading the index tho - but there mus be a few curly diferences eh?

nice site looks like a pretty solid platform - you had good experiences wid them - any dramas to an fro with money in an out of account - you bank it all overseas so there's no tax..............

Frinklet, I think you and IG may have converted me

 

[theasxgorilla]

Re: Trading CFD's

I don't know if this has been stated already, but with regards to CFD providers...CMC suck, go with IG Markets. The universe of ASX tradeable shares is larger, the universe of shortable shares is larger AND most of all, IG Markets allow you to use 'stop' orders to open new positions. CMC markets do not allow you to place an order that will open a new position automatically once a price level is reached. Defeats one of the key purposes of trading with CFDs IMO.

 

[professor_frink]

Re: Trading CFD's

hmmmmm

futures hey

uhoh........... think I'm in for another learning curve - pretty mus the same as trading the index tho - but there mus be a few curly diferences eh?

nice site looks like a pretty solid platform - you had good experiences wid them - any dramas to an fro with money in an out of account - you bank it all overseas so there's no tax..............

Frinklet, I think you and IG may have converted me

The mechanics of trading the futures contract compared to trading the cfd equivalent won't be much of a change- Apart from the spike on your chart, it looks to be quite close to the futures contract, provided they don't do that in the middle of the session, you could probably still daytrade it via cfd's fairly well( depending on the spread of course!).

You'll need to find out what the margins are for the market you're trading, and when to rollover contracts, but it pretty well everything else should be the same.

Except for maybe the tax scenario- I'm pretty sure the yanks will want some tax out of you for trading their markets, which probably won't apply if you trade the cfd index via a local provider.

IB's platform takes a little bit of getting used to, and you need to have a fairly decent computer to run it smoothly, as it's a bit of a resource hog! Apart from that it's rock solid in the important areas- order execution is great. It was a little bit of a hassle to get my money deposited(had to wire the money in which took a couple of days, but it got there in the end!). Withdrawing money hasn't been a problem as yet, usually next business day, day after that at the latest. Despite them being an American company, you can keep money in Aussie dollars, it's done through Citibank in Sydney.

 

[wahoo]

Re: Trading CFD's

Hey Frinkwardo thanks fo that - I'll have a good look it

 

[professor_frink]

Re: Trading CFD's

Hey Frinkwardo thanks fo that - I'll have a good look it

No worries mate, good luck with whatever you decide to do. In the meantime, keep those stops nice and wide

 

[nizar]

Re: Trading CFD's

To those trading CFDs.
Do you do it from a real market or from a market maker like CMC?
I heard with market makers its better to place stops outside the market??

 

[coyotte]

Re: Trading CFD's

I'm already into short index cfd's, the IG Markets Mini 200. Looks like an income generator now with short interest plus capital gains. I wonder what happens to the cfd providers in the event of a big market correction. I wouldn't mind betting they will put restrictions on short selling or bump up the margins.

If they (IG) have too large a commitment they will close that stock for any more orders. --- phoned them the other day

Cheers

 

[It's Snake Pliskin]

Re: Trading CFD's

To those trading CFDs.
Do you do it from a real market or from a market maker like CMC?
I heard with market makers its better to place stops outside the market??

DM access. I like to see my actual order placed on the market as a real order. GSL's are expensive though if trading tight stops.

 

[Uncle Festivus]

Re: Trading CFD's

To those trading CFDs.
Do you do it from a real market or from a market maker like CMC?
I heard with market makers its better to place stops outside the market??

I use 2 cfd providers - IG Markets (L1 for controlled risk) for indexes, derivatives & precious metals & Etrade (Man) for DM access cfd's and normal shares (WebIress).

I have tried CMC but gave up after too many re-quotes, and spurious order changes.

The big negative with IG is that they don't pay interest on your cash account, & the L1 is pretty basic, (although the new tick charts are good). I have yet to find the perfect cfd provider.

Spikes in prices & charts are usually errors that IG don't hold you to eg if it did take you out of the trade a phone call usually fixes it (and the chart).

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