Trading the XJO with CFDs

[oldorman]

I have a question for the cfd traders. Is it safe to trade with $25-$50 contracts on the Aus 200 ?

The broker won't pull any funny business if your playing with that amount ?

I was thinking if there are no liquidity problems because it just tracks the index and your just a trade inside your brokers virtual machine then there should be no slippage or bad fills or widened spread, slow execution etc.

So I guess I like to know from experienced ones if the instrument plays fair with bigger dollar amounts ?

 

[Uncle Festivus]

I have a question for the cfd traders. Is it safe to trade with $25-$50 contracts on the Aus 200 ?

The broker won't pull any funny business if your playing with that amount ?

I was thinking if there are no liquidity problems because it just tracks the index and your just a trade inside your brokers virtual machine then there should be no slippage or bad fills or widened spread, slow execution etc.

So I guess I like to know from experienced ones if the instrument plays fair with bigger dollar amounts ?

As safe as your risk strategy is.

No funny business as long as they are winning? Plenty of stories on here about dodgy practices when you start winning? Some are worse than others for eg CMC used to be cronic re-quoters for any size, not sure if they still are as I no longer do business with them. Safety of your funds is still qustionable too these days, though none are to big to fail anymore eg MF Global?

 

[cbc1]

Hello Uncle,

I"m looking at getting into SPX200 CFD trading, I have 2 demo accounts, one with IG and one with CMC.

Talk about confusing, exactly what is the Australia 200 cash, is this the S&P ASX 200? It looks very close. Which leads to my next question which I will try to answer myself. Whats with the changing spread that doesn't sit evenly over the index? I can understand the spread changing to the advantage of IG, say if the DJIA is down then people dive on the "Sell" overnight and thus IG jack up the price (spread). U know, just like a bookmaker at the races constantly changing the odds to their advantage.

Also whats with the spread moving 20 points whilst the XJO has been down for 3 hours (close at 4ish)

Does everyone get quoted the same price or what?

So whats this dodgy business? Re-quoting? Is that when you try to close out and they change the price? So much for that advertising about 90something % of trades getting closed out in micro seconds eh?

My Cfd trading was only going to be investing on the side.

Thanks

 

[cynic]

I've had experience trading with three CFD providers to date. I always strongly recommend a very thorough reading of the relevant PDS and client agreements to anyone considering these products. The clauses I've encountered, thus far, have sufficient scope (and at times vagueness) to allow the provider to (amongst other things) quote different prices to different clients, alter margin requirements without notice, and automatically close positions should the account go sufficiently into margin/deficit.

I think you can readily understand just how much financial devastation an unscrupulous provider could legally inflict on their clients if said provider decided to surrender integrity in pursuance of greater profitability.

As for outside of hours price movements and spread widening - yes I have observed significantly increased spreads (at times >100 pts) when trading "Aussie 200" cfd/spread bet products. In addition to the widening of spreads, the prices also move in reaction to news and other markets. I've also had the experience of my stop orders being touched and triggered with a spooky degree of precision. My suspicions were aroused by the frequency of these occurrences , however, the PDS/Client Agreements often allow the provider to quote different prices to different customers!).

Many of the CFD traders/investors I've encountered, seem to be blissfully ignorant of the PDS and its contents. This tends to lend some weight to ASIC's dismissal of clients as being "unsophisticated", however, the "if not, why not" disclosure benchmarks that ASIC introduced appear to fall a long way short of addressing issues pertinent to the potential "conflicts of interest" within the client/provider business relationship. The prohibition of certain PDS clauses prior to the granting of an AFSL would (in my opinion) go a long way towards improving the integrity of the OTC CFD industry.

Given ASIC's performance history to date, I won't be holding my breath.

 

[Joules MM1]

sold to open XJO 4668 stop 74 target 24's

 

[kid hustlr]

Hello Uncle,

I"m looking at getting into SPX200 CFD trading, I have 2 demo accounts, one with IG and one with CMC.

Talk about confusing, exactly what is the Australia 200 cash, is this the S&P ASX 200? It looks very close. Which leads to my next question which I will try to answer myself. Whats with the changing spread that doesn't sit evenly over the index? I can understand the spread changing to the advantage of IG, say if the DJIA is down then people dive on the "Sell" overnight and thus IG jack up the price (spread). U know, just like a bookmaker at the races constantly changing the odds to their advantage.

Also whats with the spread moving 20 points whilst the XJO has been down for 3 hours (close at 4ish)

Does everyone get quoted the same price or what?

So whats this dodgy business? Re-quoting? Is that when you try to close out and they change the price? So much for that advertising about 90something % of trades getting closed out in micro seconds eh?

My Cfd trading was only going to be investing on the side.

Thanks

CBC i think you need to gain a better understanding as to how the underlying index, the futures contract and the cfd are related.

 

[cbc1]

Are you freakin kidding KID or what?????

Isn't this is what the forums for?? To come on and ask questions if you don't understand somthing......

After sifting through you reply I have a better understanding that it isn't just tracking the index then.

 

[CanOz]

Are you freakin kidding KID or what?????

Isn't this is what the forums for?? To come on and ask questions if you don't understand somthing......

After sifting through you reply I have a better understanding that it isn't just tracking the index then.

When the cash index is open the cfd ( or the SPI futures contract ) and the cash will be very closely correlated as arb traders take advantage of any difference...once the cash closes the cfd and the future are on their own to track the other global markets until it closes again before the cash opens.

CanOz

 

[Joules MM1]

sold to open XJO 4668 stop 74 target 24's

crimped....

xjo does look very bullish....very little rotation....except for the overnights

sold to open 4684's looking for 4634's ...



https://twitter.com/joulesmm1/status/284515215398281216/photo/1

 

[Joules MM1]

When the cash index is open the cfd ( or the SPI futures contract ) and the cash will be very closely correlated as arb traders take advantage of any difference...once the cash closes the cfd and the future are on their own to track the other global markets until it closes again before the cash opens.

CanOz

mebbe a tad confusing, mister C

until it closes again

mebbe explain wot the "it" is that closes

and are you alluding to the SFE setting the futures price and the cfd tracks that (while not adjusting directly to be the futures contract price, rather, parallel) ?

 

[Joules MM1]

and yes, i lulz @ the hsi short, too....why bother a 11 point spread on a 30 point swing....

 

[CanOz]

mebbe a tad confusing, mister C

mebbe explain wot the "it" is that closes

and are you alluding to the SFE setting the futures price and the cfd tracks that (while not adjusting directly to be the futures contract price, rather, parallel) ?

I can't recall how the CFD tracks the SPI in the sycom session Joules, maybe you can give a better idea of this...i just saw that no one had responded so i attempted to set the recent poster straight. Having not used CFDs for over 4 years i guess i shouldn't be commenting.

CanOz

 

[Joules MM1]

I can't recall how the CFD tracks the SPI in the sycom session Joules, maybe you can give a better idea of this...i just saw that no one had responded so i attempted to set the recent poster straight. Having not used CFDs for over 4 years i guess i shouldn't be commenting.

CanOz

s'all good....just wanted to know if i had strayed off the beaten......my understanding is that the sfe sets the price....

 

[CanOz]

......my understanding is that the sfe sets the price....

One would want to hope so, can't trust those shifty market makers...

 

[cynic]

One would want to hope so, can't trust those shifty market makers...

+1.

 

[cbc1]

Can, Joulz,


Thanks for covering that. You shed much needed light on the situation.



Also I don't trust their systym, this was just going to be somthing on the side

 

[skc]

Hello Uncle,

I"m looking at getting into SPX200 CFD trading, I have 2 demo accounts, one with IG and one with CMC.

Talk about confusing, exactly what is the Australia 200 cash, is this the S&P ASX 200? It looks very close. Which leads to my next question which I will try to answer myself. Whats with the changing spread that doesn't sit evenly over the index? I can understand the spread changing to the advantage of IG, say if the DJIA is down then people dive on the "Sell" overnight and thus IG jack up the price (spread). U know, just like a bookmaker at the races constantly changing the odds to their advantage.

Also whats with the spread moving 20 points whilst the XJO has been down for 3 hours (close at 4ish)

Does everyone get quoted the same price or what?

So whats this dodgy business? Re-quoting? Is that when you try to close out and they change the price? So much for that advertising about 90something % of trades getting closed out in micro seconds eh?

My Cfd trading was only going to be investing on the side.

Thanks

With IG ASX200 is cash and has 1 point spread during cash hours. With ASX200 futures it has 2 (or 3, can't remember) spread during the SPI day session. Overnight session the ASX200 futures CFD have much larger spreads.

The cash product is different to futures in that it has cost of carry - i.e. overnight interest charges and dividend. You will notice, for example, if tomorrow is a large ex-div day (say for a Big 4 bank), the cash CFD will drop by dividend adjustment, while the futures CFD will not change. Essentially, the cash product "mostly" track the real SPI futures tick for tick during the day, but it is "made" to maintain the same numerical value by IG as the XJO cash index.

I encourage you to find the answer for yourself, however. It has been a while since I last traded the index CFDs intimately.

To fully appreciate what's going on, you can watch the two CFD products, the real SPI and the XJO cash during various market phases. To see if IG is quoting you a different price/spread to another punter, you can sign up multiple accounts (demos) with them and watch them side by side. You can run each in a different browser or through a laptop / mobile etc.

 

[Joules MM1]

just a quick addition to the decions made on todays sell to open which is still active and riding down on weak US futures....the weekly and daily are clearly (in that order) the dominant reasons

how significant this weekly ratio is is unknown, however if broken upwards allows for a strong purview and confirm a bull period.....right now my focus is on the pullback....including HSI and GOLD

 

[Joules MM1]

a break of the lower support line would put the odds of multi day pullback in favour of sellers.....the XJO has decent rotation in several sessions....i am warey that the US market could pull a giant bunny out of the congress hat.....ping!!

the arrows denote trade entry

$$

 

[Joules MM1]

XJO
the 4634 level i cited in the above chart was fractionally broken and immediately retreated above in this mornings melee in the US.....i have left several (open to) sells running even though looks to me like over-extended there..... there is likely to be some weight in the HSI next week......all rotational, i think.....