Futures and CFD trading

[Alvin]

Hi guys,
i am ready to start trading on margin, just wondering whose trading futures and CFD's and how is it going, how did you get started.

cheers

Alvin

[still_in_school]

Hi Alvin,

do trade a variety of instrutments.

Options for leverage - short time frame (daytrades 1-7 days + for free option trades)
Warrants for dividend capture (4 weeks average)
CFD's (day trades)
Margin Lending - (1-7 days) but have a T7 with my broker.

favourite trades would be the Option Trades, due to free trades, if you can draw your capital out and leave your profit at risk.

Margin Lending on T7 - much higher risk, but trading on almost completly on credit.

eg.. Mayne Chart Example.
http://www.aussiestockforums.com/forums/showthread.php?p=4424#post4424

Meaning of T7 - you have 7 days to come up with the balance owing for that trade, if you can buy and sell that position with in the 7 days, the profit and loss are offset against each other, within that trade.

eg... Mayne bought 20,000 units @ $4.26

Will hold out as far as i can to the T7
(profit target $4.38 - $4.40 for the 7 days)

if target is hit.

$4.40 - $4.26 = 14 cents profit
14 cents x 20,000 units = $2,800

minus brokerage of $300 each way

$2,800 - $600 = $2,200 profit

ROI = Profit ($2,200) divided by Brokerage ($600)

$2,200 / $600 = 3.6 (x 100 to give percent)

Profit as a percent = 360% ROI

please note ( this is a very high risk trade, an example of entry would be like the Mayne Link above, though this might be typical, on an intraday trade, based on annoncement or news. )

though how did i get into the derivatives products, is mainly by my broker, holding my hand as i learn new trading strategies, suggestions of trades that are very bullish, by positive indicators and using derivatives to further leverage the gains..

Cheers,
sis

[positivecashflow]

Hi SIS,


suggestions of trades that are very bullish
Your strategies are geared for the bull market. How are you planning to change your strategy(ies) once a bear market kicks in? Would you do the opposite - ie sell the stock short, buy a call option as your hedge etc.

Cheers,

J.

[still_in_school]

Hi PositiveCashFlow,

long time no hear...

pretty much exactly the opposite... of what im doing, and exactly what you mention above....

will do plenty of shorts and puts on stocks and options, and probably changing most my trading to just seasonal trading, once the bear market moves in....

Cheers,
sis

glad to hear from you, long time no hear... :)

[positivecashflow]

Hey SIS,

You never reply to my MSN msgs.. LOL.. Anyways sounds like you've done very well in your trading... I see your still in love with MRL ;) .

Cheers,

J.

[Alvin]

Hey thanks guys,
so SIS do you use a specific broker like the cmc group, or maquarie to trade these instruments?
i guess thats the info i need first.

cheers
alvin

[still_in_school]

Hi PositiveCashFlow,

it varies, everyday, because im on a different computer to where MSN is running, but if you remember, when i came down to Sydney, i was still online even though i was many many km's away from the computer screen.. lol... ill fix up that up later on, and put a message on there that say... not at this screen at the moment....

but, how are things going for you, i heard about a course you did, i hope it does you very well... as i do believe, that you will be an option expert one day...

Cheers,
sis

[positivecashflow]

SiS,


i heard about a course you didI'll tell you all about it when we next chat on MSN. (I am also trying to brainwash PropertyGuru and Jetdollars - LOL :sly: ). When are u next coming down to Syd?

Cheers,

J.

[cfd benny]

i started trading cfds about a year ago. I have learnt alot along the way the hard part is getting consistent. some months you have 10 profitable trades in a row other months like feb when its volitile as its tough.. i use www.cfdtools.com to get info about providers. ive switched a few times already. initially i traded with cmc because is saw the cheapest commissions from my experience dma is much better and i am now with man

[Wysiwyg]

Another old thread but relevant to my question.

Does anyone have their stop losses hit consistently?The reason I ask is 10/10 trades my stop losses were hit and 5 only just tipped.This is a frequent event with trading CFD`s and although i have moved my stops further from the entry (out of immediate range) they are strangely hunted down and taken out.

Even more unusual is the splinters that get thrown out (tails,spikes etc.)
I cannot believe that my stop losses are hit frequently by spikes or tipped and then reversing.Does this happen to anyone and if so would you be interested in investigating the events further.

I think it is deliberate and constitutes illegal practice.

[James Austin]

Another old thread but relevant to my question.

Does anyone have their stop losses hit consistently?The reason I ask is 10/10 trades my stop losses were hit and 5 only just tipped.This is a frequent event with trading CFD`s and although i have moved my stops further from the entry (out of immediate range) they are strangely hunted down and taken out.

Even more unusual is the splinters that get thrown out (tails,spikes etc.)
I cannot believe that my stop losses are hit frequently by spikes or tipped and then reversing.Does this happen to anyone and if so would you be interested in investigating the events further.

I think it is deliberate and constitutes illegal practice.

Wysiwyg

what are you trading exactly?

if its index CFDs, these charts should replicate the futures charts when over-layed -- preventing, or at least minimising, this type of behaviour during cash market hours.

i also find an 8 to 10 pnt stop works fine on the SPI and FTSE - but it stops working well when my entry timing becomes poor.

James

[Wysiwyg]

Wysiwyg

what are you trading exactly?

if its index CFDs, these charts should replicate the futures charts when over-layed -- preventing, or at least minimising, this type of behaviour during cash market hours.

i also find an 8 to 10 pnt stop works fine on the SPI and FTSE - but it stops working well when my entry timing becomes poor.

James

Hi James, I traded the `aussie 200 cash`, `wall street cash`, spot gold and foreign exchange.
Yes i use 7 to 12 point stops depending and they are consistently getting touched but not continueing on trend.I trade on trend (sometimes counter-trend) and when I move the stop out 15 - 20 points they get touched too.

I`m talking about tipped out of trades before major moves, tipped out of trades and then back on trend.Even the spread price (one tick) touching and then reversing. Real weird stuff.

I concede i am wrong too but this is beyond acceptable and want to know if others have the same happen.

If it is normal then i won`t be using CFD`s again but if it is the provider then i will investigate further.I believe it is deliberate.

[James Austin]

Hi James, I traded the `aussie 200 cash`, `wall street cash`, spot gold and foreign exchange.
Yes i use 7 to 12 point stops depending and they are consistently getting touched but not continueing on trend.I trade on trend (sometimes counter-trend) and when I move the stop out 15 - 20 points they get touched too.

I`m talking about tipped out of trades before major moves, tipped out of trades and then back on trend.Even the spread price (one tick) touching and then reversing. Real weird stuff.

I concede i am wrong too but this is beyond acceptable and want to know if others have the same happen.

If it is normal then i won`t be using CFD`s again but if it is the provider then i will investigate further.I believe it is deliberate.


i can only speak for indices, dont trade the others, but the only way to determine if hanky-panky is occurring, is to compare the CFD chart to the futures chart. if there is a discrepancy at each 1 min candle u r stopped,
then hmmm . . . .

otherwise you might want to look at your entries and your stop placement.

but i can understand your frustration
good luck

[Wysiwyg]

i can only speak for indices, dont trade the others, but the only way to determine if hanky-panky is occurring, is to compare the CFD chart to the futures chart. if there is a discrepancy at each 1 min candle u r stopped,
then hmmm . . . .

otherwise you might want to look at your entries and your stop placement.

but i can understand your frustration
good luck



Okay thanks, here is a chart of the first event today.Gold buy entry at level on chart with stop loss below.This is what happens.

It is not the matching with futures charts i am concerned with.It is the powerless feeling that your protective stops can be taken out any time at any position.

[James Austin]

It is not the matching with futures charts i am concerned with.It is the powerless feeling that your protective stops can be taken out any time at any position.

your stops can only be taken out repeatedly if:
A) your provider is up to no good as is your suspicion
B) your entry/stop placement are not working

if you cant prove A) then you might want to look at B)

James

[macca]

Hi Wys,

I don't post much as I have very bad eyes so just a quick one, IMO opinion that was a poorly placed stop.

If you are long, then your stop needs to be below the round number not above.

All that price did was to test $909 and you got stopped out, your stop should have been 908.9 or similar.

If you can't afford to put the stop on "the other side" of round numbers then you need better entry points.

Do some research this way, choose the best place to put your stop, then work out your entry

HTH

[mctwoheads]

"I`m talking about tipped out of trades before major moves, tipped out of trades and then back on trend.Even the spread price (one tick) touching and then reversing. Real weird stuff"

Well, try and bear in mind how your provider gets paid. If your provider receives a fee (and possibly some margin) when you trade, there is an incentive to trade as often as possible. This is why I only leave "take profit" orders with my broker (because I want my broker to work hard to fill these) and manage "stop losses" myself.

[Wysiwyg]

"I`m talking about tipped out of trades before major moves, tipped out of trades and then back on trend.Even the spread price (one tick) touching and then reversing. Real weird stuff"

Well, try and bear in mind how your provider gets paid. If your provider receives a fee (and possibly some margin) when you trade, there is an incentive to trade as often as possible. This is why I only leave "take profit" orders with my broker (because I want my broker to work hard to fill these) and manage "stop losses" myself.

That is interesting because i had another crack at forex and indices this week and the same happened as last time.One tick hits on my stops.
Even swings in my favour were short lived when tick returns to my break even or slightly better.

If i ever have another go i will try the method you suggest but there is something fishy about CFD providers and it is starting to rot.

[Trembling Hand]

That is interesting because i had another crack at forex and indices this week and the same happened as last time.

LOL I see a pattern. :(

[Wysiwyg]

Below is a classic example of what happens to bump traders off.Any longs in at 10550 with a stop loss up to 26 points gets bumped off with a spike.After seeing this happen many times it is the classic "asylum" move that would do anyones head in.Now someone say `oh don`t put your stop loss in an obvious place`.What rubbish.

I didn`t spend a penny on it just enlightening to what can happen before a move either way.Like I said I call it the asylum play.

[Trembling Hand]

Whats your point Wysiwyg? You saying this game is hard:confused:

[G-fer]

Doesn't trust MMs perhaps .......

[Trembling Hand]

Doesn't trust MMs perhaps .......

The problem is that its in the fut...... :rolleyes:

[nomore4s]

Below is a classic example of what happens to bump traders off.Any longs in at 10550 with a stop loss up to 26 points gets bumped off with a spike.After seeing this happen many times it is the classic "asylum" move that would do anyones head in.Now someone say `oh don`t put your stop loss in an obvious place`.What rubbish.

I didn`t spend a penny on it just enlightening to what can happen before a move either way.Like I said I call it the asylum play.

If you're so sure this is happening why not trade it or develop a strategy to use it to your advantage?

[canaussieuck]

Thats a classic candle pattern, why not wait until after the sellers quit to even place an order, and use that new low as the stop?

Nice correlation between the made market and fut, maybe they're in Cahoots together....:)

Cheers,


CanOz

[Wysiwyg]

Whats your point Wysiwyg? You saying this game is hard:confused:


Yes, and thankyou for the futures chart which shows the spike down pulled up above 10530 :)


If you're so sure this is happening why not trade it or develop a strategy to use it to your advantage?

Thats a classic candle pattern, why not wait until after the sellers quit to even place an order, and use that new low as the stop?

Nice correlation between the made market and fut, maybe they're in Cahoots together....:)

Cheers,

CanOz

Yes nomore 400m and CanOz, a spike of 20-30 points past the resistance/support levels could definately be worth patience and setting a limit order for.Probably the only counter to the spikes.

[Trembling Hand]

Yes, and thankyou for the futures chart which shows the spike down pulled up above 10530 :)
.

OMG. are you still suggesting that the CFDs were fudged??

[rub92me]

Based on the limited information you've given us, the main problem seems to be timing of your entries.
To test your 'evil market maker' theory, why not do the following:
Use your exact same strategy, but this time on a simulator (or if that's not available: papertrade). Do this for about 30 setups. Does the same thing happen? If so: back to the drawing board, if not: you may have a point.

[skyQuake]

Yes, and thankyou for the futures chart which shows the spike down pulled up above 10530 :)

Looks like IG Mkts, were u trading YM Cash or YM Futures? If you overlay your chart over TH's futures chart you can see everything is slightly lower.
Granted, the spike down seemed a bit excessive.

[Trembling Hand]

Granted, the spike down seemed a bit excessive.

thats because its a bid chart not a trade chart like the futs are.

[barney]

.Probably the only counter to the spikes.

Hi Wysiwyg, I think what most of us "small" traders do wrong, is think like "small traders" ................. I also noticed these kinds of spikes showing up all over the place a while back .............. so I asked myself, if I was a "big" trader, how would I go about extracting the most I could out of the market?

In this instance (and in most from what I see), the spike happened after a steady trend ............. The big players are looking to get the last drop out of the downtrend before they start buying again, so when they get the chance, (ie liquidity/momentum is low/slowing ) ..... they only have to dump a "relatively" small amount of trades on market .... which artificially pushes the price way below value, ............. sellers jump in (probably the last of the "small traders"!! ...... last ditch stops are hit creating more volume ..... and they promptly buy up everything in sight, pushing the price straight back up, and create an immediate gap up/buffer for their position in the process .......... If I was a big player, thats what I would do as well ..............

If the above is correct, then the volume of trades relative to the direction of the market (on all time frames) is the key to being on the right side of the market/trade .................

TH may tell me whether I am barking up the wrong tree, or whether I am actually starting to learn something ....... at last !!:o

[Wysiwyg]

Hi there Barney, Just read your post and I do not think that big player strategy you suggest happens.

However I do believe highs and lows of a trend are revisited to `squeeze` out any good entries and this was particularly evident on last nights DOW index as the previous session low was revisited when in all likelyhood there would be a bounce.There was a bounce after would be low pickers were sqeezed out of positions.

This I think is done on purpose and has cost me a pot or two when going for the longer term hold.(last night entry for 1 long at 7495 squeezed out)

I have come to the conclusion that CFD`s are not for longer term holds and can understand why scalping and 20 point/pip exits are all too common.

Though I have had a lucky multi hundred point move, the nature of index trading doesn`t allow for longer term holds.

[MRC & Co]

No doubt sometimes big players will do this (or a lot of the times you will just see a V-bottom, which is when a large institution is scaling in I believe and is harder to catch). But you cannot always wait for it, sometimes they will just go to town at any level. Some of the ways they try to get filled for their orders are TERRIBLE, would sack their traders if I was the manager! They just give free money to all the intraday traders there front-running their size which is not being clipped from the other side.

You see the same things happen on smaller scales too, with much lower volume and large traders in that market doing it themselves, setting off stops and then covering.

It's also called a 'test' in VSA I believe. Which is irrelevent (except for a big volume move in one direction) to small illiquid markets such as SPI on intraday timeframes. Sometimes you can get a stack of contracts trading on a 1 min candle, which can simply be a couple of bigger guys covering, not a legit move.

[Trembling Hand]

Without actually seeing the order flow you will be lost. If you can't afford the real data (not the sh!t CFD stuff) you can't afford to trade Indexes.

You will be blind and from that comes "cult ideas" you know stuff like "the big boys are pushing this", "they are sweeping stops", "if we throw a virgin in the volcano the god's will be happy". Get the facts then make a judgment from them. Or go and join a cult that worships a sun god or a comet. Will be cheaper giving the chosen one 20% of your wage rather than the market.

[MRC & Co]

Get the facts then make a judgment from them. Or go and join a cult that worships a sun god or a comet.

ha ha ha ha ha ha.

Though, big traders do sweet stops, ALL THE DAMN TIME!!! Some make their living (and a fukcing good one at that) off it alone. When one is not trading that day, the SPI acts and looks completely different!

Here is a video sent to me by RobinHood: http://www.traderslaboratory.com/Tra...derTicker.html

It is simply a different and more graphical representation of order flow. Not so sure you need to see cancelled orders and you can get most of the rest out of the simple order book. IMHO the way the guy thinks is EXACTLY how you need to think. He is always analysing who is doing WHAT and WHEN. If it is simply a trader, or a bigger insto like a bank (who you want to take notice of) and then later on, when a few larger orders hit, is it more legit orders or simply a bigger trader covering?

Not sure how TH does it, he may disagree, but this is how I try to think while watching the order flow.

[MRC & Co]

WTF, not sure if the link works. If you want to watch the video, PM me.

[chops_a_must]

thats because its a bid chart not a trade chart like the futs are.

That's probably correct.

And why Wysy is getting so annoyed on these down spikes.

Wisy, from someone that watches the futures fairly closely, and trades them every so often, you need to realise that any down spike will widen the bid/ask spread at times.

Well, any spike in general really... If it spikes up, the ask side will widen, the opposite etc. etc.

So you need to realise that. And on the CFD's your stops are probably triggered on the spread, not the price action. So you would have to widen the stops accordingly. Also, if you are going to be making a position trade like above on the YM, buying off the low, you are probably going to need about a 50 point stop or there abouts at the moment anyway.

As to being stopped out on 10/10 trades, and the market turning on your stop... well... simply, get over it. It happens to everyone, not just you.

It also happens on the other side, where you get in the right side of the turning point as well. And if it doesn't balance out, you are doing something wrong! The more you keep blaming everything else but the method you are trading, the more you will keep sticking to a losing strategy, rather than accepting responsibility for your own trades.

[MRC & Co]

As to being stopped out on 10/10 trades, and the market turning on your stop... well... simply, get over it. It happens to everyone, not just you.

It also happens on the other side, where you get in the right side of the turning point as well. And if it doesn't balance out, you are doing something wrong! The more you keep blaming everything else but the method you are trading, the more you will keep sticking to a losing strategy, rather than accepting responsibility for your own trades.

ha ha ha, and isn't that the truth! Sometimes it feels like I get done on 20 trades in a row! Well close to all of them. There are days where I hard it find just to scalp a few ticks and the market is out to get you. Any logical order book or chart pattern you used to work, just does not work and you are instantly offside as soon as you execute your trade. Then you cover at the damn top or bottom of the move! :o Honestly feels like 'they' work out your risk tolerance, and then just squeeze you out.

But definatley have to be self critical and try and adapt to that. Stop waiting for confirmation and instead buy counter ticks, pullbacks (either wait for a squeeze in the order book or wait for a legitimate HL, or LH etc from the chart). Or if it's simply flicky mess but still trending, try and learn to position trade it instead. This is what I am currently working on. Knowing when to have conviction and having it.

:2twocents

[barney]

Hi WYS, All just a learning curve for me a present, but


Hi there Barney, Just read your post and I do not think that big player strategy you suggest happens.

However I do believe highs and lows of a trend are revisited to `squeeze` out any good entries and this was particularly evident on last nights DOW index .There was a bounce after would be low pickers were sqeezed out of positions. This I think is done on purpose

I would ask myself, who is doing the squeezing?

In my humble opinion, only the "smart money" can turn a trend, or squeeze a position, so the volume of trades, relative to the trend direction,(and the "duration" of that prevailing trend, is the only guideline we smaller traders have to indicate what is happening. Cheers.

[Wysiwyg]

ha ha ha, and isn't that the truth! Sometimes it feels like I get done on 20 trades in a row! Well close to all of them.

Honestly feels like 'they' work out your risk tolerance, and then just squeeze you out.

But definatley have to be self critical and try and adapt to that.
:2twocents


I hear you chops, barney and mrc & co.

There is so much I don`t know.

[chops_a_must]

I hear you chops, barney and mrc & co.

There is so much I don`t know.

First step would be to open an IB account, to get the proper data, depth and volume.

You can pull the majority of the money out if you don't want to trade through them.

[MRC & Co]

Man, nobody knows everything.

The possibilities in the trading world are ENDLESS! There are so many markets out there which do such big volume. You can scalp them with huge size, or even position trade others with even bigger size.

It's an endless persuit of 'perfection'.

[joeyr46]

Wysiwyg
I think everyone who's ever traded has been taken out at the bottom by his stop (or top) just prior to major move
Only one way to stop it happening is to take total responsibility for your trades and learn more about the market (cause it's always right )
I always use stop losses based on wave patterns or like the spikes your alluding to trade after the spike if volume etc is right as it should be a one day reversal and your wrong if it trades below that spike and you want to be out. Remember you can always reenter if your analysys says to but very hard after getting stopped out. Thats part of getting into control of your emotions (but not to reenter out of spite or you compound problem) The key is phsychology and control of emotions