Just thought I'd outline what has happened to me with ASX CFDs as a caution for anyone considering trading them.
As always, there is NO element of "it's not my fault" in this post. I am simply describing what happened to me and why this makes ASX CFDs an unacceptable risk vehicle for me.
I have a somewhat experimental money management model which I have developed for use with CFDs. It is designed to achieve the following goals;
1. Never be margin called unexpectedly.
2. Maintain as little as possible money in the non interest bearing CFD account and as much as possible in the interest bearing money management account.
Planning for and managing margin calls are a part of this plan - it is VERY important to note that the capital allocated to a given trade is ALWAYS completely available in an interest bearing account. I'm not playing with money I don't have.
I chose to use ASX CFDs to test this money management model as I could segregate this trading and money management from the rest of my trading.
I check the positions daily as part of my risk management routine.
Wednesday night - there was sufficient margin in the account. There were two small long positions in RIO open.
Thursday - large gap down with RIO (but not that large - NOT large enough to have hit my stop, but large enough to go into margin call).
Thursday night - checked the statement as part of my routine.
Through the course of Thursday, one of my two RIO positions had been sold down in 4 tranches; 15, 2, 1 and 1 CFDs. Each incurred $15 brokerage.
No email notification of a margin call.
No phone call asking for margin.
PLENTY of cash in the interest bearing account (CDIA account with CBA. ASX CFD account also with CBA).
Basically, NO opportunity to correct the margin deficit, just the uncontrolled sell off. If this is the normal behaviour of ASX CFDs with CommSec then this is basically a forced intraday stop which I have no control over.
I am not impressed.
CBA's response to my not impressed email will be interesting.