Shares, Options, Futures, CFDs - what do you trade and why?

[Pager]

We all trade to basically make a buck, but which markets/instruments do those on this forum trade and why?

All have there pros and cons but why do you favour a particular market over another, many may trade 2 or 3 or maybe all instruments but I would expect even these traders favour 1 market over the others.

I trade Index Futures and on a short term basis, very rarely hold past the close of any market, for me Index Futures are the simplest form of trading and I would go as far to say that trading these types of futures is a far more even playing field for all participants in the market.

Costs involved are very low compared to other markets, buying 1 contract on the Spi for example costs from $5 to $20 depending on the broker, that contract at current prices controls about $140,000, markets are liquid and spreads generally pretty tight, although slippage in some markets can be bad when they are moving quickly.

Cheers

Pager

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

What do you trade and why?

Great question Pager

We trade the SPI Daily
For the following reasons:

Leverage.
Volatility.
Good liquidity.
Ease of execution.
Diversification.
Just as easy to Sell.
Zero counterparty risk.
Price transparency.
Low transaction costs.
We have specialised in 'Trading the SPI'

 

[wayneL]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

What do you trade and why?

Great question Pager

We trade the SPI Daily
For the following reasons:

Leverage.
Volatility.
Good liquidity.
Ease of execution.
Diversification.
Just as easy to Sell.
Zero counterparty risk.
Price transparency.
Low transaction costs.
We have specialised in 'Trading the SPI'

????????????

 

[surfingman]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Only shares at the moment as only been trading for about 6 months, looking at gettting into options but etrade is taking there time to review my application which has been sent 3 weeks ago!!!!

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

????????????

Do you have a question?

 

[wayneL]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Do you have a question?

You mention diversification, yet seem to trade only one instrument. Not meant as criticism, but this seems more like concentration than diversification.

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Still confused Wayne
So what is your question?

 

[wayneL]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Still confused Wayne
So what is your question?

You listed "diversification" as a reason for trading the SPI.

di·ver·si·fi·ca·tion /dɪˌvɜrsəfɪˈkeɪʃən, daɪ-/ Pronunciation Key - Show Spelled Pronunciation[di-vur-suh-fi-key-shuhn, dahy-] Pronunciation Key - Show IPA Pronunciation
–noun
1. the act or process of diversifying; state of being diversified.
2. the act or practice of manufacturing a variety of products, investing in a variety of securities, selling a variety of merchandise, etc., so that a failure in or an economic slump affecting one of them will not be disastrous.

Granted, the SPI is an index of diverse equities, but the act of trading the SPI exclusively, doesn't strike me as diversification.

Don't worry, just being a pedagogue.

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

You listed "diversification" as a reason for trading the SPI.

Yes I did and we believe that it is.
Still not sure why you have questioned this Wayne

 

[wayneL]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Yes I did and we believe that it is.
Still not sure why you have questioned this Wayne

Nevermind, I'll never get an answer.

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Brent Penfold book 'Trading the SPI'
On page 15 Brent also lists 'Diversification'
Under the heading: 'Why trade the SPI?'
Please read for yourself Wayne.
Here is your answer

 

[wayneL]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

(Sigh) Brent Who?

Look! I can accept the diversification point if trading the SPI is in ADDITION to trading other equities/instrument.

But trading one instrument, whether or not the constituents of that instrument are diversified or not, is not in itself diversification. All your risk is tied up in one single chart. This is the antithesis of diversification.

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

(Sigh) Brent Who?

Brent Penfold
http://www.indextrader.com.au/

 

[theasxgorilla]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

I trade shares (long only, 0-60% leverage) and CFDs with a side account (25% of trading capital).

In the coming months I plan to branch out into options and let me tell you, I'm VERY excited.

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Brent Penfold
http://www.indextrader.com.au/

Brent explains 'Diversification' very well in this book.
Well worth a read to anyone considering.....
"Trading The SPI"

 

[wayneL]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Brent Penfold
http://www.indextrader.com.au/

Yeah I knew that, but was subtly pointing out that Brent is not the keeper of the trading gospels, just another guy who wrote a book. Having flicked through the book at Borders, I am confident that the point on diversification is either out of context or apocryphal.

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

(Sigh) Brent Who?

So what was the meaning behind this?

 

[cuttlefish]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

Only Australian shares. Have dabbled with eto's a couple of times over the years. Last year spent time trying to understand them propertly, and did quite a bit of options trading, had mixed results though overall profitable and still currently have some open long dated positions, but I've decided I'm not that keen on options trading - too technical/mathematical for my style and not enough liquidity in the Australian market so dealing to much with the MM's.

Will probably only use them as a shorting instrument or for specific situations. However the bit of options trading that I did made me grasp concepts that are beneficial to the equities trading/investing and will also be helpful when I do encounter situations where I want to use them.

Have no interest at all in CFD's or warrants.

 

[theasxgorilla]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

All your risk is tied up in one single chart. This is the antithesis of diversification.

If there are 200 constituents the likelihood of a single exchange affecting eventing causing all of them to fall out of bed is pretty slim. But if you were in a single constituent, like for example NAB during the traders scandal in 2004, you would have really felt the pain.

You don't tie risk up in a "chart"...no matter what you trade there is always an underlying reality eg. a commodity, a currency, a company.

 

[Bronte]

Re: Shares, Options, Futures, CFD's - what do you trade and why?

If there are 200 constituents the likelihood of a single exchange affecting eventing causing all of them to fall out of bed is pretty slim. But if you were in a single constituent, like for example NAB during the traders scandal in 2004, you would have really felt the pain.

You don't tie risk up in a "chart"...no matter what you trade there is always an underlying reality eg. a commodity, a currency, a company.

Yes agreed theasxgorilla, and very nicely explained.