• Australian (ASX) Stock Market Forum

Starting small CFD account

Discussion in 'Trading Diaries and Journals' started by Triple B, Oct 31, 2017.

  1. Triple B

    Triple B

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    Gday.

    Have been interested in Stock market
    Since High School Economics Classes... 27years ago
    Have been Studying a couple hours per night since April 2017.
    Paper Trading Since June 13 and Also on the ASX Game making reasonable profits after a bit of drawdown from overtrading , no patience etc...

    Longer Term plans 10 years max. are to Make majority of income from trading , being supplemented by My Self employed Tradie income

    MId Term: 1year + is To supplement my Tradie income, and grow capital assets to Size large enough to achieve Longer Term Goal. Will have 1 CFD acc to Start.
    2 accounts When Capital Reaches Amount Large enough to Split.
    Another 3rd CFD Acc For "Pocket Money" for new golf Clubs ,Holidays etc
    At each pre determined level of Profit I will be Transferring Funds into a Standard Broking Acc. ie $5 or $10 K at a time .
    May also Look into Forex , Gold futures , etc later

    Short Term .. Trade Small CFD acc as a way of learning with "real money"
    Reach B/E with acc and also deposit a bit at a time to gradually move to larger Pos Sizes
    gain Live experience with little to no Stress .
    Build account with what the market provides.

    The Risks and their management.
    So Starting with a $1000 acc.
    If I lose this I wont lose sleep.
    Of Course I would be disappointed but would hopefully learn from mistakes.

    Now I could trade up to $ 20000 with $1000 using 5% margin .[Don't do this!!]
    But nothing left for margin calls and quick way to get your account closed !
    Your broker does not want to have to chase you for margin!They will close your trade before that happens if they have the time!
    So Will be using 5-10% margin Stocks with the same % left in Free equity for Margin Calls.
    Therefore a 10% margin Stock will have 20%[ 10%+10%] in margin for the dreaded Gap Down.
    This also means that The account will only ever be 50% in active margin with the other %50
    Ready for any nasty crash or big gap down of one Stock
    Remember CFDs are Risky , The above Should be enough to make you think about the Risks and assess for yourself if you can tolerate losing you entire CFD account in one Bad Day.
    eg market collapses in USA overnight and Most ASX Stocks Drop 10-25% on open nxt day.
    Scary thought ,but possible.

    So To Start I will be risking 8% of account or less per trade + costs which will be at least $20
    in /out. + finance costs. so about 10% Risk per Trade!! High Risk Trading!/Gambling !?
    Stop Trading if acc gets to $500 and re assess.
    This will give position Sizes of around $1500 - $2500 . I figured this is a good min size as costs will be around 1% so not to eat up too much in profits and only add 1% to losses
    Cost s cans Skew P/L Ratio too much if they become too large in relation to pos size.
    As acc grows position size will remain the same until Risk is down to 2% of acc

    ie. as account grows risk reduces,but trade number can increase or higher margin stocks traded


    So $80acc risk + $20In/ Out ...Finance about $5 Average =$105 Risk per trade
    This is 2% of $5250. After This, pos size can grow with acc.
     
  2. Triathlete

    Triathlete Keep it Simple..!

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    You have mentioned that you have only started paper trading since June 13...
    Can I ask what your results have been:

    Number of trades
    Win / Loss %
    Profit / Loss percentages has been??
    Reward to Risk and expectancy ratio.

    Also have you given any thoughts as to what type of stocks you intend to trade using CFDs eg ASX 20 ASX50, ASX 100 , ASX200 or something else???
     
  3. peter2

    peter2

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    I applaud your caution as I think it's warranted. My concern is, Are you going to get enough trading experience in the period you've alloted for this stage? It's going to take a long time to reach a level where you can split your account.

    You've already put a bit of thought into it but most people start trading equities with too little capital.
    I think your starting capital is too small. Two reasons;
    (i) $1000 is a pittance, you've already given it up. You'll have to stop if you lose $500.
    (ii) $1000 won't allow you to start enough trades to get into a good one.

    My advice is to start with more say $3K - 5K.
    It's enough to hurt if you lose it, not enough to cause you financial trouble. You'll have enough to cover the margins and any downside exposure on 3 - 6 trades. If you can't get into a winner starting 3 - 6 trades then your entry criteria needs lots of work.

    The obvious Q's we ask is (Triathlete already has);
    How do you know you have an edge?
    Do you know how to create it?
    Can you do what it takes to create it?

    All the best with your endeavour.
     
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  4. Triple B

    Triple B

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    Sure
    These are the stock watch trades since 13/6/17
    $50000 Start
    46 Trades [if you include closing 4 current trades open now]
    22 Win 24 Loss
    Win % 47.8%
    Total wins $ 12766
    Total loss $ 5119
    Total Profit $7647
    Profit 15.3 %
    Costs $2687 !! [does not include cost of closing current 4 trades]
    Profit after costs $4960
    Profit after costs 9.92%

    Avg Win $ 580 Avg Loss $213
    P/L Ratio 2.72:1
    Expectancy .7781
    This result includes overtrading . mistakes , trades I could not take because they were not listed on stockwatch, etc
    I'm sure I can improve on it .
    A2M certainly helped.
    Starting with asx 50 as these are lowest required margin but least volatile .
    Eventually ASX 200

    Current balance on ASX Game is $53421
    after overtrading down to almost $48000 .
     
  5. Triple B

    Triple B

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    Thanks Peter .
    Point taken about small amount to start with
    I will be depositing another $1k within 2 weeks and then further $100 p/w consistently for the next few years. Should be at least $3 k by Christmas.
    trading now and in profit, but very tricky as you say with low capital start. so far so good however.
    Back
    soon thanks for the comments.
     
  6. Triathlete

    Triathlete Keep it Simple..!

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    With a win% of 47.8 you need to be aware that your probable losing streak will be around 13 or 17 based on the win% chart I have attached so I guess you really need to be on top of your game with stops etc....your risk per trade is going to be quite high so this is not good in my opinion of course.

    Good luck and keep us all posted on how you do.
     

    Attached Files:

  7. Triple B

    Triple B

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    Thanks for that .
    I have read Nick Radges ebook.
    Successful stock Trading .
    Excellent book with all the numbers done so you can assess your risk P/L Losing streaks equity curve...
    etc
    Longest Losing Streak during paper trading was 4 .
    Longest winning streak was 6.
    6 Losses in a row reaching their full stop will take account to $532
    risk gets smaller as account shrinks.
    ie 1st loss $ 1000-$ 100 risk inc costs [max] = $900
    2nd = $900 -$90 =$810
    3rd = $810- $81 etc
    First trades are all at $ 100 Risk.
    I understand the high risk involved .
    and can see why an account blow up is on the cards.
    This is as close to punting as I will get
    I would not take the same risk with a $10,000 account for example.
    When [if]account is at $2000 [should be after more deposits]risk inc costs will still be $100 so %5
    at $3000 account Max R is $100 inc costs so R will be 3.3%
    $ 4000 R will be $100 or 2.5%
    $5000 R will be $100 or %2
    So Lower Risk as account grows but more positions can be taken
    If I do get to my $532 limit then Trading stops and will start again differently .
    [with larger acc]


    1st Loss was $44 inc costs.
    acc is currently 10% in profit after costs

    Thanks for the warnings , and you can say " I told you so" if I fail.
     
    Shaker likes this.
  8. Roller_1

    Roller_1

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    have you calculated your commission drag on your $1000 dollar account? How much commission (estimate) will you pay to get in and out of 1 trade do you know?
     
  9. Triple B

    Triple B

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    Commissions are $10per trade for the trade sizes [up to about $2500]
    finance cost on $2500 position is about 34c per night
    I add cost into risk . So max $80 Risk is 8% of account + $ 20[2%] in /out = 10% + $5 finance costs [14nights]. = 0.5% so absolute max R per trade is 10.5 %
    I use $25 costs per position as costs as some will last a few days and others longer , the longer trades will be the ones at BE inc costs or in Profit. Non performers will be cut after 2weeks or sooner.
    So costs are about 1% of position size the idea is to have the market move the aprox 1% to pay costs.
    Trades have 2 B/E stop levels. 1st is B/E exc costs [ie $25loss] 2nd includes costs.
    [ie $0 loss]
    The p/L ratio for cost included vs cost not included is different is so lets look at the difference.
    Lets take a $2500 position for eg
    Max Risk ex cost is $80 [8% of acc] stop loss can be adjusted tighter to get larger pos size but if it need to be too tight I don't take the trade
    Lets say we make 10% profit on Trade not inc Costs =$250
    So Risk is 8% of Acc to Make 25% or R/R 3.125:1
    So Now Same Trade inc Costs
    Max R 10.5% of Acc[8% R + 2.5% costs] Risk = $105 profit $250 - $25 Costs = $225
    = 2.14:1 R/R .
    So just in Profit with a
    50% win rate.Of Course we assume 10.5 is% lost per losing trade ,however as stops will be moved I expect Better R/R
    Thanks
     
  10. Triple B

    Triple B

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    OK

    Better post some Trades before they pile up.
    I Intend updating this journal mainly on the weekend, after filling out the stats book. Old school pen and paper. May get an excel base journal later like this....
    https://trading-journal-spreadsheet.com/purchase-download/

    I am using Wyckoff method with simplified VSA . Will continue learning both as I believe they together can show the physcology and tactics of the big smart money . As they play on the psyche of the weaker retail investor, the larger weaker institutions and the weaker traders .
    I believe my "edge "is being able to see the market from the eyes and wallet of the weak retail investor,
    From the perspective of the weak , trader and the Stronger traders both retail and institutions.
    But most importantly from the perspective of the Big smart Money. Combine this with patience and
    a strategy that should reward patience while minimising risk as soon as possible I should be successful.
    I also have the ability to stick to a plan long term . I generally do what I say I will do , but can take a while to get things done. but they get done well.

    Will mainly be buying below resistance , or after new support made and is tested . also stock needs to be in an uptrend for at least a year or coming up off a long period of accumulation.
    prefer stocks at or near all time highs or at highest price for at least 5 years. as this should eliminate weaker holders at higher prices holding thins up with strong scared supply. allowing larger holders to withhold supply and let demand do its thing.
    Will post more details with charts.

    Feel free to offer constructive criticism.
    I will take all on board but may not alter my plan . Does not mean its bad advice , but I need to be sure it fits into my way of doing things, and need to run my own show with this.
    Thanks
    Brendan
     
  11. Modest

    Modest $PEPE

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    Hi mate, look forward to stopping by your thread as you progress. I can see you're on the right track already

    Good luck!
     
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  12. Triple B

    Triple B

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    So My First Trade on 19/10/17 Was
    Santos
    Energy sector seems to be where the money is at.
    I use charts to compare sectors to the XJO. for strength
    Mainly to reduce amount of charts to analyse and keep in the stronger sectors ,helping with demand side.
    I can take trades in weaker sectors as this strong sector idea is not a hard rule .
    we see Santos coming off long term lows, after a period of about 3 years accumulation.sto_ax24jan13_to_01feb18.png
    From about Dec14
    We can see and area of recent resistance at $4.60 then probable resistance at $5
    I got on at $ 4.27 green arrow [put an at market order on overnight! then realised at lunch what I did and then fixed it] cost myself about $20 with that one]
    Initial stop was $4.11 for 16c Risk
    $80 risk /.16 = 500 @$4.27 = $2135.margin req $106.75
    If STO Gets to $5 and stalls profit will be $365 - $25 costs = $340/$105 Risk 3.23:1
    I will round trade sizes down to nearest 10 for easier maths when having quick check of prices at work ;)
    Stop is now at 432 to be B/E including costs.
    Will adjust Stop tonight to 437 to lock in $25 profit.
    Stops are put below a point of decent support like jut below a largish bull candle but well below an new area of support so as to not get stopped out by the tests of support.
    STO
    sto_ax07nov16_to_16nov17.png
     
  13. Triple B

    Triple B

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    awc_ax07nov16_to_16nov17.png Next AWC
    Materials sector is in reasonable shape especially from late july.
    Made the same mistake with overnight market order as with STO
    in at 236 In Stop at 228 for 8c risk $80 risk /.08 =1000 x $2.36 = $2360 10% margin = $236
    $80 Risk + $25 Costs =$105 Reward was hoping for min 10% so $236 -$25 =$211
    so 2:1 RR
    But put stop at 236 for B/E + cos ts moved the stop down to 234 then stopped out!
    Cost myself and extra $20 + $24costs .
    Wont do that again .
    As The duck Tech a said. Stops move UP not Down.
    will keep an eye on AWC for possible re-entry
     
  14. Triple B

    Triple B

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    24/10/17
    Long ,ALL
    Consumer Discretionary is about Neutral with XJO
    ALL is at highest price for at least 5 years
    UP trend From at least April 2016
    Accumulators between $14 -$16 July 2016 - March 2017
    Took 50% profits between May -July 2017 to Set Up latest Re-Accumulation .all_ax17jan13_to_27jan18.png
    Am working on entry lower /earlier towards support. Then can sit and wait under Resistance with profits locked in
    In $23.05 Init St $22.35 = .80c R $80 R +$25 Costs =$R 105 =10.5% of Acc
    Stop now $22.60 Risk now $45 + $25 Costs+$ 70 =7%
    all_ax08nov16_to_17nov17.png
     

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  15. Triple B

    Triple B

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    So That was my 1st week of trading my small Acc. 6 Days as started on a Thursday
    Results were
    Fri 27/10/17
    Profit on $6800 Positions [unrealised ]$146 2.14%
    Profit on Acc $146 14.6%
    Costs $38.74
    Profit on Acc after costs $107.26 10.72%
     
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  16. Indoril

    Indoril

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    It's kind of hard to tell from your posts but it seems like you are leveraging quite a bit.
    If you are risking $80 per trade on a $1000 account then you better have a high win rate.
     
  17. Triple B

    Triple B

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    Its $105 per trade inc costs. High risk Tolerance , High leverage low volatility ASX50
    Stop trading at $500 loss
    Win rate 47%
    From 1st Post:
    Now I could trade up to $ 20000 with $1000 using 5% margin .[Don't do this!!]
    But nothing left for margin calls and quick way to get your account closed !
    Your broker does not want to have to chase you for margin!They will close your trade before that happens if they have the time!
    So Will be using 5-10% margin Stocks with the same % left in Free equity for Margin Calls.
    Therefore a 10% margin Stock will have 20%[ 10%+10%] in margin for the dreaded Gap Down.
    This also means that The account will only ever be 50% in active margin with the other %50
    Ready for any nasty crash or big gap down of one Stock
     
  18. Triple B

    Triple B

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    So only 1 Trade this week ,ending 3/11/2017
    CWY. In uptrend for at least a yearcwy_ax25jan13_to_02feb18.png highest prices in 5 years min
    cwy_ax08nov16_to_17nov17.png

    So we can see there has been a test of the new support which resulted in below average volume.
    So not too many stops triggered or sellers shaken out.
    Entry was at Green arrow $1.47 Init Stop at $1.40 so 1100 Shares at 7c risk is $77 R= +$25 costs
    =$102 Risk
    Will put stop up to about $1.43 for Monday.
    Just Want to keep it at 3 open trades at the moment.
    Next minor goal is $315 profit so I can have 3 trades at $105 Risk inc and still be B/E on account if all full ,stops are hit.
     
  19. Triple B

    Triple B

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    Fri 3rd Nov 2017
    Have 3 Trade s open
    ALL . bumping up towards $24 Resistance now $23.70 In $23.05 Stop at $22.60 for $70 loss inc costs
    STO . Again this one up to Resistance at $4.56 In at $4.27 x500 Stop now 437 for $25 profit after costs
    CWY. This one looks good. in 147 Init St 140 x 1100 for $102 Risk .move st to 143 on Monday for $64 Loss inc costs.

    That's currently $109 Risk if they all stopped out
    Acc GLV $1224.22 after costs
    .
    I am trading mainly the 50 x5% margin Stocks With FP Markets . I thought these would be the ASX 50 . Turns out not so.
    So Trading ASX200 with mostly 5% Margin, will also take good 10% margin Trades.
    The way I see it is that you will be charged finance on the position size anyway.
    Might as well use max leverage on the least volatile stocks giving more trades for your $ and less chance of a quick large drop in price ,hitting your full stop .
    Yes I understand the risk and thank everyone for their concern .
    Of course I would not trade like this with a Lower risk Tolerance,[Larger account]
    This is High Risk Trading. and can go pear shaped after just a few losers in a row . I am ok with this .
     
    Last edited: Nov 3, 2017
  20. Triple B

    Triple B

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    FRI 10-11-2017 Week 3

    Started week With GLV$1234.40 after costs
    By Tuesday Was up to $1372 With +$ 90 Risk!!
    So Time for a couple trades. at $105 risk each or about 7.5% of acc each

    Just lost an hours posting so this will be short
    Wed Long MGR 1100 @ 2.46
    Stop now $2.46 for Risk of $25 Costs
    mgr_ax30nov12_to_14jan18.png
    mgr_ax19may17_to_19nov17.png

    Thursday IAG
    Long 500@ 6.95
    Tightish stop at $6.80
    stop will stay there until new support is tested and price starts to increase

    iag_ax03dec12_to_14jan18.png
    iag_ax18may17_to_19nov17.png


    Then Today Friday
    STO was stopped out at $4.50 for $90 profit after costs
    Dropped 6% in 2 day
    I saw the TV news on Thursday night that STO had an investor presentation and the price dropped 3%!
    It was a warning I didn't heed!!
    Instead of placing a limit order for next day I just left stop thinking it cant drop again tomorrow can it! It did 3% so From about 4.75 to 4.48 in 2 days.
    Lesson learned and new Rule:
    check asx watchlist at 10am for news symbol. read news headline at least , and if prices are dropping fast ring broker to close .

    This was a rule I was considering but didn't apply as I was wanting to isolate myself from news influencing my trading .
    But is seems there is some news that cant be ignored. so checking the news notices and reading the headline at least , then checking prices for big dumps will be worth the small effort
    STO Dump.png


    So After Week 3

    GLV $1324.30 after costs
    Profit before costs $434
    Current Risk $110
    with 4 trades on
    2 At B/E before costs ie $50 R
    one at full $100 Risk
    and CWY at $40 profit after costs.
     

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    Last edited: Nov 10, 2017
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