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Trading CFDs?

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Ken

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Just wondering who here has traded CFD's.

With any success/disasters?

How did you start?

I understand how they work, considering starting off trading with $5000 and gaining exposure to $20,000-$50,000 worth of a stock like OXR or ZFX.

Just wondering how you went in the correction?

Did you benefit, or did you lose massively?

How tight were your stop losses etc?

I think its an interesting one. I intend to do a number of simulations before I even register an account.

I see no reason why one can't master the art of CFD's like anything else on this earth...
 
Re: Trading CFD's

Hi Ken,
A search of ASF will find plenty of postings on CFD's and how people have faired with them.
To be blunt, CFD's are for lazy investors/traders hoping to make twice the money in half the time, but end up loosing most if not all their capital.

There is only one genuine non gambling use for CFD's as far as I can see, that is to hedge against realising a capital gain on a share position.

Unless you are very experienced with shares then save your money.
 
Re: Trading CFD's

Uncle F, I feel like a naughty schoolboy just been caught at the TAB, surely where not that bad, how about the option or warrant traders they in the same class. porkpie
 
Re: Trading CFD's

Uncle festivus why are cfd,s for lazy people???doesnt make sense.its the same as a margin loan to a certain extent.I believe alot of eople including mum and dad investors take out margin loans.

I think cfd.s are great allows you to go short which is great in this type of market where the swings are great for holding a day position or loneger if you like the risk./going short you even get paid interest plus brokerage charges are alot less than you average comsec,etrade etc.

If youy careful with them understand the risks it shouldnt be any different to normal trading.Just because you put $10000 in a cfd account doesnt mean you have to go and make a $100,000 trade.just play it at the level you are comfortable with.same as always folllow rules keep losses small let winners run etc etc.Dont expect to make huge amoounts but slowly but surely you can get your account higher.

Ken if you start a $5000 account work out the max loss on each trade you can rxcept $200,$300,$500 whatever and buy your parcels accordingly.From the sounds of it you have been thinking long about and arent going to jump straight in and blow up your account.It all comes down to the trader and if you can pick the winners.

cheers
 
Re: Trading CFD's

Ken - all good points made already. I trade CFD's with IG markets - and would happily recommend them or CityIndex which I have found useful as well. As for the correction - well - it was a bit of an 'Even Steven' ride for me. I was short on a few and long on a few...and managed to pull the trigger on some which, believe me, is the toughest thing to do with CFD trading...knowing when to get out.

I have found CFD 'simulation' helpful to better understand margins. I play around a fair bit with Concensus Trader - http://theconsensustrader.com.au/
and found it a good learning tool.

As for funds...I open positions on the index (Australia 200 - $5 mini)...if I do well (e.g 2 contracts short on August 1)...then that money goes into opening a position on a company...that way if it goes belly-up as it has in the past - I really haven't 'lost' anything...just put it down to continuing the education needed to trade CFD's. Good luck.
 
Re: Trading CFD's

gday hawkeye,

Im with ig as well.seem pretty good.cant complain its my trading that looses not there platform.lol

anyway ive been thinking about those mini contracts as well.if you get a chance do you mind giving a run down on how they work.

eg currently the buy is at 6178 sell at 6176 so i understand to go short and long.so if i put in 10 contracts is that $50 for every point rise and $50 for every point drop???is that how it works.

cheers
 
Re: Trading CFD's


That's how it works yes.

I should clarify my previous post a bit. What I should have said was that if you are new to investing then cfd's are probably not the place to start your 'career' as you have to be very disiplined with stops and losses. You just can't let a cfd loss grow into a bigger loss thinking it will turn around; capital preservation is the number one rule, more so for CFD's.
 
Re: Trading CFD's

Yep - What Uncle F said...capital preservation is the number one rule.

Also - IG Markets and City Index have different values per contract. I believe IG are far more straight forward and a bit better looking as well. 1 Contract = $5...every point therefore is 5 bucks...If you're going to open positions on the index - worthwhile having a look at Bloombergs Economic Calender. Our markets do follow the US...and if you're up late on a Friday night - you can make a killing. See what the latest announcement is - e.g last week was a double wammy - 10.30pm our time the Durable Goods report came out and at midnight the Housing report came out...both went against analysts reports and were good news items...DOW went up, up and away and the AUS 200 followed suit about 3 minutes behind....nice work if you're up late watching the footy and making money at the same time kicking back with a beer.
http://www.bloomberg.com/markets/ecalendar/index.html
My advice is don't get too greedy too fast...you need $350 bucks in your account at all times and you can keep your position overnight - but good luck getting much sleep if you do that at the moment!
 
Re: Trading CFD's

tasmanian said:
~~
eg currently the buy is at 6178 sell at 6176 so i understand to go short and long.so if i put in 10 contracts is that $50 for every point rise and $50 for every point drop???is that how it works.
cheers
Click to expand...

So I guess you are $100- behind to start with from the spread. I understand this is the only cost, but does the spread widen when volatility approaches?

What hours does this market operate?
 
Re: Trading CFD's

Well yesterday I noticed Tabcorp went to $15.40 on really low volume after hitting a 5 week low.

It closed today at a 52 week low.

I would have gone short @15.40 and then again today on close as it closed at a 52 week low and there is a lot conjecture of the Horse Flu.

So i think it might be further south for Tabcorp.

It also went Ex -div so there is no incentive to hold TAH at the moment.

Maybe I am wrong.

See how it goes.

I have written it down on paper.

The trend at the moment is definitley heading towards south...and with long term support broken, then next support levels are a long way down, so I can see TAH potentially heading towards the $12-$13 on a chart basis. But the dividend at those prices would be very much a buy.

Short term I think further south until the horse flu is cleared up...

Anyone agree?

Thanks for the input
Havent opened up an account yet. Will just see how i do on paper.
 
Re: Trading CFD's

CFD said:
So I guess you are $100- behind to start with from the spread. I understand this is the only cost, but does the spread widen when volatility approaches?

What hours does this market operate?
Click to expand...

Gday cfd,

Im not really sure how this market works.hawkeye gave me more of an idea.sounds like its open when the market is closed???if you cna do it on a friday night it must be.

Ive only ever traded shares but trading the index sounds good.especially lately everytime the market has come around 6187 its dropped.I wouldnt be holding any position overnight though as hawkeye said way too volatile atm.

Does anyone elsse out there trade this???I might have to give ig markets a call and get the rundown.eg whats the brokerage is there none just the spread.any info appreciated

cheers

Does anyone else trade this
 
Re: Trading CFD's


The IG ASX 200 cash market runs 24Hrs... apart from a short break before and after our market opens and closes... the spread during market hours is 3 points from memory... out of hours it widens... at the moment it is 6126.5-6133.5... but it varies, I have seen it go out to 10+.... there is no brokerage as such, just the de-facto brokerage of spread.. if you use GSL the minimum stop distance(same on all their index CFD's) is 5x the current spread, and also there is a 3 point fee for it....
Hope this helps
Cheers
....Kauri
 
Re: Trading CFD's

CFD's were great during the correction eventhough I did not short anything.

Used CFD's to buy into OXR what I sold from long term holdings.

Sold OXR stock to buy into other stocks that were not available via CFD's.

Also trading a short term with them they are great.

But I've been doing physical shares for 6 years now
 
Re: Trading CFD's

Man I only started trading CFDs this year. The correction RAPED me. I lost more in that month that my total investment gains for the past 3 years... I made a large chunk of it back on the rebound but im still hurting bad.

If i had gotten into CFDs in a couple of years ago I would have been so much better off. But during a correction, leverage can really hurt you. And those big jumps in macquarie bank, spiking way past MA20 kept hitting my stops and forcing me to sell b4 the stock bounced back... ahh the sorrow.

Anyways - i have not given up on CFDs - just have to go back to the drawing board and work on my trading plan - im taking a break at the moment caus the market is still 2 uncertain and volitile.
 
Re: Trading CFD's

BNB & PDN were my first two shorts. Got in when BNB was mentioned in the sub-prime crisis. As for PDN, just read the down ward trend & thought I could ride it. End result, lost in both positions- bad.

Long BHP when they reported about their 'too much money, don;t know what to do with it' news. Held for 4 days. Very small profit (better than nothing, i guess).

short ANZ on Monday and close position today for a nice profit.

overall result- still down 25%.
 
Re: Trading CFD's

What I have found with CFD's is they require excellent timing.

I also concentrate on 2 markets really getting to know them and learning there personal quirks.

I also watch about 8 other shares trade them only when they look plum.

I have lernt from my last 1 year and 11 months in the market that u must wait for trades to come to u, don't chase.

I keep my loses very small and I am never shy of switching from long to short or short to long if at first I am wrong. (mainly do that in FX)

CFD's in my opinion are good I really enjoy the leverage you can obtain and the fact that they are so flexible. often if i take on a ambitious trade i will put a very small parcel at it, that's a big plus. options and futures don't really have that luxury.

Learn what u trade start small build you way up, don't rush. Leveraged instruments need to be approached with care.

good trading
 
Re: Trading CFD's

another thing to bear in mind is the cost of opening & closing a position. my CFD provider is Mac Prime. The trading fee is ok but the GSL is a killer. And Mac Prime does not allow shorting MBL.
 
Re: Trading CFD's

Given the leverage involved, I think money management is very important.
There is a view the your risk (ie the difference between your entry price and stop price) should not exceed 1.5% to 2% of your cfd capital. Sure glad I learned this before I started!

I also wonder about the wisdom of having all trades in the same direction. Not wishing to trade against the trend but getting hit by a runaway train (DOW) is not much fun.
 
Re: Trading CFD's


Yes that is very important. Even if you calculate your stop at Max 2% per trade but enter a lot of trades at the same time say 5 you have just exposed yourself to a 10% possible hit if not more.

I am guessing that a lot of newer traders have even larger stops with CFDs, 4% or 5% of the stock price which would equate to 1/2 the margin requirements. On 5 trades this could be a very large proportion of your account at risk.
 
Re: Trading CFD's


Go direct market access.
 
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