Posts Tagged ‘stocks’

The Basic 5 Reasons Why Day Traders Opt For Contract For Difference

September 4th, 2010 No Comments

By far the most general question requested among budding CFD traders is ‘what are the most profitable CFD day trading schemes or the most profitable winning CFD trading strategies that the profitable CFD traders employ?’

Here we’ll look at several causes why day traders opt for trading a contract for difference over other derivative outputs and uncover the most common CFD day trading strategies.

No overnight investing
CFDs have absolutely evolved into the ideal selection for short term day traders and there are a couple of main reasons for this. Firstly, CFDs undergo a financing rate when you keep a position overnight. The financing for long positions is usually the RBA rate (cash rate) +2%. So if the RBA level is 7% then you pay 9% for year counted back as a day rate. One variant to evade this is to close your position before the trading day has ended up, thus avoiding the CFD financing rates.

CFD Leverage for day traders is incredible
One more considerable reason that CFD day trading strategies are quite popular is because of the incredible leverage you have access to. You see, if you had $5,000 in a stock trading account then you are able to only trade $5,000 and a 5% move on $5,000 is only $250.

CFD liquidity on the top 100 ASX stocks is solid
One of the keys for short term day traders is a quite a liquid market and not ordinary other derivative products like options, CFDs mirror the liquidity of the underlying stock market. When trading utilizing a Direct Market Access (DMA) provider you can get access to and can see the exact volume accessible on each stock at muliple levels of depth.

Low commission rates for CFD traders
By far the biggest highlight for CFD day traders the very low commission rates. Indeed certain of the most popular CFD outputs are the index CFDs which are without any commission. This gives you access to a fast moving product with ample liquidity for zero brokerage.
Even if you are day trading the top 100 CFDs, the brokerage is still too low. The great number of CFD brokers in Australia charge a minimum of $10 or 0.1% and this makes the day traders quite happy.

Day Traders like volatility which as been quite high recently.
Volatility and CFD trading are the perfect couple. Day traders can’t afford to sit there seeing a stock go nowhere, they want movement and fast movement. When the markets are changeable, short term day traders are in their element and as usual benefiting handsomely from the short sharp intraday steps.

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CFD Brokers: Who Is Best?

August 31st, 2010 No Comments

I have been trading CFDs in Australia since they were first introduced in 2003. Over this period I have traded with all of the major CFD providers in Australia first hand. When speaking to groups of traders at investing expos and seminars all-around Australia I regularly get asked who’s the best CFD provider? I wrote this review to help answer this million dollar question.

This review covers all the major CFD providers in Australia that I’ve dealt with first hand, when writing this review I took into consideration four main things which as an expert trader I feel are the critical requirements to think about when selecting a CFD provider, these are:

1. Customer Service
2. Platform stability and ease of use
3. Product range
4. Pricing

It is important to to note that there are CFD provider evaluations performed by a variety of internet sites and magazines in Australia a lot of which are biased with the winners often being selected by journalists not traders and determined by the amount of cash spent on marketing and advertising in the magazine or on the website that carried out the review. Only real traders with real life experiences are able to conduct a fair an unbiased review.

The major players in the CFD industry in Australia are:

· IG Markets
· CMC Markets
· International Capital Markets (IC Markets)
· MF Global

I did not carry out a review of Etrade or Comsec as these organizations are purely resellers of MF Global’s CFD offering.

In this review I talk about my real life experiences with each of the providers mentioned above whilst taking into account the four crucial elements that I view as critical when selecting a CFD provider.

IG Markets
Customer Service: I’ve had an account with IG Markets for the previous three years I use this account as my backup account. Over this time I’ve found that their customer service has declined drastically, in-fact at on one occasion I was unable to contact a dealer as they were all busy. On the whole I regard their customer support to be poor and wouldn’t recommend them.

Platform stability and ease of use: I use both their Pure Deal and L2 trading platforms and have had problems with both. Lately I experienced the problem of being unable to view my positions and free equity preventing me from buying and selling all morning. I wouldn’t consider either of their trading platforms as appropriate for a professional trader.

Product range: IG Markets has a fantastic product range, this is certainly one of their strong points. One thing I’d say is that if you are looking to trade CFDs on exotic futures contracts and currency pairs IG Markets is certainly not the CFD provider for you as they have a tendency to stick with a fairly mainstream offering.

Pricing: On Australian share CFDs IG Markets has competitive pricing, their minimum commission on share CFDs is low and their spreads are tight on the major currency pairs, however for anyone who is an active trader and are seeking volume discounts don’t bother trying to negotiate with IG Markets their commission schedule is fixed.

CMC Markets
Customer Service: Out of every one of the CFD providers that I have ever dealt with I’ve found CMC Markets to have the worst customer service, with CMC Markets your problems start as soon as you call them up for support and select a number from 1 to 10 just to talk to someone. I’ve also found their support staff to possess only a basic knowledge of their platform. General queries and problems frequently must be escalated to more senior staff, not the kind of support an experienced trader demands.

Platform stability and ease of use: In recent times the stability of their trading platform Market Maker has improved a lot, however the trading platform still lacks functionality such as course of sales for share CFDs, something an experienced trader demands.

Product range: CMC’s product range is broad and not dissimilar to that of IG Markets though it is worth noting that CMC offers an exceptional variety of CFDs over exotic futures contracts and foreign exchange pairs, precisely what is missing from IG Markets product offering.

Pricing: Like IG Markets CMC markets offers good entry level pricing but lacks the pricing flexibility required when it comes coping with high volume traders.

International Capital Markets (IC Markets)
Customer Service: I had not heard about these guys until about one year ago. After calling them up and talking to one of their sales staff I thought I’d give them ago. My experience to date has been second to none. Their customer support is top notch. Despite the size of my trading account I have my very own dedicated account manager that knows the market and what I need, this is incredibly different to the call centre operations of IG and CMC Markets.

Platform stability and ease of use: They offer a variety of trading platforms to cater for a diverse range of clients. They have a trading platform for novices, intermediate and advanced traders. As I am an experienced trader I chose their advanced platform Pro Deal which offers all the functionally a professional trader needs. Though I can not speak for all of their trading platforms their advanced trading platform continues to be trouble free and I’d certainly recommend it to anyone.

Product range: All of the products absent from the two major providers like futures, DMA functionality and exotic forex pairs are offered by these guys. Whilst writing this review I couldn’t think of a product that these guys could not offer.

Pricing: Like most of the CFD providers reviewed these guys offer excellent entry level pricing, however the difference with these guys is that they also have a flexible pricing arrangement for frequent traders. As I’m an active day trader they were willing to drop their minimum charge and offer me a commission rate of 0.04% on DMA CFDs, the very best rate offered to me by the other providers was 0.08%, they are 50% more affordable!

MF Global
Customer Service: At the start I believed that these guys would take the cake on the customer service front, however regrettably their high level of service did not last for more than one week after funding my trading account, this was quite surprising and not something that I’d have expected. Once I was up and trading these guys did not want to know me, this kind of customer support leads me to rate them as the worst of the lot.

Platform stability and ease of use: These guys offer one platform for CFDs, webIRESS. Even though webIRESS is a good trading platform they do not offer anything else, in comparison to IC Markets who offer webIRESS as well as many other trading platforms. Their offering is basic and not what an expert trader demands.

Product range: MF Global can give you all the futures contracts you could ever think of however when it comes to forex, CFD and share trading they cannot compete with the likes of IC Markets. If it’s only futures you want than these are the guys to speak to, but for CFDs you should give them a miss.

Pricing: The entry level pricing for CFD trading at MF Global is expensive, they do however offer packages for frequent traders with discounts right down to 0.08%, this is still a far cry from the 0.04% offered by IC Markets. Even though the CFD commission rates are expensive I’m sure that if you were only trading futures you could get some great pricing from MF Global

Conclusion
As an expert trader I am quite demanding in what I expect from my CFD provider, I’m sure that this is not the norm for many traders. There was actually just one CFD provider from those reviewed that was able to give me what a professional trader would demand, the remainder of the CFD providers have great offerings that would suit an regular trader but when pushed to their limits might falter, this is something a professional trader cannot afford to have occur when capital is on the line. Aside from my number one choice IC Markets I’d chose IG Markets as my backup, regardless of their shortfalls they do have relatively good platform and a broad product range. There’s however a big difference in customer support and pricing of IG Markets offering compared to my number one choice, IC Markets.

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What You Should Know Before You Start CFD Trading

August 27th, 2010 No Comments

Before you start trading Contracts for difference it is vital to obtain a few tips from the experts to make sure that you do not make many of the expensive errors that beginner traders make. Below are three trading recommendations that can assist you in your CFD Trading success.

1. Manage your Positions
Repeatedly new traders spend a large amount of time choosing, planning and executing new positions, however they regularly make the error of exiting these trades with much less thought. This is unfortunate as it is the exit which will determine whether a trade has been profitable or not.

It is human nature to take profits quickly while the fear of incurring a loss will see the same trader leaving poorly performing positions open in the optimism that prices will move in the right direction and decrease losses or even turn them into profitable trades.

Many new traders ignore the old saying “Let your profits run and cut your losses short”. As the saying states if you have a profitable position, make sure you allow that trade to realize its full potential, as opposed to closing it out at the very first sign of a small return. On the other hand, in the event you hold a position that is moving against you, you need to move swiftly to get out of that position, before the loss becomes too great.

If you’re managing your trades properly, your average winning trade should be considerably larger than your average losing trade. Once you have the discipline to buy and sell in this way, you should be able to achieve overall profitability regardless of whether only half of your trades are winners. Numerous traders make the mistake of not closing poorly performing positions fast enough. One tool that makes this simpler is the stop-loss order.

Once you have identified a price level that corresponds with the level of risk that you are willing to take on a particular trade, a stop-loss order can be placed at this level to automatically close out the trade. This removes the human factor from the exit, reducing the chance that the emotion of hope will interfere with rational decision making.

It is essential to understand that a stop-loss order simply provides a trigger point for the execution of an order. If a sell stop has been put on a long position, the stop-loss will likely be activated if the price trades at or beneath the nominated stop level. Every now and then, this can lead to trades being executed a price that is less favorable than the nominated stop-loss price. This is called slippage.

2. Become familiar with the instrument you’re trading
Being over-the-counter products, there are various variations in the contract specifications of CFDs. If you’re buying and selling these products, it is crucial to know what these specifications are.

You must also become familiar with the influence that currency fluctuations might have on your holdings. If the base currency of the CFD increases against the base currency of your account your gains might be eroded by any foreign exchange fluctuation or your losses could be made worse.

Most CFD traders trade CFDs based on shares listed in their home country. The simple motive for this is that traders are more comfortable trading CFDs that they are familiar with. Most traders also enjoy the convenience of trading their home market as it isn’t realistic to sit up for half the night to trade a Contract for difference over a share listed on an exchange in another part of the world?

In lots of cases it is better to stick to CFDs based on stocks listed on exchanges that you are familiar with instead of trading CFDs based on shares listed on markets you do not fully understand.

3. Use the correct order types
You should treat trading as a serious business. As such, you ought to take some time to ensure that you thoroughly understand the tools of your business. Many Contract for Difference traders miss chances or have been closed out of trades at the wrong time simply because they placed the wrong kind of order.

At the very least, you should be familiar with these order types:

Market order: This sort of order is utilized to execute a trade at the current market price.

Stop-order: This order type is utilized to exit a trade at a specific price. Stop-orders are located at a level that’s worse than prices presently available in the market. On a long position, the stop-loss order to sell would be positioned below the present market price. Conversely, on a short position, the stop-loss order to buy would be located at a level above present market prices.

Limit order: A limit order is utilized to exit a trade. Limit orders are positioned at a level that is better than the present market price. When seeking to lock-in gains on an open long position, a limit order to sell would be placed at a level higher than current market prices. If seeking to lock-in profits on a short position, a limit order to buy would be placed at a level below current market prices.

You should always keep in mind that as CFDs are geared and that buying and selling them can be risky. Though if used properly CFDs will become a valuable tool within your trading arsenal.

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There Are Many Advantages Of Trading With DMA CFDs

August 23rd, 2010 No Comments

Direct Market Access, known as DMA, describes a type of CFD that is becoming favored by day traders. With this type of CFD your requirements are dealt with immediately, without a dealer becoming involved. This implies that the orders are filled without any need for re-quotes. This is when you want to buy at one amount, but your CFD broker says ‘Sorry, that price is not available, how about but I can let you have it at a slightly higher price. Now if you are running DMA CFDs using a WebIress feed, and you see there is volume available, you can have it at your price.

Having Direct Market Access means that traders can join bid/offer queues, as well as the markets open and closing auction phases. When dealing using a DMA broker you will never get any re-quotes, as you’re dealing within the liquidity of the local exchange. So when you go to buy stock at the price you want, and the volume is available, then that is the price you are going to pay So really the Direct Market Access CFDs have all the advantages that you would expect when you trade in conventional securities, along with the leverage you get with margin trading.

Traders that use DMA are often regarded as the ones responsible for setting the market prices. They seemingly have an influence over the prices, because the exchange reacts to any orders that are made by DMA traders. This can also affect the share prices on which the CFD is based .

There are other advantages that DMA CFD traders have over the traders that make use of a market maker. One is because they may enter and exit trades when the prices are more favorable. But there is also a disadvantage, and that is that it is not possible to have guaranteed stop loss orders. The more advanced traders use options so as to manage any exposure.

Another restriction you have when trading with DMA, is that it can only be used for stocks. When you want to trade in other markets, such as forex or commodities, you will have to use a market maker. DMA providers usually have only a very narrow range of products, therefore they have difficulty competing against the wide-range of products offered by the market makers. But saying that, they are ideally suited for traders who prefer to complete their own trades in the underlying market.

When trading using DMA, it is still possible to subscribe, for a minimal fee, to get exchange market information. This subscription allows access to real-time quotes. This facility allows you to keep a check on the number of traders that are operating at the different price levels.

The contracts for difference that use the Direct Market Access model, is ideal for day traders who make frequent deals with the plan to take advantage of any small price changes quickly. By the whole nature of day trading, orders have to be executed quickly, and without re-quotes.

There are a number of platforms that allow you to trade DMA CFDs, a major one being the webiress trading platform This platform will allow traders to take part in the market depth of the DMA CFD instrument that they are trading within.

Want to execute trades directly into the underlying market ? Get the ultimate low down on stock trading via DMA CFDs now in our comprehensive webiress guide.

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Leading Forex Trading Robots – MT4 Professional Advisor

August 22nd, 2010 No Comments

Well! The way the globe sees Fx has altered and pleasantly so. Right now, there is a complete new wave of automation that is assisting novices industry greater. There are demo programs and reside programs on which to industry. The robots normally use Meta Trader 4 platform which is the greatest out of the good deal currently. Currency trading autopilot- this one particular helps industry several currencies pairs and has a good end loss functional to shield against huge losses.

The robots typically use Meta Trader 4 platform which is the ideal out of the great deal today. Most of these guide our fortunes and support us generate huge bucks regardless of becoming protective. Let’s verify out 3 Currency trading robots. Forex autopilot provides money back again ensure inside of 60 days with no asking any type of a query. The concept is to make the investors feel safe and authentic about the product or service.

The computer software has performed additional than adequately in tackling several technical nuance of dealing. It plays on market place volatility sand news associated alterations in the market place. The software has accomplished far more than adequately in tackling a variety of technical nuance of exchanging. It plays on current market volatility sand news associated alterations in the current market.

Currency trading killer is a best currency trading robot which aims to go through industry predicament to come up to the greatest obtain/market time. It is fundamentally blessed with judging perfect exit and entry points for make trades. A former Deutchse bank currency exchanging advisor is behind the Forex trading robot and has produced a system which just requirements some order placing enable from the user. Forex trading Avenger- Now this a single is not as talked about as the other two but if you feel about the return on purchase (ROI), it merely is around the very best. It believes in absolute protection of trader funds. This is why the end losses are far too conservative in comparison to the business standards.

It asks the traders to go through the10 videos that it has to provide you with. The striking point for better or even worse is that Avenger trades in only 1 currency pair. This is the EUR/USD pair. Now Avenger believes that dealing in 1 pair of currency creates it much more solid in its reading and assists it to make trades much better for its a lot of investors.

Want to find out more about forex robots, then visit Joe Stevens’s site on how to choose the best forex robot for your needs.

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