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justjoin corner

Yo! Bro intercept! And must be versatile to know when to run away too. 

For he who knows when to fight and when to close shop and run away.....................will live to fight another day.  

For myself, I try to reduce that " running away" bit. To run away means to cut and take that loss. Ouch!

A Trading Strategy which does not require you to cut, means you will never have to take a loss.   But provided one's timing is okay.

Dont have to be perfect. But if " OKAY" ... meaning any paper loss is LOONable coz either further upside or downside is limited, then

that is a good strategy. And such a strategy invariably requires one very important trait - PATIENCE.  

Intercept      ( Date: 23-Nov-2013 21:48) Posted: Bro hosayleow is a versatile trader, assuming the role of a battleship commander or submarine commander as and when opportunity strikes.

 

I saw you at Sniper but did not see you post. Your account not activated? If so, can PM me and I will sms the Forum Administrator to make a duplicate key for you. Those who has the luxury of time can do forum hopping to learn from all sorts. There are MANY ways to make money from the market. Er....many ways to lose money too as well. LOL. The learning journey never ends. Never. Becoz just like the way people do business, the way people live and work do change over time, the way the stock market is manipulated also do change over time. What works now, may not work over time. Then a new way has to be found to overcome the competition to stay in this game. Learn from as many good forumners as you can. But it is important you learn how to fish for yourself. Not just wait for fish to be given to you on a dinner plate. Coz when you know how to fish, you can eat for a lifetime. Watch the market and observe how prices move. In my own experience, unfortunately, the many ways to make money from the market, cannot be found in books. But if your job commitment does not allow you to glue your eyes to your screen, then you cannot use price action observation to trade. You will have to find another way which suits you and which puts bacon on the table.

Luna69      ( Date: 23-Nov-2013 20:39) Posted: Tks bro, do drop by to post n share w all of us here too! It is good to learn from examples :) mkt is so depressed n so r most people including me, the way mkt behave, see also sianz.... Can make 1-2 pips must quickly run, rally is only sporadic n short lived, to long may not see bottom yet, to short seem risky for rebound, n all the talk of worst yet to come all the way into 2014 for SG mkt... I think either must hv super holding power, switching playing style n ability to scan good stocks, else really hard to dabble at this moment... But it is really good when sifus like u who come out to share knowledge w all... Beside jj, There r also many in Sj including bro sc, ace, js, etc who r also selflessly sharing their knowledge n it benefitted us a lot too n all hv their own different style...:) just hope all of us don't lose until give up but to finally find a profit trading style that suit oneself n in which I must say is just as difficult as cutting loss ... :) very good reading n analysis bro .. Tks for sharing ! hosayleow      ( Date: 23-Nov-2013 15:08) Posted: If you like, I will write more when time permits and the writing bug infects me. LOL Until then, some food for thought for your trading/investment journey... " When the market is doing range trading, do not set high targets to take profits. At a time like this, one smaller profit in your pocket is worth two larger ones on the chart."   Here's another... " In a Bull Market, do not sell a stock simply because it has hit a PREVIOUS HIGH. It could go higher. And very often do. And its because of momentum. Momentum Traders live by this RULE - BUY when the price breaks a New High."   One more... " It is a common misconception to believe that the price will not move up during distribution."

 

From my own recent survey, IG Market does offer the lowest com in town for their DMA model. Whether their platform and stock menu are the best...that I cannot say as I have not used other DMA CFD platforms.

Other CFD Providers charge as much as double the com.

City Index (0.08% of contract value or $10, whichever is higher) and CMC Markets (0.1% of contract value) do NOT offer DMA Model. 

I used City Index a few years back when they charged $10.00 com per trade regardless of contract value. When they had that, it was very good to use City Index to trade high value high beta stocks like UOB. Imagine back then I could within intraday buy 5 lots of UOB in the morn and sell it at 20 bids higher by late morn or afternoon. And my profits would be 20 cts x 5 lots = $1000 less $10.00 com per trade (x 2 trades of BUY & SELL) leaving a nett profit of $980.00. 

But when they scrapped the $10.00 per trade com and introduced a 0.08% com, I stopped using them and switched to IG. City Index is not a DMA CFD. One major flaw of a non-DMA CFD is you cannot participate in Pre-Opening and Pre-Closing...which is very important because that is when you can profit from the GAP-UPs or GAP-DOWNs. 

iluvboost      ( Date: 23-Nov-2013 19:18) Posted: tks for ur info... i been using KE Cfd for telco stks n capland. agree with ur points. btw is IG commission reasonably lowest and with good selection of counters? dont mind opening IG as a alternative platform.. hosayleow      ( Date: 23-Nov-2013 17:41) Posted: Yes. Index stocks are usually all there. Penny stocks are usually not there. Only selective penny stocks are there. Which is not a problem for me becoz as a rule of thumb, I dont play pennys. In another post, I will explain why I avoid pennys. But no offence to those who live and die by pennys. Back to CFD...not having the illiquid penny counters in IG's Menu may turn out to be a blessing in disguise. Becoz pennys being highly speculative can suddenly become very illiquid when the Chng Kay run road leow. Becoz of that, penny counters tend to require a much higher margin of 30% to 35%. And this high margin can eat into your limited trading capital. If you are a pure penny trader, then you may not find CFD suitable.

 

Yes, therefore, need your advice to avoid further damage. thanks

hosayleow      ( Date: 24-Nov-2013 15:16) Posted: Are you a stuckist in both counters? Sorry. I am now working on answering general questions regarding CFD and trading. More people will benefit from this and so I am according priority there. Your questions on stocks are counter-specific. If I happened to play those stocks, I can straight away offer my advice as I will be familiar with them. But if your stocks are outside my radar, I will need to check the charts first before I say anything and even then, my views will be based on charts alone without the benefit of price action observation. I would prefer to offer advice based on price action observation which to me is a far superior way to assess the immediate price direction of a stock. Hence, for advice on counter-specific issues, I will leave it to Bro JJ as his in-depth knowledge and repertoire of penny counters is far superior to mine for I generally as a rule of thumb dont play penny counters.  revival55      ( Date: 24-Nov-2013 14:08) Posted: just an additional question hope won't take much of time. What's your view on SinoGrandness & Yoma? Both vested. Thanks

 

Are you a stuckist in both counters?

Sorry. I am now working on answering general questions regarding CFD and trading. More people will benefit from this and so I am according priority there.

Your questions on stocks are counter-specific. If I happened to play those stocks, I can straight away offer my advice as I will be familiar with them. But if your stocks are outside my radar, I will need to check the charts first before I say anything and even then, my views will be based on charts alone without the benefit of price action observation. I would prefer to offer advice based on price action observation which to me is a far superior way to assess the immediate price direction of a stock. Hence, for advice on counter-specific issues, I will leave it to Bro JJ as his in-depth knowledge and repertoire of penny counters is far superior to mine for I generally as a rule of thumb dont play penny counters. 

revival55      ( Date: 24-Nov-2013 14:08) Posted: just an additional question hope won't take much of time. What's your view on SinoGrandness & Yoma? Both vested. Thanks  hosayleow      ( Date: 24-Nov-2013 13:55) Posted: Woaaaa !!!! So many questions!!! Hang on guys. Working on it now. One at a time.

 

Yes. To trade via CFD, you MUST ALWAYS provide a buffer. One simple solution to this problem is to treat your CFD account exactly like a Cash Account. So let's say I have $100K of trading capital in my CFD Account and I am LONGing an index stock which requires 10% margin, I should buy not more than $100K worth of that stock. Let's say the stock is trading at $1.00 and I buy 100 lots, that's $100K worth of stocks and I do have $100K of trading capital. But what my CFD House will do is to set aside 10% of the value of the stock, ie. $10K as margin. This $10K margin will be deducted from my trading capital of $100K leaving me an " Available Balance" of $90K to trade in other stocks. Assuming my stock price falls to 90 cts, I would be sitting on a paper loss of 10 cts x 100 lots = $10K. My CFD House will set aside another $10K from my trading capital to buffer that $10K paper loss. At this juncture, my platform will show:

Capital : $100,000

Margin : $10,000

Profit & Loss: -$10,000

Available Balance : $80,000.

If I have only $10,000 of trading capital and I buy 100 lots x $1.00 worth of stocks, my entire $10,000 of trading capital will be set aside as margin for that position leaving zero dollar to buffer any possible paper loss. In such a situation, if the price of my stock falls to say 95 cts, my paper loss is 5 cts x 100 lots = $5,000. And since I have no more trading capital to buffer that paper loss of $5,000, my CFD House has the right to give me a Margin Call to top up my account by $5,000 by a specified date/time in default they will be entitled to close my losing position at the prevailing market price. Let's say they force close my position at 95 cts, I would have lost 5 cts x 100 lots = $5000 plus com + finance charges (if any). And my Available Balance which was $10K will be updated to show a reduced balance of say $4750 ( after deducting the loss of 5 cts x 100 lots + com + finance charges). And after my House has closed my position at 95 cts (which they are legally entitled to if I do not meet their Margin Call), it matters not anymore if the price of my stock rebound strongly the next day or even on that same day to close at $1.10......ie. 10 cts above my entry price. My stock having been force sold, what happens to the price thereafter is hindsight and irrelevant.

To avoid the above situation, you must ALWAYS set aside capital to buffer any temporary paper loss. You musn't use up all your trading capital as margin. Having enough capital to buffer a temporary paper loss will make all the difference to your trading outcome. Earlier this month, prior to Super Group releasing her Results, I LONG her at an average price of $4.2154 x 55 lots. At one point in time, she fell to $4.00. My paper loss was $11,847. But I had enough capital to buffer that paper loss. So as far as my CFD House was concerned, this was a non-event. Super Group then rebounded to 4.45 and I started to sell her slowly (I could not sell all 55 lots at one go without crashing the price) at 4.42, 4.40, 4.39, 4.38, 4.37 and 4.36. It took quite a while to slowly unload 55 lots and I did that one day before she announced her Results. After selling all 55 lots, my profits worked out to more than $8K nett after deducting com and finance charges. Why am I telling you all this? To highlight to you all that this trade was at one time sitting on a paper loss of $11,847 + com + finance charges and that paper loss would have become a real loss if I did not have enough capital to buffer it and I kena force selling by my House. But becoz I had enough capital to buffer that paper loss, it remained only a paper loss. No more and no less. And that trade soon turned around from a possible loss of $11,847 + com + finance charges to one of real profits of more than $8K nett. In an earlier trade the week before, I made more than $4K nett from Super Group. All in, I made more than $12K from her for this round of Result Play. That earlier trade of $4K profit was also at one time sitting on a paper loss of $8400 when she fell to $3.90. Thankfully, she rebounded and that paper loss of $8400 simply vapourised   and I sold her for a profit of more than $4K.

The moral of the story? When you trade via CFD, never trade to the max of your capital. Always keep some money to act as a buffer for paper loss. Hopefully, your paper loss is temporary and LOONable and for that, it is all about timing your entry correctly at or near the Bottom. If you anyhow BUY or SHORT without checking where your stock is and only after you have entered that you realised you SHORT at the LOW or you LONG at the HIGH, then LOONing your paper loss is the worst thing you can do to yourself. In such an instance, no choice. CUT. And then open a new position in the opposite direction to recoup your loss. 

richsoh      ( Date: 23-Nov-2013 19:01) Posted: Pls do yr homework If exceed yr trade limit u hv to top up (margin call)

 

just an additional question hope won't take much of time.

What's your view on SinoGrandness & Yoma? Both vested. Thanks 

hosayleow      ( Date: 24-Nov-2013 13:55) Posted: Woaaaa !!!! So many questions!!! Hang on guys. Working on it now. One at a time.

 

Woaaaa !!!! So many questions!!!

Hang on guys. Working on it now.

One at a time. 

 

In this case, which cfd platform do you think is the best for a rookie like myself who has never touched or dabbled I'm CFDs before? I had a city index account which I never used and my minimum deposit in there is just rotting away. In your experience, which platform is the cheapest? I am mainly looking into index or blue chip trading.

hosayleow      ( Date: 23-Nov-2013 17:51) Posted: To confirm that, you need another POEMs user to do so. I do not have the answer. But I will not consider using POEMs to trade becoz I believe their com is one of the most, if not the most cut-throat in town. As a trader, the ability to run with 1 to 4 bids is VERY VERY important. More so if you trade intraday and your counter doesnt give much spread. Let's take UOB as an example again. I can run with 4 bids. Say, you need 14 bids to run. If for one whole week UOB's daily spread is only 9 to 14 bids, if I am nimble, I can IN OUT IN OUT a couple of rounds. But you, you will be sulking and frowning and paying daily finance charges and feeling frustrated about being stuck. Trust me friend. Low com giving you the ability to run with much lower bids than other traders makes all the difference to your trading outcome. gavinl      ( Date: 23-Nov-2013 17:37) Posted: By the way, i used to trade using cfd under poems. My remiser told me that poems cfd got the most counters, can you confirm that

 

Bro JJ/HoSayLeow, very impressed with all your knowledge sharing.

What is your view on SinarMas and Weiye?

Thanks and happy weekend. Huat Ah!!!

 

Good pointers....esp for those trade the pennies. Got to be nimble or the coconut will land on your heads. Myself I'm not nimble due to work commitments....so I stay away from pennies most of the time, but at the moment I do have a couple eg Rowsley and Viking. I bought Rowsley when PL talked about the Vantage and RSP thingy....and accumulated more along the way till it went ex. Viking only recently. Could have made a few rounds of profit from these two but not nimble lor. I don't normally trade often...only if got opportunity ( the fall of the 3 ) or during this year-end period ( Nov to Jan ) then I'm off the radar till opportunity calls. You are right about no cut loss for certain come-back stocks. I'm a CFD trader and I used it to trade during this present period but not for pennies which I hold for long term. Thanks for sharing your experience here and it's good for all learners....me included. Btw I've been thru all the major downs too. Pan-El, Black Oct, Asia's crisis, Dot com meltdown, SARS, Lehman/US housing meltdown. The worst was the last one....knocked me back to almost the stone-age time. Hopefully no wish to go thru any more of these and that is the main reason I don't trade often now. Oh...I'm attended many courses too, most will advise to stay vest most of the time....S1, S2, S3, K-line, macam-macam predictions theories lah ( only to lose more $$$$$$ lah ). I still go hear-see some of these presentations/seminars just to stay up to date with the happening whenever time allows. Frankly fun to see these guys/gals about my kids age trying to tell how good and successful they have achieved by trading stocks, forex, properties, gold and other investment.

hosayleow      ( Date: 23-Nov-2013 18:08) Posted: Not expert lah. I am also always learning everyday. The learning journey never ends. And there is always something we can all learn from each other. Er... which index stocks did you trade? In my experience, most index stocks move. Whilst most pennys dont move. Only those pennys which have a Chng Kay in the driver's seat, will move. Those without a driver, are usually stuck in the car park. I can name many. But for you to name an index stock which does not move, is tough. They all move. Its only a matter of how fast they move. But pennys...those without a driver, they can remain in the same parking lot for a long time and simply corrode away.  If you are interested to trade index stocks again, I can offer you my recommendation of those which move: A. Above $10.00 Range: UOB, DBS, OCBC, SIA, CityDev and KepCorp. B. $3.00 to $10.00 Range: SembCorp, SembMarine, SGX, Starhub, SingTel, M1, SIA Engrg, SATS and ST Engrg The good thing about these index stocks are they are what I called " Never Fail To Come Back Stocks" . And this is very, very important. What it means is...you dont have to cut loss. And if your trading strategy is one where you dont have to cut loss, then you will have no loss. Afterall, when does a trader/investor incurs a loss? When he cut loss. Isn't it? So if your strategy allows you not to cut loss, it means you will have no losses. More of this in another post. It is tied with why I dont play pennys. Becoz if you play pennys, you CANNOT dont cut loss. You must cut. And that's where and why most penny traders lose money over the long term. They win peanuts. But lose coconuts. Net result is a negative Profit & Loss Account. I have been there myself too. LOL.  gavinl      ( Date: 23-Nov-2013 17:51) Posted: Thank you very much for your expert view. I m a part time day trader n used to trade index stocks but stopped for past last 1 to 2 years because they seldom move n only pennies move. Thanks agai

 

Tks for pointers. Used to trade sia,dbs n singtel etc. You are right again. Lol, what i meant is that they move too slow for me. Lol.

hosayleow      ( Date: 23-Nov-2013 18:08) Posted: Not expert lah. I am also always learning everyday. The learning journey never ends. And there is always something we can all learn from each other. Er... which index stocks did you trade? In my experience, most index stocks move. Whilst most pennys dont move. Only those pennys which have a Chng Kay in the driver's seat, will move. Those without a driver, are usually stuck in the car park. I can name many. But for you to name an index stock which does not move, is tough. They all move. Its only a matter of how fast they move. But pennys...those without a driver, they can remain in the same parking lot for a long time and simply corrode away.  If you are interested to trade index stocks again, I can offer you my recommendation of those which move: A. Above $10.00 Range: UOB, DBS, OCBC, SIA, CityDev and KepCorp. B. $3.00 to $10.00 Range: SembCorp, SembMarine, SGX, Starhub, SingTel, M1, SIA Engrg, SATS and ST Engrg The good thing about these index stocks are they are what I called " Never Fail To Come Back Stocks" . And this is very, very important. What it means is...you dont have to cut loss. And if your trading strategy is one where you dont have to cut loss, then you will have no loss. Afterall, when does a trader/investor incurs a loss? When he cut loss. Isn't it? So if your strategy allows you not to cut loss, it means you will have no losses. More of this in another post. It is tied with why I dont play pennys. Becoz if you play pennys, you CANNOT dont cut loss. You must cut. And that's where and why most penny traders lose money over the long term. They win peanuts. But lose coconuts. Net result is a negative Profit & Loss Account. I have been there myself too. LOL.  gavinl      ( Date: 23-Nov-2013 17:51) Posted: Thank you very much for your expert view. I m a part time day trader n used to trade index stocks but stopped for past last 1 to 2 years because they seldom move n only pennies move. Thanks agai

 

Bro hosayleow is a versatile trader, assuming the role of a battleship commander or submarine commander as and when opportunity strikes.

 

Tks bro, do drop by to post n share w all of us here too! It is good to learn from examples :) mkt is so depressed n so r most people including me, the way mkt behave, see also sianz.... Can make 1-2 pips must quickly run, rally is only sporadic n short lived, to long may not see bottom yet, to short seem risky for rebound, n all the talk of worst yet to come all the way into 2014 for SG mkt... I think either must hv super holding power, switching playing style n ability to scan good stocks, else really hard to dabble at this moment... But it is really good when sifus like u who come out to share knowledge w all... Beside jj, There r also many in Sj including bro sc, ace, js, etc who r also selflessly sharing their knowledge n it benefitted us a lot too n all hv their own different style...:) just hope all of us don't lose until give up but to finally find a profit trading style that suit oneself n in which I must say is just as difficult as cutting loss ... :) very good reading n analysis bro .. Tks for sharing !

hosayleow      ( Date: 23-Nov-2013 15:08) Posted: If you like, I will write more when time permits and the writing bug infects me. LOL Until then, some food for thought for your trading/investment journey... " When the market is doing range trading, do not set high targets to take profits. At a time like this, one smaller profit in your pocket is worth two larger ones on the chart."   Here's another... " In a Bull Market, do not sell a stock simply because it has hit a PREVIOUS HIGH. It could go higher. And very often do. And its because of momentum. Momentum Traders live by this RULE - BUY when the price breaks a New High."   One more... " It is a common misconception to believe that the price will not move up during distribution."   Luna69      ( Date: 23-Nov-2013 14:29) Posted: Short n sweet message :) it shed a lot of knowledge for all to learn ! Very interesting n enlightening ! Tks a lot for the enjoyable read!!!

 

tks for ur info... i been using KE Cfd for telco stks n capland. agree with ur points.

btw is IG commission reasonably lowest and with good selection of counters? dont mind opening IG as a alternative platform..

hosayleow      ( Date: 23-Nov-2013 17:41) Posted: Yes. Index stocks are usually all there. Penny stocks are usually not there. Only selective penny stocks are there. Which is not a problem for me becoz as a rule of thumb, I dont play pennys. In another post, I will explain why I avoid pennys. But no offence to those who live and die by pennys. Back to CFD...not having the illiquid penny counters in IG's Menu may turn out to be a blessing in disguise. Becoz pennys being highly speculative can suddenly become very illiquid when the Chng Kay run road leow. Becoz of that, penny counters tend to require a much higher margin of 30% to 35%. And this high margin can eat into your limited trading capital. If you are a pure penny trader, then you may not find CFD suitable. gavinl      ( Date: 23-Nov-2013 17:33) Posted: Very informative indeed. But only thing i dont like is not all counters are listed in the cfd basket. Mostly blue chips right

 

Pls do yr homework
If exceed yr trade limit u hv to top up
(margin call)

 

Not expert lah. I am also always learning everyday. The learning journey never ends. And there is always something we can all learn from each other.

Er... which index stocks did you trade? In my experience, most index stocks move. Whilst most pennys dont move. Only those pennys which have a Chng Kay in the driver's seat, will move. Those without a driver, are usually stuck in the car park. I can name many. But for you to name an index stock which does not move, is tough. They all move. Its only a matter of how fast they move. But pennys...those without a driver, they can remain in the same parking lot for a long time and simply corrode away. 

If you are interested to trade index stocks again, I can offer you my recommendation of those which move:

A. Above $10.00 Range:

UOB, DBS, OCBC, SIA, CityDev and KepCorp.

B. $3.00 to $10.00 Range:

SembCorp, SembMarine, SGX, Starhub, SingTel, M1, SIA Engrg, SATS and ST Engrg

The good thing about these index stocks are they are what I called " Never Fail To Come Back Stocks" . And this is very, very important.

What it means is...you dont have to cut loss. And if your trading strategy is one where you dont have to cut loss, then you will have no loss.

Afterall, when does a trader/investor incurs a loss? When he cut loss. Isn't it? So if your strategy allows you not to cut loss, it means you will have no losses. More of this in another post. It is tied with why I dont play pennys. Becoz if you play pennys, you CANNOT dont cut loss. You must cut. And that's where and why most penny traders lose money over the long term. They win peanuts. But lose coconuts. Net result is a negative Profit & Loss Account. I have been there myself too. LOL. 

gavinl      ( Date: 23-Nov-2013 17:51) Posted: Thank you very much for your expert view. I m a part time day trader n used to trade index stocks but stopped for past last 1 to 2 years because they seldom move n only pennies move. Thanks again hosayleow      ( Date: 23-Nov-2013 17:41) Posted: Yes. Index stocks are usually all there. Penny stocks are usually not there. Only selective penny stocks are there. Which is not a problem for me becoz as a rule of thumb, I dont play pennys. In another post, I will explain why I avoid pennys. But no offence to those who live and die by pennys. Back to CFD...not having the illiquid penny counters in IG's Menu may turn out to be a blessing in disguise. Becoz pennys being highly speculative can suddenly become very illiquid when the Chng Kay run road leow. Becoz of that, penny counters tend to require a much higher margin of 30% to 35%. And this high margin can eat into your limited trading capital. If you are a pure penny trader, then you may not find CFD suitable.

 

To confirm that, you need another POEMs user to do so. I do not have the answer. But I will not consider using POEMs to trade becoz I believe their com is one of the most, if not the most cut-throat in town. As a trader, the ability to run with 1 to 4 bids is VERY VERY important. More so if you trade intraday and your counter doesnt give much spread. Let's take UOB as an example again. I can run with 4 bids. Say, you need 14 bids to run. If for one whole week UOB's daily spread is only 9 to 14 bids, if I am nimble, I can IN OUT IN OUT a couple of rounds. But you, you will be sulking and frowning and paying daily finance charges and feeling frustrated about being stuck. Trust me friend. Low com giving you the ability to run with much lower bids than other traders makes all the difference to your trading outcome.

gavinl      ( Date: 23-Nov-2013 17:37) Posted: By the way, i used to trade using cfd under poems. My remiser told me that poems cfd got the most counters, can you confirm that? gavinl      ( Date: 23-Nov-2013 17:33) Posted: Very informative indeed. But only thing i dont like is not all counters are listed in the cfd basket. Mostly blue chips right

 

Thank you very much for your expert view. I m a part time day trader n used to trade index stocks but stopped for past last 1 to 2 years because they seldom move n only pennies move. Thanks again

hosayleow      ( Date: 23-Nov-2013 17:41) Posted: Yes. Index stocks are usually all there. Penny stocks are usually not there. Only selective penny stocks are there. Which is not a problem for me becoz as a rule of thumb, I dont play pennys. In another post, I will explain why I avoid pennys. But no offence to those who live and die by pennys. Back to CFD...not having the illiquid penny counters in IG's Menu may turn out to be a blessing in disguise. Becoz pennys being highly speculative can suddenly become very illiquid when the Chng Kay run road leow. Becoz of that, penny counters tend to require a much higher margin of 30% to 35%. And this high margin can eat into your limited trading capital. If you are a pure penny trader, then you may not find CFD suitable. gavinl      ( Date: 23-Nov-2013 17:33) Posted: Very informative indeed. But only thing i dont like is not all counters are listed in the cfd basket. Mostly blue chips right

 

Yes. Index stocks are usually all there. Penny stocks are usually not there. Only selective penny stocks are there. Which is not a problem for me becoz as a rule of thumb, I dont play pennys. In another post, I will explain why I avoid pennys. But no offence to those who live and die by pennys. Back to CFD...not having the illiquid penny counters in IG's Menu may turn out to be a blessing in disguise. Becoz pennys being highly speculative can suddenly become very illiquid when the Chng Kay run road leow. Becoz of that, penny counters tend to require a much higher margin of 30% to 35%. And this high margin can eat into your limited trading capital. If you are a pure penny trader, then you may not find CFD suitable.

gavinl      ( Date: 23-Nov-2013 17:33) Posted: Very informative indeed. But only thing i dont like is not all counters are listed in the cfd basket. Mostly blue chips right? hosayleow      ( Date: 23-Nov-2013 12:37) Posted: Hi Friend, I am a CFD trader. I trade wholly and exclusively via a CFD Account. Hence, there is no such thing as contra for me. I can open and close a position within intraday or I can hold for as long as necessary till my position bears fruit or when I decide to cut and take the loss. Its only a question of paying finance charges for my open positions. So the longer I keep a position open, the more finance charges I incur. Why I prefer CFD? Becoz of 3 very important reasons: 1. My com is only 0.09% (inclusive of GST) of contract value. This means for stocks trading at between 0.005 ct to $5.50, I can run with just 1 lousy bid, if need be. The ability to run with just 1 bid gives me a VERY important edge over other traders. For stocks trading at $5.51 to $11.00, I need only 2 bids to run. Take a heavyweight counter like UOB trading at $20.94. If you trade with an online Cash Account say at 0.25% com + clearing fee + GST, you need 14 bids to cover your 2-way charges. So if you LONG 1 lot of UOB at $20.94 and you SELL at $21.09, ie. at 15 bids profit.... you make $10.00. Your broker make $140.00. Whereas for me when I do the same with a CFD Account, I make $110.00. My CFD House makes $40.00.   You get the drift now why low com is so very important and it gives me an edge over online Cash Account traders? 2. The next VERY important reason why I trade via a CFD Account is that I can SHORT the market as well. An online Cash Account trader can only LONG. No SHORTing is allowed unless you take the risk of covering your SHORTs intraday WIN LOSE or DRAW and that is like trying to walk on a tightrope suspended 20 metres above the ground without any training and without a safety net below you and hoping not to fall. The BULL does not reign and run all the time. When the BULL is exhausted, he will leave the market to make way for the BEAR to take centrestage. And when this BEAR starts to maul, stock prices will take a plunge and freefall. In such a market, the only way to make money is to SELL HIGH and BUY BACK LOWER to profit from the difference. And you can do this only if you are able to borrow scrips (which is very cumbersome and costly) or if you SHORT a counter via a CFD Account which is very convenient and hassle free. An effective trader is one who can play from both sides of the market. BULL or BEAR, rally or correction, a CFD trader is kept busy in both phases of the market. But an online Cash Account trader is helpless during a correction, retracement or pullback. He becomes a sitter. He can only wait for his stock to bottom out before he can trade again. Being able to SHORT is very important for one other reason. When prices rise, they rise slower than when they fall. When prices rise, some weak traders will take profits. This translates into price pullbacks which slows down the ascend. But when prices fall during a correction, there is no buying support to slow down the decline. Instead, panic selling or indiscriminate throwing will accelerate the fall of a stock's price. Did you notice that a stock can take 1 month to rise by 50 cts but yet can lose half or more of that rise, in just one or two days? Now you know why. Becoz when prices fall, they fall faster than when they rise. Which means if you can SHORT, it will take you much, much lesser time to profit from that position than if you LONG. 3. CFD is a leverage product. It offers margin financing. This is of course a double edged sword. It can make you, in good times. It can break you, in bad times. Margin is like fire. Control it...and it can serve you. And you can use it for cooking, lighting, heating, etc. But lose control of it and it can burn down your house and everyone in it. Margin gives me much needed additional firepower. But this additional firepower must NOT be used recklessly. Or it will wipe you out in just one bad trade. Take UOB as an illustration. If I want to LONG 50 lots of UOB at $20.94 with an online Cash Account, how much must I have to pick up those 50 lots?   $1,047,000 !!! But at 10% margin, to do the same with a CFD Account, I need only to put up with $104,700. And when will I do a trade like this. Certainly not when UOB is trading at $20.94. Maybe, if UOB is trading at $20.00. Better still, if she is trading at $19.00. If the market should go into a minor correction, we may see UOB fall to $20.00 or below $20.00. If the correction is very nasty, we may then see $19.00 to $19.30. At this level, I will dare to LONG UOB when she starts to rebound. 50 lots to 100 lots is what I will be looking at. Coz if the entire market has bottomed out and the market is ready to stage its next rally, UOB will trade back up to $21.00. And if it coincides with Earnings Reporting Season and dividend announcement, UOB can continue her rally towards $22.00. A move from say $19.30 to $22.00 is $2.70. This can happen within 1 to 2 months. A trade of 50 lots will yield $135,000. And if you have enough capital to do a 100-lot trade, your harvest is $270,000. Far fetched? Look at the chart of UOB for the last 1 year and you will know what I mean. You can make money from her Big Moves. You just have to be patient to wait for her to Bottom Out (to LONG) and to Top Out (to SHORT). Scanning The Market In any market across any time frame, there are ways to make money. We just have to FIND them. And understand what kind of set up must occur before a profitable trading window opens up. And then patiently wait for it to appear. And when we see it, to act immediately to seize the opportunity. Hence, over the weekends, I scan the market to look for such money making opportunities.....and their set ups. Sometimes I find a couple. Sometimes I dont. It is not all the time that such set ups will occur. We just have to be patient. Afterall, we dont have to trade everyday. Trade only when it is easy to make money. And it is easy to make money when those money making set ups appear.   Sorry I wrote so little. [LOL]