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Hi,
Firstly, you may think you are not paying Commissions - but if you
are trading on a 4 Tick Spread in a market where you can trade the
futures for a 1 Tick spread you are paying a lot more spread than any
commission you would pay!! CFDs are really just undated futures
contracts that can be rolled out for an interest cost. Futures are
cheaper to trade.
I was speaking with Larry Williams last week for the seminars he is
doing in Australia and New Zealand and he has been trading a lot of
Forex and he has found a way to trade Forex without much spread at
all - says he is having great fun trading forex. Should be real
interesting to watch Larry Williams trade Forex live at the Million
Dollar Challenge.
Secondly, if when day trading one needs tight spreads, lower
commissions and more volatility than normal end of day trading
markets. Levarage means costs are a little lower for the position
size but traders need to be able to scratch trades quick - with a 4
Tick spread scratching a trade is punishing - as it means 8 Ticks
Spread on Entry and Exit.
If the Bucket Shops (read Reminiscences of a Stock Operator ) hedge
your trade (if they hedge - because usually they just bet that you
will lose your dough) using the underlying futures. The marketing
director of a big Bucket Shop told me a few years ago they worked on
the stats that 90% of their customers lose, so they just often hold
the trades their customers give them. Then run their own price made
market to hit the stops and take their profits when undercapitalised
and scared customers stop themselves out).
So you are actually better off trading the underlying that the bucket
shop would use to manage its risk. Undercapitalised and Smaller size
accounts could consider the Mini Contracts.
Regards
David Hunt
http://www.adest.com.au
At 07:54 AM 9/05/2006, you wrote:
>Hello all,
>
>I have just opened up a CFD trading account to take
>advantage of commission free trading on the major
>indices. Concentrating on the DOW for now. There is
>a constant 4 point spread on the bid ask through CMC
>Markets.
>
>I was wondering if anyone here is trading the DOW
>intraday and if they would mind sharing their
>experiences with me privately or on the board.
>
>I am currently looking at the 15 minute chart and the
>5 minute chart, with MA's of 3,5,8,10 12 on the 15 and
>5,10,20 on the 5 min chart.
>
>Using the Elder Ray, RSI, and MACD as my indicators.
>No volume available.
>
>I trade breakouts above or below the first bar of the
>day and try to gauge the longevity of the run using
>the MA's and indicators.
>
>But I find that I am still guessing too much. And the
>index seems to swing pretty wildly compared to stocks.
>It just feels different and I get uncertain about how
>far to let a trade turn against me before selling for
>a profit or loss.
>
>I have always been more of a swing trader but looking
>for strategies to daytrade the dow and take advantage
>of the leverage and lack of commissions here. Can't
>hold overnight as interest is charged despite your
>cash balance.
>
>Any advice appreciated.
>
>
>
>
>
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Regards
David Hunt
http://www.adest.com.au
p: + 612 9527 4690
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