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Hi David,
Thanks for the input. These guys offer a 0.1%
regular commission on other trades which you pay on
the buy or sell to a max of $40Cdn.
On the Dow the Sale price is at the actual tick while
the Buy price is 4 points higher. So whichever way
you play it the Dow has to move 4 points in your
favour to break even, not 8. I thought it was fairly
equivalent to paying in and out commissions. Say 10
CFDs controlling $115,000 worth of Dow, at 4 points
thats $40. And its really only on the entry, not the
exit. If I start playing more contracts then I can
see how the spread would hurt more than commissions
since they cap regular commissions at $40 each way.
In terms of intraday trade strategies for the index do
you have any advice?
--- David Hunt <adest@xxxxxxxxxxx> wrote:
> 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
>
>
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