CFD Trading

The trading options website provides both CFD trading recommendations and education to learn to trade CFDs. Additionaly we provide clients with access to an online CFD trading platform with access to over 7500 stock and 19 exchanges around the world. More information on our CFD recommendation service is below.

CFD Recommendations

The CFD trading recommendation service has been running for approximately 4 years, specialising in CFDs on Australian Stocks. The service aims to capture short term profits in both rising and falling markets with the ability to trade either long or short. Both technical and fundamental analyis is used to identify CFD trading recommendations. Trades usually last anywhere from a few days to a couple of months.

Clients registed for the CFD recommendation service will receive trade ideas via email, and can also be contacted by phone if required. No trades will be executed without prior confirmation from each individual client. If we feel the market is not presenting any A+ CFD trading opportunities, we are happy to sit out until more favourable conditions return. All recommendations are detailed including stop loss levels and profit targets. Quite often we use a trailing stop loss and increase the profit target as the stock moves in the right direction. All stops and targets can be actioned by the adviser upon previous request from the client so that client’s don’t have to watch the market all day.

For more information on the CFD recommendation portfolio or to register to receive a no obligation free trial for access to the trading recommendations please complete the contact form at the bottom of this page.

CFD Trading Risks

The primary risk with trading CFD’s involves the leverage nature of the product and gapping.

CFD Trading Leverage

Leverage allows an investor to achieve market exposure that is greater than the amount of capital they invest. It can be achieved through using products such as CFDs. With greater leverage comes greater exposure to adverse market movements. This can be a double edged sword magnifying your returns and your losses.

When the market is doing well, a higher level of leverage may be appropriate. However, it may be difficult or even impossible to determine when market conditions will change. This can expose you to large losses. For this reason it trades must throughly understand how gearing can magnify both returns and losses.

Gapping

The Australian share market is well known for its tendency to gap. This means that on the open of trade, the share price may open higher or lower than the previous days close without any trading occurring within the two levels.

If your stop loss is located within this gap area, then you will not be executed at this level but instead at the first available price level. This is referred to as slippage and tends to occur more frequently in stocks with a low daily turnover of shares or very volatile markets.

CFD Trading Example

An investor expects the price of BHP to rally in the short term from $35.00. The investor has $35,000 to invest and a price target of $40.00. He can now choose one of four strategies:

1 Invest the money in stocks;

2 Buy the equivalent number of CFDs as he would have stocks;

3 Partially leverage his investment, e.g. five times; or

4 Fully leverage his investment in the stock, thereby increasing his potential investment to $350,000 (on a 10% margin), and also raising the related risks by the same factor.

The table below compares the outcome of a few CFD strategies with a traditional stock investment.

After the opening transaction, Strategy 1 & 2 have an exposure of 1,000 shares in BHP, while Strategy 3 & 4 stand to profit from a leveraged holding of BHP shares for the same amount deposited. Of course, with the same capital available you can get very different results depending on the level of risk you are willing to take. Remember to only leverage your investment as much as you can afford to lose if the position moves against you.

Opening		Strategy 1 Stocks	Strategy 2 CFDs	Strategy 3 Partial Leverage	Strategy 4 Full Leverage
Deposit		$35,000	$35,000	$35,000	$35,000
Transaction	Buy BHP @ $35	1,000	1,000	5,000	10,000
	Sell BHP @ $40	1,000	1,000	5,000	10,000
Financing	30 days	0	$85	$425	$850
Profit/Loss		$5,000	$4,915	$24,575	$49,150

* The financing rate will change with interest rates. The above calculation is intended for illustrative purposes and is not 100% accurate.

Name:

E-Mail Address:

Phone Number

Message:

CAPTCHA Code: