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     spider
Member
Username: spider
Post Number: 1094
Registered: 10-2002Rating: N/A
Votes: 0
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| | Wednesday, October 08, 2003 - 05:46 pm: |  
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Chris Tate is running a CFD course..............details on the tradinggame web site.
A 1-day seminar with Chris Tate
In this exciting, completely new seminar, Chris Tate will take you through how to apply some of his favourite strategies using Contracts For Difference.
These instruments have literally turned the broking world upside-down. You will learn all about these amazing tools, as well as discovering how to gear your portfolio up to 10 times with no risk!
You can't afford to miss this one. If you are serious about learning how to go long and short the ASX 200, as well as a heap of other Indices from around the world, including the UK market, this seminar is for you.
Chris Tate is recognised as Australia's market leader in this arena. His strategies and expertise is being sought from even advanced traders in this brand new area.
Fee:
$990 (inc GST)
When:
Saturday 25th October - 8.45 am (for a 9.00 am start) to 5.00 pm. Includes lunch andmorning/afternoon tea. Full course notes will be provided.
Where:
Carlton Crest, 65 Queens Road, Melbourne
"How long a minute is depends on what side of the bathroom door you're on."
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book_ii
Member
Username: book_ii
Post Number: 98
Registered: 12-2002Rating: N/A
Votes: 0
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| | Wednesday, October 08, 2003 - 10:58 pm: |
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Hi Spider,
I received the above email also. I am always concerned when the sale pitch is like 'how to gear your portfolio up to 10 times with no risk'. To be a successful trader is to understand the nature of risk and how to manage it, there is no way to eliminate it completely, and without risk there would be no gain.
Well i guess the band wagon has truly arrived in Australia with D4F followed by IGM, then comes the book on CFDs by Catherine Davey (who does TA for investorWeb and free promotional courses for D4F), now the $1,000 courses embellished with comments like 'no risk'. Mmmmm, think i might go buy an apartment on the gold coast at an highly inflated price!
I know Tate is highly regarded as a TA educator, but is this because he is a good talker or trader? I'd be interested to know how much he has made from trading in comparison to educating.
Cheers
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"It is a good viewpoint to see the world as a dream. When you have something like a nightmare, you will wake up and tell yourself that it was only a dream. It is said that the world we live in is not a bit different from this."--Ghost Dog (Forest Whitaker), reading from HAGAKURE: THE BOOK OF THE SAMURAI
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debono
Member
Username: debono
Post Number: 4
Registered: 01-2004Rating: N/A
Votes: 0
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| | Sunday, January 04, 2004 - 05:48 pm: |
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Hi all
For those currently trading CFDS have you had a definative tax ruling?
As I understand it CURRENTLY there is no ruling but the tax man being what he is could hit with a retrospective tax as there is no ruling as yet (I stand to be corrected here?)
I have searched many forums for an answer.
Shares mag has also stated that there is no ruling as yet but was due Sept 6 2003.
Having been caught up in the 'not so' tax effective investments I would be cautious and appreciate any further insight you may have.
cheers in advance
cheers
debono
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shawky
Member
Username: shawky
Post Number: 134
Registered: 11-2003Rating: N/A
Votes: 0
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| | Sunday, January 04, 2004 - 06:09 pm: |
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Debono
I bought Shares mag just for the article on CFDs. As I read it, Spread Betting is not taxable in line with any other form of Gambling. The statement regarding no tax was not referring to CFDs, only the spread betting. Unless of course I misread it, and unfortunately Mrs Shawky has the mag at work this weekend, so I can't confirm.
You are correct in regards to a pending ruling. The ATO has been deliberating over spread betting for some time as the article also mentioned, and it could be back dated.
A CFD is a Contract and as explained in the article, you effectively own the underlying shares. The CFD is simply a financial instrument to provide leverage to your money. With spread betting there is no underlying ownership. It is literally a bet on which way the market or a share price will go. And I think your loss is limited to the amount you "bet".
Hope this helps, whilst awaiting a CFD expert to respond to your query. By the way, I am not an accountant but do try to keep up to date.
regards
Shawky
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debono
Member
Username: debono
Post Number: 5
Registered: 01-2004Rating: N/A
Votes: 0
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| | Sunday, January 04, 2004 - 06:42 pm: |
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Cheers Shawky
you are 100% correct. It does refer to spread betting. I have taken this to include the cfds also as you don't actually own the share do you but I guess it can be said that it is a derrivative of the share?
You are probably correct though as I am sure the tax man would not let this slip though his fingers.
I am doing the numbers vs warrants and apart from the risk of mm manipulation I don't see the benefit in leverage.
Having said that I am only just starting to dig into it.
I wonder if anyone has done some spread sheet calcs to compare warrants,eto's and cfds?
thanks for the reply...much appreciated
cheers
debono
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heyyou
Member
Username: heyyou
Post Number: 1
Registered: 09-2003Rating: N/A
Votes: 0
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| | Sunday, January 04, 2004 - 06:49 pm: |
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shawky
"and unfortunately Mrs Shawky has the mag at work this weekend, so I can't confirm. "
Try this.
http://www.sharesmag.com.au/stories2/20040101/21137.aspx
Hey You
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deanrosario
Member
Username: deanrosario
Post Number: 177
Registered: 11-2002Rating: N/A
Votes: 0
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| | Thursday, January 08, 2004 - 01:37 pm: |
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Gentlemen, you may want to peruse this thread from a while back in relation to taxation and CFDs.
http://forum.incrediblecharts.com/messages/12/54816.html
DR
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shonky
Member
Username: shonky
Post Number: 11
Registered: 09-2002Rating: N/A
Votes: 0
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| | Sunday, April 18, 2004 - 12:35 pm: |
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Shawky
If perchance Mrs Shawky has returned your magazine, I would appreciate any views you may have on CFD trading.It looks too easy.
Regards,
Shonky
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shawky
Member
Username: shawky
Post Number: 242
Registered: 11-2003Rating: 
Votes: 3
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| | Sunday, April 18, 2004 - 02:12 pm: |
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Shonky
Yes got the magazine back...now what was that all about...Oh yes tax or no tax.
I spoke to my accountant and basically as I would be trading CFDs in a deliberate way to earn income, then he highly recommends that it be declared on my tax return as income. Makes sense to me as it IS income, and no use trying to dodge Big Brother.
Having said that, regarding CFDs, I treat it no differently to trading Shares. So in that respect it IS easy. Share Trading for sustained profit is NOT easy. I am no expert on CFDs but here are my views, and thoughts to date to help or hinder...
I think the danger and pitfalls with CFDs lies in the ability to manage the gearing of capital plus the additional margin costs. Money and Trade Management become critical once gearing is applied. If Money Management is in place already and your trading system is profitable then CFDs are just a mechanism to gear your success to date.
For example, with 10k in the CMC account, you could limit yourself to 10k of CFDs i.e. same as direct shares. This is the safest way to start and allows you to overlook the risks of margin calls. Just manage your CFDs as you would shares (i.e. money and trade management - stop loss, take profit, and keep an eye on the time decay factor for a healthy rate of return - ROR). CMC charges daily interest on your portfolio hence the ROR factor.
I am of course assuming that you will always have a stop loss price to limit erosion of capital no matter what broker or derivative/commodity you trade.
With 10k you could also go long or short on say approximately 200k of BHP or IAG share CFDs. DEADLY - not only have you geared to 95% (the max for these shares) but left no free equity in your account to cover the 0.1% brokerage, the daily margin interest charged (7.25%/365 of 200k = $39.72), or stop losses.
If the share price drops, it impacts your margin immediately. This is where a CFD or in particular a CMC Contract differs from a normal share contract and requires tighter money management.
In CMC (I assume with CFDs in general) your account is marked to market 24 hours a day, so you MUST have sufficient equity to cover ALL price movements of a share at all times.
So, you might ask, how does Shawky keep on top of this detail and try to keep it simple?
A. Money Management and magical spreadsheets, apprentice trader style. Keep it simple and safe.
1. Every Buy/Sell Order is followed through IMMEDIATELY with a Stop Order calculated using support / resistance, previous high/low or 5% of total purchase cost whichever incurs the least loss. I did use a wider stop on my first trade (7%) but decided this was too big. Trading books suggest 5-8% is a healthy range. e.g. 2 losses of 5% means 1 win of 11% and your square; 2 losses of 8% needs 1 win of 19%. Do some back testing and you will agree, a worst case % stop seems to limit losses as a default exit strategy.
2. Assuming CFDs requiring 10% margin are used (i.e. 10 times gain/loss), maximum exposure is half of my equity. i.e. 10k equity allows one to hold 50k of CFDs using 5k margin. The other half (5k) is there to cover a worst case 5% stop loss (5% of 50k = 5k) on all trades. So now I don't have to worry about margin calls, just manage the trade as a normal share trade.
3. I monitor active trades and will only add or increase positions if they are all in profit and my stops are now stop profits not stop losses.
4. I am fine tuning the money management side and tracking equity based on target prices, current prices and all stops hit with slippage. The usual win/loss ratios and weekly cash flow charting are also done. I know exactly where I am and where I could be if the market works for me or against me.
Hope this helps as a starting point. I could go far deeper into the money management side as I am now working my account a little harder (since easter) so need to track equity closely. I am trying to apply money management rules as detailed in Elder's book and Compton and Kendells Book, the latter is readily available at public libraries as is excellent for a beginner. It takes you through trading, indicators and ends up with a trading system including full details for a good money management system. Compton references books by the likes of Elder, Weinstein, Guppy, Bedford, Schwager, Tate, etc
Mind you money management is well explained in trillions of posts on this forum if you have the time to read them all. Most are far better than my ramblings.
References:
Trading with a Plan by Tony Compton & Eric Kendall
Come into my Trading Room by Dr Elexander Elder
www.cmcgroup.com.au
Kind regards
Shawky who is not Shonky for those who may have got confused
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shonky
Member
Username: shonky
Post Number: 12
Registered: 09-2002Rating: N/A
Votes: 0
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| | Sunday, April 18, 2004 - 04:49 pm: |
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Shawky
Brilliant synopsis.Those stops seem very tight, mind you, considering I was using similar settings with AOT a while ago and found they were too constrictive, or required too much screenwatching. I'll have to ponder awhile over the benefits of CFDs vs margin trading, as my current mindset is definitely EOD, but many thanks for your input.Incidentally, have you read Catherine Davey's book on CFDs ?
Regards,
Shonky
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shawky
Member
Username: shawky
Post Number: 243
Registered: 11-2003Rating: N/A
Votes: 0
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| | Sunday, April 18, 2004 - 05:39 pm: |
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Shonky
Thanks for the compliment, much appreciated.
The stops are tight because they are the weakest link in my trading to date. I have also found that over the years each time I reviewed a few months trading history (paper trading mostly) I found that re-doing the trades with a 5% stop turned every -ve trading period into a +ve return. My current focus is short term trading. The 5% max loss fits well. Once the trade is in profit I can choice how tight to place my stop. Remember 5% is just my initial worst case stop to limit losses. Stop profit settings are a totally different ball game and depend entirely on you investment timeframe and time available to monitor the trade or find new trades once stopped out.
I have been on holidays for 3-4 weeks so my CMC account was not watched religiously - EOD analysis, tight stops and conditional orders worked fine. I am watching it during the day now but this is more so for training purposes. I want to target EOD trading and only when the cruise ship is not in dock  .
I have a ComSec Margin loan as well. It currently runs at 7.45% of the margin component. CMC charges interest on 100% of the trade so this is a significant difference (in interest), but if you use borrowed money (home line of credit - equity mate etc) for your equity component then the difference is bugger all (about 1% difference). If your target Rate of Return is multiples of the interest rate, then the variance in interest becomes a mute point anyway.
Most important benefits for me:
CMC gives me reliable Stops. ComSec does not.
CMC gives me the LOWEST brokerage rate that I am aware of.
CMC will accept a bank guarantee (can use 50% of its value as margin) instead of cash but this increases your 'risk'
CMC has conditional orders: If Done, One Cancels the Other
CMC has Long and Short - no difference at all, just order in which you Buy/Sell
ComSec, E-Trade have very good tools for market depth, announcements et al. I use them to supplement CMC.
Yes, a standard margin loan with some brokers is cheaper than CMC, but not all and there can be additional trading costs (e.g. transfer fees between leveraged equities and say ComSec).
Remember, use whatever you are comfortable with. Your Trading System and Trading Plan are far more important than which broker you use, or how you source your capital base. The latter only help reduce operating costs. The former put food on the table.
regards
Shawky
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cracker
Member
Username: cracker
Post Number: 31
Registered: 05-2003Rating: N/A
Votes: 0
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| | Sunday, April 18, 2004 - 09:36 pm: |
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Hi Shawky,
Thanks for the terrific posts on CFD's.
I am interested in the CMC facility, mainly due to the flexibility in regards to placing orders (unfortunately I haven't got much time during the day to place orders and my current broker doesn't offer stop loss orders), and also the ability to sell short.
I read on this site earlier in the year that some changes had been made at CMC. Can you confirm whether:
- the ASX 200 can still be traded
- the brokerage is $10 now
- there is a monthly data fee of $40
Many thanks,
Cracker
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shawky
Member
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