Hi All,

Check out these Option vs CFD examples ... look forward to your comments.


$1K in 4 Minute ANZ Example


Option

Put Trade :- Option value of 90 to 95.5 resulting in $1054 profit


CFD

Using 20K of capital trading the ANZ CFD in the above example through the power of leverage.

Margin = 1%
20K x 1% Margin = $2,000,000 Market Value

Sell @ $16.66
2000000 / Sell price of $16.66 = 120,048 CFD’s

Buy @ $16.53 ($16.52 less spread of $0.01)

$16.66 - $16.53 = $0.13

$0.13 x 120,048 = $15,606.25 Gross Profit
Less Commission of $4000

= $11,606.25 Net Profit


Alternatively you would only need to expose 10% of capital to achieve the 1k profit result.


Or consider this ASX200 paper trade example …

Margin = 0.5%
20K x 0.5% Margin = $4,000,000 Market Value

Buy @ $4373
4000000 / Buy price of $4373 = 915 CFD’s

Sell @ $4403 ($4401 less spread of $2)

$4373 - $4403 = $30

$30 x 915

= $27,450 Net Profit (no commission applies to index trades)

http://www.onedaywealth.com/forum/images/attach/jpg.gif

Alternatively using only 10% of $20K capital would net a profit of $2560

The Trailing Stop Loss is a method I’ve been trialing with great results so far (all work in progress).

This is bound to generate some interest / depate / controversy but felt the urge to “Put it Out There” to gauge Members response.


Regards

Gary

Thanks for that Gary. That's a great example of how options win hands down every time in my book.

Can't help but wonder how much would I have made if I put the $20 million (that I borrowed for - and can lose on - the cfd) on that option?

Stop losses? They don't always work. I lost $150,000 one night because we relied on "guaranteed" stop losses. No one is going to buy a stock or index derivative if it's running away in the wrong direction.

Thank you for bringing this idea to my attention,interest,debate or controversy I fall into the interested category.

Hi Bill,
Respectfully; I disagree. I’m not suggesting to place a trade & walk away. In fact in the ASX trade (& all my other paper trades) I had my finger on the trigger all the way. Trailing Stop Loss, 10MA candle breakouts, 3 opposite candle colors ... are all triggers to exit the trade either at a profit, or to minimise loss.
If the initial Stop Loss on the ASX trade was activated (@$4365), a net loss of $800 would have resulted (on a 10% of 20K trade or $400,000 market value). How is that more risky than trading Options? I’m prepared to risk $800 to make $2740 (not $2560 as mentioned in 1st post)
There are so many factors that influence Option price. Implied / statistical volatility, ITM ATM,OTM Theta decay along with all the other Greeks ... the list goes on. Whereas CFD’s are a simple derivative.
My intention is to use the ODW technicals to trade CFD’s. All I’m saying is consider the power of leverage with CFD’s and have an open mind.

Regards

Gary

I have an open mind. If I didn't I'd still be working as a shit kicker welder.

Leverage is fine until you have to pay it all back. Stops are fine in theory but I prefer not to use anyone else's money. I risk my own cash, make more than enough money and I consider borrowing 1.99 million dollars when I could get the same effect from risking only 20k something that I would struggle to justify. Leverage is fine and if people are comfortable borrowing all that money just to make a few k then (very low return) then it is something that they should consider. Personally I think it carries much more risk than is evident to many new traders.

Plus CFDs with all that leverage are much more volotile than options and options require a much slower and positive moving trend. I'd be very surprised if my entries and trends would work with CFDs. Extreme caution is advised.

The open mind suggestion was more directed at members. I have a huge amount of respect for what you have achieved here and sharing your wealth of knowledge with fellow members.

I have only compared CFD vs Options via the ANZ 4 minute trade. Will compare others & post later.

I'm under no illusion that trading leverage (or any other market) has risks. I personally don't have 20k cash on hand so the leveraging suites me.

It's no different than mortgaging the house or a bank loan (exept it's interest free).

The CFD option may allow members to trade ODW methods without underpowering their positions.

If nothing else, hopefully this thread will dispell any pre conceptions either way.

There are numerous situations where Options beat CFD’s hands down, but directional day trading isn’t one of them.

I may have missed something but my understanding is both Options AND CFD’s derive their price from the same underlying asset (with the Option price also influenced by Greeks and Delta’s as previously mentioned). And that underlying asset is the price action that determines entry / exit triggers.

If that is the case I can’t see why ODW methods shouldn’t apply to CFD’s.

So …. Here’s a couple more examples referring to the price of the underlying asset (stock)


CBA Perfect Day Trade Example

Option
Call Trade :- Derived from price movement from $24.30 - $25.60 resulting in $11204 net profit using a 20K account. (56% ROI)

CFD
Derived from the same price movement would result in $12874 net profit utilising only 50% of a 5K account. (515% ROI)



BHP Trade of the Day

Option
Put Trade :- Derived from price movement from $24.20 - $23.20 resulting in $4150 net profit using a 20K account. (21% ROI)

CFD
Derived from the same price movement would result in $3932 net profit utilising only 50% of a 2K account. (393% ROI)


The challenge is to find an Options day trade that out performs a CFD day trade.

I’m happy to compare the stats on any Options day trade (win or lose) using CFD’s

Correct. Options derive their value from the underlying stock and CFDs is like buying the underlying stock. But you need to compare apples to apples properly to see clearly that Options beat CFDs hands down without failure every single time. Especially in day trading.

Remember, you are still borrowing (and are responsible for) 99% of your investment with a CFD. If you want to compare options and CFD side by side then you should compare the same amount of money that is being risked.

There is one situation where I agree with you and that is for a new trader with only one or two thousand dollars to trade (if that's the case then that trader really shouldn't be trading high risk instruments such as options and CFDs anyway). If that trader wants to find a quick and easy way to borrow 99% of the funds and risk the lot then CFDs may offer a high risk way to do that. Though I'd argue that a well placed overnight option trade would return more bang for the buck.

But I don't think that's necessary 90% of the time really because I see people wasting 10-20-30k on a car then complaining they don't have enough money to trade my method. If people re-arrange their finances a bit and cut down on the massive auto spending (until they can afford it) they could scratch together 5-10k in a snap. If not, they can save it up in less than a year if they are serious. Then they can use 80% less money than they would have to use with a CFD and get massive results they are after.

In your examples above you are only comparing your deposit - not the amount risked on the trade. This is making your CFD trade look better than the same Options trade but in fact it performed very poorly and no better than buying the stock outright (which is what CFDs are).

To be fair to any poor old new trader who comes along to read this they should know that the BHP option trade above returned 21% on the money risked ($20,000) but the same CFD trade only returned 3.9% on the money risked ($100,000). The option trade was risking only $20,000 but your CFD trade was risking $100,000 (50% of 2k = 1k deposit on a $100,000 CFD loan) and ONLY returned less than 4k. I'd be laughing at that to be perfectly frank. The same option trade (with the same $100,000 that you risked on the CFD) actually returned $21,000 not the $4,150 you stated above.

CFD have never caught my attention because of the massive lending involved and since seeing many many traders lose more than they thought they were risking I would have to warn everyone reading this away from CFDs unless they want to risk much more money and return much much less for the exact same option trade.

The real challenge is actually finding a stock trade (which is what a CFD is except that you borrow nearly all of the money) that comes even remotely close to beating an option trade for the same move. It will never happen. Options move dozens of times faster than the stock and it is only that many (not all) CFD traders refuse to accept that the money they borrowed is ever at risk. It clearly is and the biggest mistake new CFD traders make (from what I've been told based on personal experience) is that they don't factor the entire borrowed and risked amount into their calculations and they always presume that a stop loss will stick. Big mistake...as I found out.

It may not and then you would have to pay back as much of that $100,000 as you lost waiting for the stop losses to work and they will only work when the stock has resumed trading at a fair value and that might be a long way away from your stop loss. I know this from bitter and heart breaking personal experience.

There are lots and lots of ways to make money but ODW is primarily about trading options. It's probably a great idea to try to find ways to make us all better options day traders so I reckon we'll probably stick to discussing that instead for now.

Options Vs CFDs? No contest for me. Options will always move more than the stock so it's kind of an easy decision for me.

Also, the signal, entry, and sustained trend required for a typical profit on an option day trade using my method differes a fair bit from the signal, entry and sustained trend required for a typical CFD trade. If you tried to trade the CFD on a trend required for my typical options day trade your stops (should they hold) would kick you out many times during the average style of trend that I use.

Very interesting & informative thread thanks very much.

Bill, if a friend of mine won't or can't (because of close of membership) become a ODW member, would you mind if I forwarded this information onto her? She has a 'bank' big enough that she doesn't worry about too much of a trading plan / rules. She's done well in the past, but has been scared of the market for nearly a year. Plus, she's been watching the stock she owns ride like a roller coaster.

We discuss Options, but she's still adamant CFD's are for her. I vote Options.

Cheers

Sure. If it helps her understand what she's doing then it's got to be a good thing.

Very interesting info Bill & Gary.
I've been thinging about cfds for some time but was wary about the losses that can occur if things go wrong.I believe that options are a safer alternative as you can only lose what you wager.There is a big push out there from brokers to get you trading cfds.
Gary i wish you all the best mate you obviously know what your doing.
Cheers.Alf.

I did look into then once but when I found out the advantage is achieved from leverage alone I lost interest. It might suit others but I'm over looking for methods better than what produced over a year's wage for some for me last week. It's probably a good thing that it was raised. I get asked a lot to compare CFD to Options.

Cheers for that feedback Bill.

If there’s one thing in this world you wouldn’t trade, it’s what you’ve created here at One Day Wealth. But if you did decide to change vocations you’d make a great Polititian mate.

Your statements on Leverage / Stop Losses & Risk are completely misleading. The fact remains, I only forked out $2,500 for a 515% return. Leveraged or not, I don’t really give a toss & here’s why ...

Lets look at some hypothetical examples:-

Scenario 1

Iv’e got 20K in the bank available to trade with; withdraw 5K & transfer it into my CFD broking account.
Technical analysis suggests the Aussie200 is going down so I go short using 50% of the 5K equity in my broking account.
The power of leverage means I can sell 112 CFD’s for a cost of $2500, with a total market exposure (not to be confused with risk) of $500,000
So confident in my analysis; I overlook placing a Stop Loss & go walk the dog.

Whilst playing ball with Ricco (my dog), a rogue wave of optimism sweeps the market my position turns against me. The market continues to retrace expotentially & in my absence, get truckloads of e-mails from my broker for margin calls, (basically saying if I don’t place more funds in my account the position may be liquidated). Being completely oblivious to this I then receive Liquidation e-mails.
I finally arrive home, give Ricco a drink of water, grab a beer & resume monitoring my trade.

“OMG my total equity is only $340 ….HOLY F:censored:KING CRAP my positions been liquidated” …. Ohh woah is me, how could I have been so absent minded as to not apply my exit stragegy …. “WHAT A DUMBASS”. I then proceed to :wallbash:headbbutt the wall, go outside & kick the dog,:swearing: throw a fit of rage in disgust & assume the foetal position on the floor.

15 minutes later, having recovered from the initial shock of having my account liquidated, I re gather my thoughts, learn from my mistake, realise I still have 15K in the bank & a few hundred in my broking account & live to trade another day.

So in that worst case scenario; I had a position with a market value of $500,000 working against me, resulting in a net loss of $4,660 The maximum risk without a stop loss is the amount of total equity in my account … Nothing more.

Your’e still risking 20K with Options


Scenario 2

Same deal going short on the ASX. This time having plugged a few trade parameters into my “You Beaut” spreadsheet (see attachment).
I’m poised to exit should things go pear-shaped & at this point know precisely what my max risk is. The stop point is triggered, I exit the trade with a net loss of $900

You’ve still got 20K riding on the options.


There’s no denying that trading highly leveraged instruments such as CFD’s is a double edged sword & can be a risky business. The key is to develop a solid trading plan; money management & exit strategies. Have the discipline to trade according to plan to minimise the risks. Then let the power of leverage with CFD’s set you financially free.


Thanks to Tomtom; The Kiwi Coffee Clubbers for your expressions of interest & Alf for your words of encouragement.
Aroha, be sure to forward this portion of the thread to your mate so she gets all the facts.


No animals were harmed in the creation of scenario 1

Fine.

Hi Gary
I would love to know what you consider what your risk is in the above trades ,as the way ive been taught about cfds are that as you actually borrow the money to get leverage and if your trade goes against you and you say have a loss of 50% well then you have lost 50% of the amount that you borrowed and its like any loan in that you do have come up with money to repay it .
Thats the way i see it anyway and if i have it wrong can you do us all the pleasure of explaining it to us all as you see it.
And last but not least do you trade this system for real .:scratchchin:
Looking forward to your reply

Paul

G’Day Paul,

The risk in the above scenario 1 is what’s in my broking account should I place a trade without a Stop Loss and it goes against me.
I simply don’t have enough equity in my broking account to allow a 50% loss to eventuate. As my total equity evaporates, it gets to a point where the broker will liquidate my position because I don’t have the margin to cover the cost.
My equity will not fall into negative territory & end up with a whopping bill from my broker.

Maybe this scenario will answer your question

Lets assume I have $20K in my broking account, I place 1% of that on a 1% margin Index resulting in Market Exposure of $20,000. If the index went 50% against me then I’d lose half of my 20K (very bad trade / money management)
I CANNOT put 100% of my 20K on the trade because I don’t have enough equity to enter the trade (cover the margin).

I hope that answers your question.

I have traded various systems with CFD’s with mixed results. I have in fact had a position liquidated (if only on a small amount) so I know the max risk scenario from experience (albeit a bad one).

You will notice the Stop Loss on the entry calculator is at 0.18% .. that’s 0.18% loss on my “Market Position” or 1% movement of the index which is quite significant.

It’s only in the last 6 months or so that I’ve learnt as Lance over at www.yourtradingcoach.com says ...“There is no Holy Grail” but I’m damn sure I’m gonna find the closest thing to it & back testing & paper trading this method has had good results so far.

I’m happy to answer more questions on this thread but with respect to Bill’s statement ...

"There are lots and lots of ways to make money but ODW is primarily about trading options. It's probably a great idea to try to find ways to make us all better options day traders so I reckon we'll probably stick to discussing that instead for now".

It's your call Bill, I won't take offence if you wind this up & trust I havn't offended you in any way by "Putting it Out There" as I have a tremendous amount of respect for you and ODW :odwrocks:


All the best

Gary

I’ve just placed a trade to clarify the maximum % of available equity required to cover a 1% margin & I stand corrected.
The actual amount is 18% (50% is not possible). So bearing that in mind; here are the amended examples



$1K in 4 Minute ANZ Example
Option
Put Trade :- Option value of 90 to 95.5 resulting in $1054 profit

CFD
Alternatively you would only need to expose 9% of 20K capital to achieve the 1k profit result.


ASX200 paper trade example …

I haven’t clarified the max equity to cover 0.5% (possibly 2 x that of a 1% margin)



CBA Perfect Day Trade Example
Option
Call Trade :- Derived from price movement from $24.30 - $25.60 resulting in $11204 net profit using a 20K account. (56% ROI)

CFD
Derived from the same price movement would result in $11123 net profit utilising 18% of a 12K account. (515% ROI)



BHP Trade of the Day
Option
Put Trade :- Derived from price movement from $24.20 - $23.20 resulting in $4150 net profit using a 20K account. (21% ROI)

CFD
Derived from the same price movement would result in $4247 net profit utilising 18% of a 6K account. (393% ROI)


So the walk the dog scenario would have exposed me to considerably more risk than $4660. Hence the importance of Stops / Money Management & exit strategies.

Bill, I’ve been digesting your thought process on comparing Options & CFD’s and I now understand completely where you’re coming from.

Prior to this thread I was overwhelmingly in favour of CFD’s. Now I’m not so sure. One thing I am certain about is having a water tight, back tested trading plan if opting for CFD’s.

You stick to ODW coaching mate ... & I’ll take up politics.


Aroha:- best you send this one too :1redface:

All good. It would appear I am in Politics anyway. Unless I can have all my debates in a front bar I don't see myself winning many of them.

I was told by the broker when I was filling out my CFD application form that I was definitely responsibile for the entire position. The system would try to get me out at a software stop but there was no guarantee. I slowly tore up the application form and have not been interested since. If you get them right the rewards seem great but the risks are great as well as per the typical sliding scale of risk and reward.

No worries Gary. I was still giving it a bit of this one :scratchchin: and wanted to make sure I knew what I was talking about before I passed on the information.

Good on you for standing up with your correction and keeping us informed.

Still, Options for me. :wink:

As for politics, know any West Australian politicians? I'm still campaigning for $1.2M funding for my Next G signal. It's who you know in that game...........

Thanks Aroha,

I did know of several WA polititians when I lived in Perth 5 years ago. Not sure what you mean by "G Signal but there's a whole back bench of polititians here excess to requirements so you're welcome to them.

Bill,

I’ve heard that the influence of Greeks & Delta’s on Option price can actually cause them to trend in the opposite direction to the stock.
If this is the case, does the “Crowd” indicate high liquidity / low volatility effectively mitigating that risk?

I've never studied the greeks. The only one I ever really glance at is the Delta.

I can't think of a scenario where an option would move opposite it's intrinsic value. If you study how options work you will see that it's highly unlikely. I am tempted to say "impossible" but I suppose in a weird scarce and rare scenario it may not move as much as you want but unless someone paid too much (like I always do) the price paid might be more than most would pay and then the next sale might more accurately reflect sentiment and be lower even though the stock moved a few cents higher but really 98% of you are making this out to be a million times more complicated than it has to be. Forget the greeks and just start trading. Greeks are for long term option holders (losers) do try to make themselves feel like they know something that everyone else doesn't. We have been fed such a steady diet of over complication that we think that's all there is to eat. My trading method is about simplicity.

Simplicity, simplicity, simplicity.

As far as crowd goes all I can do is re-iterate what I have stated dozens of times and almost daily... ""crowd" is a term I coined to describe the method I use to measure approximate value only. Volume of actual option sales has nothing (at all what so ever) to do with day trading options..

"We have been fed such a steady diet of over complication that we think that's all there is to eat. My trading method is about simplicity.

Simplicity, simplicity, simplicity."

Bear in mind, both Dad & I are "Optionetics" graduates so know all there is to know about Calls; Puts; Call Spreads; Put Spreads; Butterflies; Iron Butterflies; Condors; Collars; Straddles; Strangles; Calendar Spreads; Diagonal Spreads; Synthetic Strategies & any combination of the above ........ NOT !!!

Hence meandering down the simplicity of CFD's path.

PLEASE DISREGARD THE AMENDMENT POST #17

I have since spoken to the broker who says the only reason I wasn't taken on trading more equity of my account was because of the minimal balance.
I need at least US$200 free equity after entering a trade. (the same amount you're left with if liquidated)

So if my account had 20K (& had balls of granite) then I could place all of that 20K (less US$200) on one trade.

So if I had 5K in my broking account (& 15K in the Bank), went short 5K on the ASX200 today (14/9) @$4570 ... Buy back @ $4515 that's a cool $12,035 NET PROFIT (241% ROI)

I say 241% ROI cause it's still all I forked out. Of course if the trade had gone against me say 0.2% of market value; that would have resulted in a $2000 loss (-40% ROI)

Pendulums swinging back in CFD's favor for me.

Oh I just know I shouldn't but could not help myself.

I spent 2 1/2 years trading Options, then around 6-8 months trading CFD's

Why did I change to CFD's you ask??

Because I, just like Gary was of the thought that CFD's can provide you with a lot less risk and a greatly improved profit percentage over that of Options trading... "I could use less money to make more profits"!! Why wouldn't I change??

I should probably say at this point that over that total 3+ years, I have been trading with "real" money and not "paper" money so the decisions I made and the profits/losses made were real, and any person trading with "real" money will attest to the fact that you live and breathe every cent a stock moves up or down.

So the question begs to be asked, "How comes I lost more money in the 6-8 months I was trading CFD's than I ever lost trading Options????

Hmmmm, an interesting thought, maybe it was because of some of the following reasons:


To allow a stock to run you have to be prepared for it to retrace a certain amount (such as Fib levels), to do this with CFD's you need to ensure there is enough money in your account to sustain the required funding. So in escence if you want the trade to continue you will need to add funds to a position whilst it is going in the wrong direction.. (Interesting if you think about it, good money after bad)
Commission/brokerage rates for CFD's far outweigh that of any Options provider, so you will need much sharper moves in the stock before your position even covers the cost of the trade (You could be getting out of an Options trade at around the same time with your profit)
You used to be able to get a Loan Value Ration of 1% for all Australian Banks, BHP etc, the minimum you can get now is 10% so to trade $100,000 of a stock, you now need to provide $10,000 equity, whereas when people used to trade CFD's for profit you only required $1,000 equity for the same position
CFD's are subject to the same governing laws as the underlying stock itself. Were you able to SHORT any of the Australian banks during possibly one of the best Bear Runs in many many years, I can tell you "NO", what use was that, pretty hard to trade a bear run when governing bodies don't allow it


I could probably go on, but I guess you are getting the point.

When looking back at stocks and determining how much profit (or loss) you could have made on a certain trade, you need to take into account every single move, not just the get in price and the get out price.

So what do I do now???

Well I don't trade CFD's (You never saw that coming did you):rofl:

I do day trade Options, personal experience with "real" money has taught me that I can make so much more on a daily basis using Options as my vehicle than I EVER DID trading CFD's.

I know on paper CFD's sound all sexy but in reality it does not really turn out this way..

Obviously everyone has their own thoughts and opinions, so please just take this as mine, I trade with "real" money, I make a good living, and I day-trade Options!!! As much as I wish anyone trading any instrument in the market all the luck and happiness they deserve for choosing this avenue to success, you can keep your CFD's and the hype they bring, I've been there and done that...

Steve Fisher

Interesting comments Steve. I’d be delighted to add my own comments in response to some of your quotes.


“Because I, just like Gary was of the thought that CFD's can provide you with a lot less risk and a greatly improved profit percentage over that of Options trading...”

I don’t believe there is such thing as a lot less risk with greatly improved profits. With higher reward comes higher risk as per the typical risk reward scale as Bill pointed out.
It’s all about developing a trading plan that reduces that risk. You can massage a trading strategy to almost any risk reward ratio you want, but it needs to realistically reflect price action to be effective.



“any person trading with "real" money will attest to the fact that you live and breathe every cent a stock moves up or down.”

I agree. Paper Trading can be a useful tool. However you cannot simulate the emotion that comes with real trading. And emotion clouds judgement. Hence developing a trading plan and having the discipline to stick to it (which I believe is one of the most difficult trading aspects to master)


1. “To allow a stock to run you have to be prepared for it to retrace a certain amount (such as Fib levels), to do this with CFD's you need to ensure there is enough money in your account to sustain the required funding. So in escence if you want the trade to continue you will need to add funds to a position whilst it is going in the wrong direction.. (Interesting if you think about it, good money after bad)”

It’s hardly surprising you abandoned CFD’s having that strategy. To chase a stock moving in the opposite direction by throwing more $$$ at it with leverage is financial suicide. Sure you need to give the stock room to move but I’m assuming you enter the trade with certain expectations. If the price action doesn’t do what you expect .... GET OUT !


2. “Commission/brokerage rates for CFD's far outweigh that of any Options provider, so you will need much sharper moves in the stock before your position even covers the cost of the trade (You could be getting out of an Options trade at around the same time with your profit)”

The commission on CFD’s is 0.1% of market value x 2 (entry/exit). So if you enter & exit at the same price on a market value of say 100k, you’ll pay $200 to the broker.
NO COMMISSION APPLIES TO INDEX’S

3. “You used to be able to get a Loan Value Ration of 1% for all Australian Banks, BHP etc, the minimum you can get now is 10% so to trade $100,000 of a stock, you now need to provide $10,000 equity, whereas when people used to trade CFD's for profit you only required $1,000 equity for the same position”

I don’t know what broker you’re referring to but my margins are still 1% 0.5% for some Index’s

4. “CFD's are subject to the same governing laws as the underlying stock itself. Were you able to SHORT any of the Australian banks during possibly one of the best Bear Runs in many many years, I can tell you "NO", what use was that, pretty hard to trade a bear run when governing bodies don't allow it”

I can tell you “YES”, at least with CMC Markets. There’s a very small percentage able to be traded “Long Only”

"I could probably go on, but I guess you are getting the point."

I don’t know about other members but I certainly do.

Gary,

I thank you for taking the time and effort to point out all my quotes, I hope it was not too much effort for you, you should also take note of a couple of the other quotes that you did not quote back to me.

QUOTE
Obviously everyone has their own thoughts and opinions, so please just take this as mine
END QUOTE

QUOTE
As much as I wish anyone trading any instrument in the market all the luck and happiness they deserve for choosing this avenue to success
END QUOTE

That being said, I just wanted to say, if CMC are in fact your broker, be careful with what you think are their current margins, these have been updated in the past three weeks or so.
Aussie 200 = 0.5%
All sector indexes = 1%
Level 1 = 5% (basically banks, bhp, rio, etc)

Level 1 used to be 1% margin
sectors used to be 0.5% margin

So to use your example of a $100K trade having commission rates of approx $200.00, on a 5% stock this would require a margin investment of $5,000
For the same example using $5,000 on a CFD trade would cost you approx $65 in commission.

Also please don't be misguided into thinking there is no commission payable on index sectors, CMC spreads on the sectors cater more than enough for a very healthy commission rate to them for one of these trades. their spreads on sectors are very large and therefore require a much steeper movement before coming into your favor.

Finally, because CMC are actually their own Market Maker they decide on a daily basis based upon their book whether or not they will allow you to SHORT stock, I can tell you when the markets started heading south they decided on a day-by-day basis to more often that not, NOT allow you to short the financial sectors of the market. there is nothing you can do about this as they decide and no-one else.

Appreciate your views, and of course you are welcome to them, I am just trying to help, so just please ensure you take a look at the "Complete CMC Market Product Schedule" which can be found here http://www.cmcmarkets.com.au/en/content/cfd/trade_global_markets.jsp?section=shares

Good Luck
Steve Fisher

Hi Steve,

I only quoted you on the statements you made which I perceived as justifying a response. I do appreciate your input and bringing matters to my attention, along with your wishes on Trading Success .... Thanks

I did receive notification of some margin increases via e-mail from CMC Markets which makes no mention of the 1% stocks increasing to 5%, but that obviously is the case referring to their updated Product Schedule; so they’ve actually moved to 5% (NOT 10%)

The commission rate applies to the market value, regardless of the margin, so whatever margin has resulted in a market value of 100K would be 100K x 0.1% = $100 (entry) + 100K x 0.1% = $100 (exit) totalling $200

I am aware of the commission applying to Sector Index’s. But no commission applies to the major index’s such as Aussie200; US30; SPX500; NASDAQ; UK100; Ger30; Jap225 & so on.

I’ve researched the shorting issue on expotential bearish markets and you are correct. It has happened in the past & in fact did happen on the bear run of 12 months ago on some STOCKS (and possibly sectors), but not Index’s.
The way you expressed that made it seem that you can’t go short using CFD’s.

I’ve never traded sectors but the spreads on the major index’s are very slim (during normal trading hours for that index) ie:- $2 on Aussie200, so the ASX only needs to move 3 pips in my favour to be in the profit zone. Hence looking to trade the low margin – no commission index’s (excluding sectors)

The whole idea of generating this thread is to share views / experiences and opinions to compare Options & CFD’s. Some of the comments have made me view CFD’s in a different light. I’m by no means sold on CFD’s yet, but still believe a well constructed, back tested trading / money management plan using CFD’s could potentially yield considerably more than day trading options.

I'm moving this thread out of here into the "other ways to make money" public section but if there's too much more yelling I'll move it away into the admin section until we all calm down. Way too much yelling (capitals) going in here and I'm not going to let this forum descend into a punching match like every other forum.

Really enjoyed reading all of the above i did a CFD course but never really "got" it, now glad I didnt go down that path at that time
Cheers
Jean