FAQ

Should I reinvest dividends or cash out?

There is no doubt dividend re-investment is an attractive option to many shareholders as it provides the benefit of a small discount and substantially reduced brokerage. Any purchasing of share assets should depend on the outlook of the particular share at the time of purchase. Sometimes you may hold a tranche of shares that are…

What does the term scalping mean, and how can a scalper make money on CFDs?

Scalping is a trading technique that involves opening and closing positions intraday in a variety of instruments such as FX, Futures or CFDs; typically “scalpers” will aim to profit from small price movements in their trading positions. They will also tend to trade much more frequently than medium to longer term “trend” following traders. It…

What futures contracts are the most popular and who buys them?

Futures traders normally fall into two groups with each having a typical ‘holding period’, based on the purpose of that futures position. The first group of traders, hedgers, have an interest in the underlying commodity and are seeking to minimise price risk in the physical market. Farmers are typically hedgers, and normally hold positions from…

Why do futures prices converge on spot prices during the delivery month?

Why do futures prices converge on spot prices during the delivery month? Prior to expiry, the price of futures contracts will most likely either be at a premium to the physical or a discount. As the contract approaches expiry these two prices will converge, or meet. Why does this happen? There are a number of…

Why you should understand support and resistance levels

Why do traders always talk about support and resistance levels? What do they mean and how can traders use these levels to better understand where the market is heading next?  Understanding support and resistance levels can greatly assist both traders and investors. It’s all about understanding how prices tend to move. There are usually psychological…