When is the best time to trade CFDs?
Question: I was wondering if you could tell me the best times of the day to trade CFDs. Are there certain times of the day that breakouts would be more likely etc? Response: Knowing what time of the trading day presents the most opportunities is particularly important for day traders. A day trade has a…
What is momentum trading? And how does it work?
For the purpose of this article momentum refers to the rate of acceleration of a security’s price ie how quickly it builds up speed in terms of price. Healthy price trends tend to display strong momentum while weakening price trends often have decreasing momentum. Momentum trading aims to identify explosive share price moves for the…
Can anyone take out a margin loan, or do you need assets?
A margin loan allows you to borrow money, giving you a wider range of investment opportunities and increases your potential returns. It allows investors the opportunity to combine their existing equity with borrowed money to expand their portfolio into shares and managed funds. The three main forms of security used on a margin loan are:…
Can the interest on my margin loan be covered by dividends on shares?
Question: Do I have to come up with the interest payments on a margin loan or could it be covered by the dividends I receive on the stocks? Can you give me an example please. Response: While there is no obligation to pay interest on your margin loan, assuming the loan doesn’t go into margin…
What is a popular options strategy for traders?
Question: What is a popular options strategy for traders? Response: Covered Calls – Generating additional income from your stocks This options strategy provides a way to increase income from stocks you already hold, using what is known as the ‘Covered Call’ strategy. This strategy supplements the return on a share investment, which is typically capital…
How do I calculate my gains and/or losses when I sell a CFD?
This is a good question for anyone who is considering using CFDs within their trading strategy. Equity CFDs not only replicate a share trade but have the additional benefits of leverage and the ability to go short. Using CFDs it is possible to profit from a rising or falling market by only making a small…
What is the formula to determine the total % return on a fully franked dividend?
Question: What is the formula to determine the total % return on a fully franked dividend? Response: If a dividend is 100% Franked, then for every $30.00 of tax paid by the company, a franked dividend of $70.00 can be paid. Company Profit: $100.00 Tax Paid: $ 30.00 Dividend Paid: $ 70.00…
How do I know where to place my stop loss on a forex trade?
Question: How do I know where to place my stop loss on a forex trade? Answer: Kathy Lien, Director of Currency Research, GFT I am so glad you are asking this question, because the number one rule of trading is “always use a stop.” This is particularly true when trading forex, because trends can last…
What is the loan to value ratio of a share?
Question: What is the loan to value ratio of a share, and how does this change as the share price changes? Response: A loan to value ratio or Lending Value Ratio (LVR) is a percentage measurement of the amount that can be borrowed against a share or a managed fund, using a margin loan. For…
How to make extra income on your shares
Question: They tell me that I can earn extra income from dividends when buying warrants rather than shares, how does this work? Answer: Instalment warrants gives holders the ability to gain exposure to price movements in underlying shares by making an initial payment and an optional second payment on expiry. There are a number of…
