Should I buy a warrant on the primary or secondary market?
What is the difference between buying a warrant from a warrant issuer and buying it on the ASX? What are the pros and cons of each? Response: Buying a warrant from a warrant issuer is often referred to as purchasing through the primary market. Buying a warrant on the ASX is referred to as a…
Why is it Worth Sticking to the 2% Rule?
The rule roughly states: Risk a maximum of 2% of your trading capital on any one trade. This way you can make 100 losses in a row and still have some money left. So if your trading account is $50,000, you allocate $1000 to each trade. If your account is $100,000, you allocate $2000. So…
What does dividend stripping mean?
‘Dividend stripping’ traditionally has been a popular strategy with active investors, looking to generate franked income via the purchase of physical shares prior to a declared dividend being paid by a company. The strategy is usually implemented by buying the shares several weeks before the ex-dividend date on the premise that shares often rally as…
How do margin calls work on CFD trading?
While statements, particularly trading statements can seem confusing, it is important to know when it is that you will go into a margin call situation. Often traders only look into how and when it is they will receive a margin call, only when they actually get the call. To assess whether you are due to…
Is volatility a good or bad thing for trading CFDs?
The attention of the world remains firmly focused on the US share market as volatility reigns supreme. We have seen extraordinary volatility over the past weeks as the economic outlook continues to worsen and consumer confidence remains low. As such, we have seen unprecedented fluctuations in other asset classes and instruments as Gold and Oil…
Does trading based on news and events work?
Event Driven Trading is any strategy that seeks to exploit pricing inefficiencies, occurring when companies are involved in corporate events such as mergers, takeovers, restructures (including share buy-backs, spin-offs and capital returns), de-mergers and lock-up expiries. Traders, who follow event driven strategies, attempt to predict the outcome of a particular corporate event on the security…
What is the 2% rule and why should all traders know about it?
When deciding to enter a trade the most important decision is determining how much to risk on the trade. The 2% Rule represents the actual percentage of a trader’s capital that he or she is willing to risk on a single trade should it go against them. So a trader with $100,000 capital will risk…
CFD traders are using the 80-20 rule – what is this?
There are numerous trading strategies that CFD traders are currently using. Strategies may vary from pairs trading to arbitration plays, portfolio hedging and more complex butterflies. I want to discuss a very basic strategy that many traders are using although there are traders out there that are still oblivious to this strategy. Those of you…
How do I trade oil using CFDs?
Many CFD traders trade oil. The amount of traders trading oil depends on the recent price action and volatility. Traders can trade whatever resource is in focus at that particular time, for example: gold may be the focus for a month or so, and then all the media and trading focus may shift to oil….
Why is it bad for a trader to be requoted?
The term ‘requote’ is driven from a lack of liquidity in the underlying market whereby the client will be ‘requoted’ with a new price for the remainder of the position. The CFD broker will instruct the client that there is insufficient volume in the market for their order and fill at the next level on…
