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Discussion in 'The Trading Floor' started by nottibird, Sep 28, 2013.


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  1. nottibird

    nottibird Moderator

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    Part II

    How Come I Can Run With 1 Or 2 Bids And Yet Still Make More Than A Cash Account Trader?


    The advantage of trading with a much lower com becomes even more evident when you play the heavyweights.

    Let's take UOB as an example. She is currently at 23.35 to 23.60. This was Friday's range.

    Let's say both the cash account trader and CFD trader managed to BUY at 23.35 and sold at 23.60.
    Trade size is 2 lots. How do their results differ?

    Cash Account : $178.49.
    CFD : $415.49.

    Becoz of lower com, the CFD trader makes $237.00 more than the Cash Account trader.

    When a Cash Account trader BUYs UOB at $23.35, his com is $159.90. He needs 16 bids just to breakeven.
    If the stock runs by 17 bids and the trader sells because the market suddenly turns, he makes just $10.00.
    His broking house will pocket the other $160.00. So the harsh reality and astonishing truth is that all the
    hard work is done by the trader and all the risk is borne by the trader when he makes that trade. And when
    he gets it right and the stock runs 17 bids, he gets to keep only $10.00. His freaking broker who didnt do
    anything and did not have to carry any risk whatsoever gets to pocket $160.00 !!!

    Whereas for a CFD trader, when he buys UOB at $23.35, his com is $42.03. For an intraday trade, this trader
    can run with small profits after seeing only 5 bids. If the stock runs 17 bids, the CFD House earns 4.2 bids.
    The CFD trader keeps 12.8 bids. Now, that sounds ALOT ALOT fairer, isn't it since the trader is the one who
    did all the hard work and carried all the risk.
     
  2. nottibird

    nottibird Moderator

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    Part I

    How Come I Can Run With 1 Or 2 Bids And Yet Still Make More Than A Cash Account Trader?


    I trade wholly and exclusively via a CFD account. I am with IG Markets. Their standard com
    for new sign ups is 0.1% of transaction value inclusive of GST. I am a Premium Account holder.
    So I pay 0.09%. How to be a Premium Account holder? Just trade as frequently as you can.
    When you are frequent enough, IG will contact you to say they have identified you as a high
    frequency trader and they will upgrade you to Premium status. Or if you think you are regular
    enough, you can contact them and ask to be upgraded. I understand their guideline for "high
    frequency trading" is $5M in transaction value per month. When I discovered this, I was stumped
    too. My immediate reaction was " I got buy/sell $5M a month mare?" [​IMG]

    Maybe when I was trading Botak and Dumbo in 30 to 50 lots during their Dividend Play a year ago that
    I hit $5M a month once...just once...and they upgraded me. After that, I probably didnt hit $5M but
    I think becoz I was still trading very regularly and much much more than their average client, they
    decided to let me enjoy Premium Status. The slightly lower com...0.01% lesser is not much lower but
    still, it translates into more eggs when I let go of my chickens. I appreciate that.

    Those of you who are scared about having a CFD account...I understand how you feel. Becoz
    I was damn scared too. In fact, so scared that I didnt even want to find out what it is and how
    it works. We humans are creatures of habit. We like the status quo. We dont like change. Change
    means uncertainty. Uncertainty means anxiety, doubt and with that...stress creeps in. And nobody
    likes stress. We all hate it.

    To me, to venture into CFD means to venture into something new. And to learn something new means
    I have to leave my comfort zone...get out of my comfortable sofa which I am very familiar with... and go
    out into the unknown to sit on a hard stool without a backrest in the hot sun and bake and sweat there.
    My fear of the unknown and my unwillingness to step out of my comfort zone stopped me from getting
    to know a trading instrument which as it turns out, became a turning point in my learning journey in this
    stock trading game. And becoz of that, I have achieved success in ways never seen in the earlier part of
    my learning journey when I traded via an online cash account.

    So to those of you who are still scared, I say to you... Fear no more. On the contrary, fear not that you
    are about to venture into CFD. Fear only if CFD is abolished as a trading vehicle and withdrawn from the
    market. THAT... for me, will be a life-changing event. A very, very sad event. Becoz I cannot imagine going
    back to online cash account to trade. Alot of the things I do now, I WILL NOT be able to do with an online
    cash account. My estimate is that 80% to 90% of my trades... are becoz I have a CFD account. If online
    cash account is all I have to trade, only 10% to 20% of my trades can be done. Why? Becoz:

    1. SHORTing is out.

    2. Buffering an existing position is out. This means doing a trade in the opposite direction
    to an existing position.

    3. Chicken trading...where I run with 1 to 3 bids is out. Becoz with an online trading account,
    I will need 2 to 5 bids just to breakeven for the smaller counters and 10 to 12 bids for the
    heavyweights. I dont trade pennies where 1 bid you can run even with a cash account.

    Now you know why 80% to 90% of my trades cannot be done with a cash account.

    Different brokerages charge different rates for their com. I will use Lim & Tan's rates for my illustration here.

    Up to 50K - 0.28%
    >50K-100K - 0.22%
    >100K - 0.18%

    On top of com, there are other charges:

    SGX Trading fees - 0.0075% of contract value
    CDP Clearing fees - 0.0325% of contract value
    GST at 7% of all 3 fees above.

    A convenient formula I used to use is com + Trading fees + Clearing fees + GST = XXXX%

    For trades up to 50K, the formula is 0.28 + 0.0075 + 0.0325 +7% = 0.3424%

    To work out quickly how many bids you need to run, take....

    Share Price x 1000 Shares x 2 (to BUY and to SELL) x 0.3424%

    For eg.......... BUY 1000 of SingTel at 4.33... how many bids you need to run?

    4.33 x 1000 x 2 x 0.3424% = $29.65

    Every 1000 shares... 1 cent gives you $10.00. For SingTel, 1 bid is 1 cent.
    For cash account, your com etc is $29.65 for every 1000 shares traded.
    To breakeven, you need 3 bids to run. 3 bids means 3 cts or $30.00 to cover your com of $29.65.

    Now we compare with IG CFD account. There is no trading fee or clearing fee and GST is
    already included in the 0.09% com. My costs per trade is...

    4.33 x 1000 x 2 x 0.09% = $7.794 per every 1000 shares traded.

    To recap...

    Cash Account - com is $29.65 per every 1000 shares traded.
    IG CFD - com is $7.794 per every 1000 shares traded.

    When a cash account trader buys 10000 shares in SingTel at 4.33 and sells intraday at 4.36, he makes 25 cts nett.
    For me using CFD at 0.09% com all inclusive, for that same trade, I will make $221.79 nett.

    This is for intraday trade where I pay only the com when I BUY and SELL.
    There are no finance charges.
    But if I hold this position overnite, in addition to the com, there are finance charges.
    For LONG positions, the interest is SIBOR + 0.25%.
    For SHORT positions, the interest is SIBOR minus 0.25%. There is also a borrowing costs for SHORT positions
    becoz the CFD House has to borrow scrips and incur a costs in order to enable you to SHORT a stock. I do not
    have the formula to calculate borrowing costs. From my trading experience, as long as you close your position
    within say one week, the finance charges wont be much. The longer you hold a position, the higher the finance
    charges. Recently I had 30 lots of SHORTs in SIA which I held on for about 6 months. My com + finance charges
    amounted to more than $5.5K. Roughly, it was about $30 per day for those 30 lots of SHORTs. This is just a very
    rough estimate for illustration purposes.


    The ability to run with 1 bid when need to, for eg. when the market suddenly turn negative or
    when the market suddenly quieten down and sellers start to come out, is a VERY VERY important
    trading edge and one which makes all the difference between winning and losing.

    Using the same example above, a cash account trader who buys 10,000 shares of SingTel at 4.33
    and sells at 4.34 will lose $196.86 whereas a CFD trader will in that same trade make $21.97.

    Very often, a market will go into a range trading mode which can last for weeks. Initially, the range
    will be wider. But as the consolidation drags on, the price spread between the intraday high and low
    becomes narrower and narrower.

    For a cash account trader, as he needs more bids to breakeven, the range may be too small for him
    to risk a trade. Even if his trade is successful, the reward may not justify the risk. So he wont place
    the trade at all.

    But the CFD trader who can run with 1 bid, if need be, and can collect Buffet Vouchers, Petrol
    Vouchers, PUB Vouchers, Grocery Vouchers etc during range trading mode...is kept busy and
    will spend more time in the market than on the sidelines.
     
    Last edited: Oct 26, 2015
  3. nottibird

    nottibird Moderator

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    This is for CFD traders with IG.

    I have said many times that for a CFD trader, it doesnt matter which way a stock moves,
    so long as it moves. Coz we can play and profit from both sides of the market. Even if you
    already have an existing position but the stock is moving in the opposite direction. However,
    whilst you want to play in the opposite direction, you may still wish to keep your existing
    position and wait for the stock to come back to your price. How then to open a new position
    in the opposite direction without closing your existing position?

    There are 2 ways to do this.

    The first is to click on OTC on your Deal Ticket. Here's how a Deal Ticket looks like.
    You can find OTC at the top right hand corner.

    [​IMG]
    [​IMG]



    After you click on OTC, the Deal Ticket will change to look like this.


    [​IMG]
    All you need to do is to key in how many lots you wish to trade by typing the number
    of shares in the box next to "Size". You dont need to key in the price. You cant. The
    price will be realtime and will appear in the RED and BLUE box. To BUY or SELL, you
    click directly on the BLUE or RED box accordingly. BUT WAIT. Before you click BUY or
    SELL, you MUST click on the small box next to the words "Force Open". Failure to click
    on the Force Open box will close your existing position if your next trade is in the opposite
    direction. However, should you forget to click the Force Open box and accidentally close
    your existing position, call IG immediately to rectify your error. IG will assist you to reinstate
    your existing position and help you open a new position in the opposite direction.

    The second way to avoid closing your existing position is to go to your OPEN POSITION (OP)
    Folder and click on the counter you wish to keep. DO NOT CLICK ON THAT COUNTER FROM
    YOUR WATCHLIST (WL). After you click on your counter, a Deal Ticket will appear. Key in a
    price you are comfortable with to close that position. After you click on CONFIRM, check your
    WORKING ORDERS (WO) Folder to ensure it is there. Once that is done, you have "LOCKED"
    that existing position and the only way for that existing position to close is if your order to
    close that position is filled. Having "LOCKED" that existing position, you can now safely use
    DMA or OTC (without clicking on the Force Open box) to open a new position in the opposite
    direction.

    From then on, each time you open a new position, you must likewise "LOCK" that position.
    Otherwise, you may accidentally close that position when you open yet another new position.

    To summarise...

    1. Always lock an exisitng position by clicking on it at the OP Folder to key in a closing price.
    2. To open a new position, always click on that counter in your WL. Once that new position is
    filled, lock it immediately.
    3. The advantage of "LOCKING" your existing positions is that when you open a new one, you
    can use both DMA or OTC. But if you do not LOCK your existing positions, you can open a new
    position in the opposite direction only by OTC and you must click the Force Open box.
     
  4. nottibird

    nottibird Moderator

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    The 20-dma Snap Back Play...

    Here are examples of how the 20-dma Snap Back Theory really works when it works.

    Osim...


    [​IMG][​IMG]

    DBS...


    [​IMG]

    ComfortDelgro...

    [​IMG]


    SingPost...


    [​IMG]


    SingTel...


    [​IMG]


    OCBC...


    [​IMG]


    Observations:

    1. When a stock goes into a 20-DMA Snap Back Play, the price will stay near the 20-dma and rise over a time
    frame be it weeks or months.

    2. Whenever the price dips below the 20-dma, it wont stay there for long. Before long, it will rise again and go
    above her 20-dma. What this means is that each time the price dips below the 20-dma, that is an opportunity
    to buy. My recommendation is to wait for the price to U-turn first. Then BUY.

    3. Whenever the price rises too far away from the 20-dma, it will come under profit taking and that's when it
    will pullback towards its 20-dma. Hence, the "snap back" action towards its 20-dma.

    4. Sometimes, the price pullback all the way to its 20-dma and then goes back up. Sometimes it goes below
    its 20-dma. Sometimes traders jump queue to reload and this cause the price to u-turn back up even before
    reaching the 20-dma.

    5. The combined effect of all of the above will produce a beautiful chart showing the stock on a steady uptrend
    for the duration when the 20-DMA Play was on. For some stock, this 20-DMA Play lasted 6 months to a year.
    There are stocks out there which are doing this. We just have to find them. And profit from them.
     
  5. nottibird

    nottibird Moderator

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    Why The Price Can Rise When The Monkey Is Selling (Distribution) &
    Why The Price Can Fall When The Monkey Is Buying (Shortcovering)

    Many moons ago, tatapao said this...

    "It is a common misconception to believe that the price will not move up during distribution."

    Monkeys do push prices up to enable them to sell.
    How does a department store which is doing not too well attract hordes of shoppers overnite?
    By throwing a 20% Discount Storewide Sale.
    When it comes to other merchandise, more people will buy only when prices are lower.
    But the stock market is special. It is the only place on Earth where more people will buy only
    when prices start to move and rise higher and higher. Yes. When it comes to stocks, if the
    price is not moving, people dont want to buy. But if the price starts to rise, more people will
    CHEONG in to buy.

    So monkeys capitalise on this phenomenon.
    When they want to sell, they need buyers to sell to.
    How to bring out more buyers?
    By pushing the price up.

    Likewise when a monkey has collected SHORTs.
    To cover low, he needs sellers.
    How to bring out more sellers?
    By depressing the price down to create panic and fear.
     
  6. nottibird

    nottibird Moderator

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    DO NOT FORCE A TRADE

    I constantly remind myself.

    You dont have to trade everyday. Trade only when it is easy to make money.
    So we will just have to patiently wait for a SET UP to happen.
    If we study our chosen target and get to know her well and also get to know
    our neighbours well, we will know what kind of SET UP we must see in the price
    action before conditions become more favourable to do a LONG or SHORT. So
    that is what we must do - patiently wait for the SET UP to occur. Then make
    a trade. And not jump in first to make a trade due to "dont want to wait anymore".
    Becoz when you do that, you are forcing a trade...when conditions are not ideal
    to make that trade. And this kind of forced trade ... is at best a 50 : 50 trade.
    Which is like what General Sun Tzu said...

    "A losing army goes into battle first. Then seek to win the battle.
    A winning army realises the conditions necessary to win and wait
    for them to be present first. Then go into battle."
     
  7. nottibird

    nottibird Moderator

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    A damn good practical explanation of why Elliot Waves move the way they move...

    ------------------------------------------------------------------------------------


    In the first wave up of a bull market (talking larger wave degrees here -- daily, etc.), the majority are convinced it's not the start of anything -- they figure it's a counter-trend rally to the prior down trend and soon to collapse to new lows.

    In the second wave down (which corrects the first wave), the majority believe the collapse has begun. They continue to believe this even after the third wave up begins -- at first, they figure the third wave is "another" counter-trend rally.

    So they short the third wave just when they should be buying. It keeps powering higher, and their stops provide additional rally fuel. Somewhere around the middle of the third wave, we hit "the point of recognition" for the masses, and they realize the trend is here to stay for a while. There's a sudden "herd mentality" rush to jump on board, and that gives further fuel to the third wave. These are some of the reasons third waves are usually the longest and most powerful wave.

    After what seems like forever, the fourth wave correction comes along and confuses the heck out of everyone. It knocks out the trend followers. They jump back in. It knocks them out again. The permabears are convinced it's the start of a new collapse. But the majority do not believe it's anything other than a correction -- and they're right. During fourth waves, counter to "contrarian" philosophy, the majority sentiment is usually correct. The job of a fourth wave is NOT to strike mortal terror into the masses (like the second wave did), it's to try and screw everyone up and make trading hard again (and fourth waves serve another purpose, which we'll discuss momentarily).

    Eventually, the fourth wave finally ends. Wait, no, sorry -- just got the memo here, it's not over. Maybe it's a triangle? Ah, an expanded flat! Okay we can move on to the next paragraph now. (Sorry -- just a little fourth wave humor there, for the Elliotticians in our audience.)

    Finally the fourth wave ends and... wait, that was only wave A of the expanded flat! Hang on...

    Okay, whew, eventually the fourth wave ends (really!) and the market enters the fifth and final wave up. By now, bulls are fat and happy. Nothing can go wrong! See, we're at new highs again, just like we told you idiot bears! All dips should be bought going forward, forever and ever, amen.

    Complacency reigns.

    Bears, on the other hand, are sick of it. They thought for sure that last fourth wave was the start of the end. They're done. No more shorting! Ever. It's a proven historical fact that more bears join monasteries during high-degree fifth waves than during any other wave.

    And this is one of the other jobs of fourth waves in a bull market: They condition traders to buy the dips. By the time the big fifth wave rolls around, traders have become deeply conditioned by all the fourth waves that have unraveled at lower degrees over the recent months (or years) and which have culminated with new highs each and every time.

    Think of where we are now -- every time bears think something is getting going on the downside, the market recovers. Fourth wave at subminuette degree -- new highs! Fourth wave at minuette degree -- new highs! Fourth wave at minute degree -- new highs!!! Etc. There's been no end to the new highs.

    See, all of this is necessary to ultimately create the psychology we encountered back in waves one and two. Once the trend finally does change, no one will believe it anymore -- not even the handful of remaining bears. Everyone will think it's another fourth wave "correction" -- right up until that big third wave down hits and wipes everyone out.

    And then we rinse and repeat all of the above, but heading down instead of up (for a bear market or major bull correction).

    This is a glimpse into what creates the patterns and fractals that make up Elliott Wave Theory. It's not some crazy esoteric voodoo; it's simply a reflection of human nature.
     
  8. nottibird

    nottibird Moderator

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    What Are Tenant Stocks & Tidal Stocks?

    At any phase of the market, there are stocks which rise half cent to 2 cts every day or every other day.
    And before you know it, after 1 week or 2 weeks, that stock has risen 5 cts to 20 cts. Every 100 lots
    you park into such a Tenant Stock will earn you a rental income of $5K to $20K. Such stocks...you usually
    collect rental intra-week or intra-fortnight or intra-month.

    Likewise if a stock is doing the slowly bleed to death thingy and is falling half cent to 2 cts every day or
    every other day. After a week or two, she would have fallen 5 cts to 20 cts. If you SHORT such a stock,
    you can also collect rental after one week or two or after a mth.

    These tenant stocks tend to be for short term play... 1 week, 2 weeks or 1 month. And so long as they
    continue to behave that way, you can keep treating them as your "tenant".

    Tidal Stocks are those which tend to have a larger move between their HIGHs and LOWs. The 3 banks,
    SIA, SGX, SingTel are a few examples. For Tidal Stocks, you need to look at their charts and plot the
    Summit at the TOP and the Valley at the Bottom. Calculate how much (in terms of dollars or cents) is
    each move and divide it by 4 equal parts. Lets say for illustration... one move is $2.00. Dividing it by
    4 equal parts means 50 cts per part. And if that 2-dollar move is from say $20.00 to $22.00, the 1st
    quarter of that move is from $20.00 to $20.50. The 2nd quarter from $20.51 to $21.00. 3rd quarter
    from $21.01 to $21.50. And last quarter from $21.51 to $22.00.

    PATIENCE is the key. The BEST BUY is at the 1st quarter followed by the 2nd Quarter. If the stock is
    already at the 3rd Quarter when you look at it, still can LONG if the bullish upward momentum is still
    there. HOLDING POWER is a MUST. And the ability to add (if your first entry is wrong) on dips is an
    important advantage. Tidal Stocks are mostly also Sure CUM stocks, ie. Never Fail To Come Back stocks.
    But not all Sure CUM stocks are index stocks. Likewise, not all index stocks are Sure Cum stocks.

    To SHORT, it is the reverse. The BEST SHORTs are found in the 4th quarter, ie. $21.51 to $22.00.
     
  9. nottibird

    nottibird Moderator

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    Build Up Your Trading Capital To Increase Your Chances Of Winning This Game

    I have said this before. And I say it again.


    And again.

    And again.

    That it is true that this stock market game is one game where............the more money you have,
    the better your chances of winning this game.
    And if you have lots and lots of money....and you do
    it properly, ie. play only SURE CUM stocks, you WONT LOSE. YOU WILL WIN. YES YOU WILL.
    :yes:

    I give you one real life example of my trade.

    I LONG CapMallsAsia at $1.9994 x 160 lots.
    She fell to 1.85.
    I was sitting on a paper loss of $23,904 + com and finance charges.
    She then rebounded to 1.975 before pulling back to close at 1.945 on Fri.
    When she found bottom and started to rebound...first to 1.875...and then crossed 1.90,
    if I have lots of money to play this game, I would have found the balls to add another
    160 lots at say 1.885. This thing about whether got balls or not hor, there is a direct
    co-relation between the size of your trading capital and the size of your balls. Its as
    simple as that. And if I have alot more trading capital to spare, finding the balls to add
    another 160 lots at 1.885 would be a piece of cake. And that would have brought my
    average price down to $1.9422. Then when the price rebounded to $1.975, I would have
    been able to get out (if I want to) with a profit of $10,496 before com and finance charges.

    But I didnt do that. I was not able to becoz of limited trading capital. But another trader who
    has the same position in CMA as I and who had more money to play, will be out of CMA now
    with a tidy profit in his trading account. And becoz he has more capital than I, he can keep
    doing this, and outperform me in every trade. And each time he completes one successful
    trade, his trading capital grows and grows...at an exponential rate. And with more money
    to play, he can take on bigger positions and repeat the same thing with more counters and
    each time he successfully completes each trade, his trading capital grows by leaps and bound.

    Which explains why it took Prof JohnPaul's friend about 20 years to make his 1st million but
    after he got that 1st million, he made another 8 million over the next 2 years. This is the sheer
    power of the exponential effect. To make money, you need money. And the more money you
    have, the more money you can make. Which is why a Fund Manager who has hundreds of
    millions, if not a billion or two to play... will not lose if he invest in blue chips index stocks.

    My advice to those of you who have not much capital is....BE PATIENT.

    Work within your available trading capital.
    Trade only Sure CUM stocks.
    Read charts to know how not to buy at the HIGH or to short at the LOW.
    Tailor your trade size to match your trading capital so that if wrong, you still have
    enough trading capital to do your averaging down when your counter has rebounded.

    One common mistake made by newbies is.... Ka Ka HOOT on a contra basis.

    Becoz that...is THE ONLY WAY to make alot of money with little or no capital and
    within a very short time. But do you know that the Monkey knows that too? And he
    makes use of T + 5 all the time to trap contras to give up and throw their scrips to
    him at a loss. Ask yourself this - how come it happened so very often that when you
    LONG a penny counter, the price either stops rising or starts to fall. Then when your
    contra clock rings, you Boh Pian throw back and took your loss. But right after you
    threw back on the same day or on the next day, the price rebounded! And this happened
    again and again !!! Cannot be pure coincidence bah? Becoz it isn't. It was planned! It
    did not happen by chance. It happened becoz the Monkey arranged for it to happen.

    So when contras are selling becoz they run out of time, the Monkey is happily collecting

    cheap from contras to position himself for the next push. And when the next push comes,
    those contras who lost money Bay Kam Guan...will rush in to LONG again "to take revenge".
    Those who rushed in early at the beginning of a push will have a chance to get out with
    profits. But those who hesitated and LOON dont buy becoz they had just cut loss and are
    licking their wounds...if they LOON and LOON until Bay LOON leow then they finally jump
    in again coz they see the price rising day after day, then they will kena caught again when
    contra clock rings a second time.

    It is a fact that Monkeys use T + 5 to suck blood out of retail players. Know that, and use
    this info to plan your next trade when you try to ride on the Monkey's coat-tail.
     
  10. nottibird

    nottibird Moderator

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    How To Set Trailing Stop Profit Loss In IG Markets CFD Trading Platform

     
  11. nottibird

    nottibird Moderator

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    You Dont Have To Cut Loss If You Play Sure CUM Back Stocks


    I know having a tight stop loss is generally a good thing.
    But then... cutting loss... is also the reason why we sustain a loss.
    A paper loss.... as long as it remains on paper only.... is not a loss until you take it.
    Ofcoz I am not saying just die die LOON any paper loss. NO. Not ANY paper loss.
    But only paper loss for Sure CUM stocks.

    Take CapMallsAsia.
    My average price is $1.9994.
    She fell to 1.85. That's almost 15 bids.
    Then bounced back to 1.955 today.
    So my paper loss of 15 bids is today reduced to 5 bids.
    And my paper loss based on a drop of 15 bids...is today reduced to one-third of the original paper loss.
    CapMallsAsia is an index stock and a Sure CUM stock. When she goes back to $2.00, my paper loss will
    be completely wiped out. And if she continues to rise to just $2.02...I will harvest about 3000 eggs nett.

    Sis adonis has a way to describe my trading style....

    She said I play big and make big.
    I said...But when I lose I also lose big.
    She then replied... "You where got lose big? Lose also you LOON until win."

    You get the point?

    Having a tight cut loss is good for counters which you must cut loss.
    But not if you play Sure CUM stocks and you did not buy at the HIGH.
    The problem with cutting loss is...

    1. When stopped out, you cut. And if you have a string of this....damn SIAN one. Damn demoralising.
    2. Small losses...when you have a string of it....will add up to quite a sum and its no fun seeing your capital being siphoned off by losses.

    Just sharing.
    I also dont like to cut loss.
    Who does?
    So I told myself.... dont want to cut loss then play only Sure CUM stocks.

    When I am out of CapMallsAsia, I will let you know how much paper losses I was sitting on.
    Its 5-figure hor, fren.
     
  12. nottibird

    nottibird Moderator

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    How To Survive A Selldown, Retracement Or Correction?

    As long as you are ....

    1. Holding a stock which is a Never Fail To Come Back Stock.
    2. You have holding power.....cash or CFD.
    3. You have LOONing power. This requires great mental strength at times.
    4. You have additional capital to average down when the market rebound.

    You wont die one.

    Dai Lole John and Jie Jie Adonis will put up both hands and legs to confirm what I just said.

    Recently, I was asked to talk to a young man to teach him about trading/investment.
    I told him that the stock market game is one game where it is true that the more money you have, the better your chances of winning the game.
    And I used this one very simple illustration to make my point.
    I said....
    Say I am a Fund Manager. And I have hundreds of millions if not a billion to invest in the market.
    Meaning I can hold my positions for as long as I need to. Plus I can add stocks when prices are attractive.
    I continued...
    Say I am a lazy Fund Manager and I didnt do my homework.......and I bought 1000 lots of UOB at the HIGH at $22.10.
    UOB then started to drop. But I am a Fund Manager. I can hold.
    Say...UOB continues to drop and drop and drop and eventually bottomed out at $19.00. And then it rebounded to $19.50.
    I am a Fund Manager. Money is no issue. At $19.50...I buy another 3000 lots of UOB.
    So my average now is $20.15 x 4000 lots.
    UOB pays 60 cts of dividends per year.
    Let's say it takes one year for UOB to recover back to $22.00.
    Meantime, I will collect dividends which at 60 cts per share.... is $2.4M.
    And UOB WILL one day recover to $22.00.
    And when it does, my 4000 lots at $20.15 would have made $7.4M.

    So isn't it true that as long as you are holding a Never Fail To Come Back Stock,
    You can HOLD.
    You can LOON.
    And you can average down when the stock has bottomed out....
    You cant lose?

    Heheh...

    So now you all know why I dont play pennys.
    Becoz when a penny drops, it can drop dead and remain dead forever never to rise again.
     
    Last edited: Oct 18, 2016
  13. nottibird

    nottibird Moderator

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    The Importance of Buffer When Trading With A CFD Account

    Yes. To trade via CFD, you MUST ALWAYS provide a buffer. One simple solution to this problem is to treat your CFD account exactly like a Cash Account. So let's say I have $100K of trading capital in my CFD Account and I am LONGing an index stock which requires 10% margin, I should buy not more than $100K worth of that stock. Let's say the stock is trading at $1.00 and I buy 100 lots, that's $100K worth of stocks and I do have $100K of trading capital. But what my CFD House will do is to set aside 10% of the value of the stock, ie. $10K as margin. This $10K margin will be deducted from my trading capital of $100K leaving me an " Available Balance" of $90K to trade in other stocks. Assuming my stock price falls to 90 cts, I would be sitting on a paper loss of 10 cts x 100 lots = $10K. My CFD House will set aside another $10K from my trading capital to buffer that $10K paper loss. At this juncture, my platform will show:


    Capital : $100,000

    Margin : $10,000

    Profit & Loss: -$10,000

    Available Balance : $80,000.

    If I have only $10,000 of trading capital and I buy 100 lots x $1.00 worth of stocks, my entire $10,000 of trading capital will be set aside as margin for that position leaving zero dollar to buffer any possible paper loss. In such a situation, if the price of my stock falls to say 95 cts, my paper loss is 5 cts x 100 lots = $5,000. And since I have no more trading capital to buffer that paper loss of $5,000, my CFD House has the right to give me a Margin Call to top up my account by $5,000 by a specified date/time in default they will be entitled to close my losing position at the prevailing market price. Let's say they force close my position at 95 cts, I would have lost 5 cts x 100 lots = $5000 plus com + finance charges (if any). And my Available Balance which was $10K will be updated to show a reduced balance of say $4750 ( after deducting the loss of 5 cts x 100 lots + com + finance charges). And after my House has closed my position at 95 cts (which they are legally entitled to if I do not meet their Margin Call), it matters not anymore if the price of my stock rebound strongly the next day or even on that same day to close at $1.10......ie. 10 cts above my entry price. My stock having been force sold, what happens to the price thereafter is hindsight and irrelevant.

    To avoid the above situation, you must ALWAYS set aside capital to buffer any temporary paper loss. You musn't use up all your trading capital as margin. Having enough capital to buffer a temporary paper loss will make all the difference to your trading outcome. Earlier this month, prior to Super Group releasing her Results, I LONG her at an average price of $4.2154 x 55 lots. At one point in time, she fell to $4.00. My paper loss was $11,847. But I had enough capital to buffer that paper loss. So as far as my CFD House was concerned, this was a non-event. Super Group then rebounded to 4.45 and I started to sell her slowly (I could not sell all 55 lots at one go without crashing the price) at 4.42, 4.40, 4.39, 4.38, 4.37 and 4.36. It took quite a while to slowly unload 55 lots and I did that one day before she announced her Results. After selling all 55 lots, my profits worked out to more than $8K nett after deducting com and finance charges. Why am I telling you all this? To highlight to you all that this trade was at one time sitting on a paper loss of $11,847 + com + finance charges and that paper loss would have become a real loss if I did not have enough capital to buffer it and I kena force selling by my House. But becoz I had enough capital to buffer that paper loss, it remained only a paper loss. No more and no less. And that trade soon turned around from a possible loss of $11,847 + com + finance charges to one of real profits of more than $8K nett. In an earlier trade the week before, I made more than $4K nett from Super Group. All in, I made more than $12K from her for this round of Result Play. That earlier trade of $4K profit was also at one time sitting on a paper loss of $8400 when she fell to $3.90. Thankfully, she rebounded and that paper loss of $8400 simply vapourised and I sold her for a profit of more than $4K.

    The moral of the story? When you trade via CFD, never trade to the max of your capital. Always keep some money to act as a buffer for paper loss. Hopefully, your paper loss is temporary and LOONable and for that, it is all about timing your entry correctly at or near the Bottom. If you anyhow BUY or SHORT without checking where your stock is and only after you have entered that you realised you SHORT at the LOW or you LONG at the HIGH, then LOONing your paper loss is the worst thing you can do to yourself. In such an instance, no choice. CUT. And then open a new position in the opposite direction to recoup your loss.
     
  14. nottibird

    nottibird Moderator

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    Direct Market Access Model & Market Maker Model

    Direct Market Access means when you key in a BUY or SELL order, your actions affect the queues in the Order Books of The Exchange.


    Say CMA now shows 233 buyers at 2.02 : 2.03 has 300 sellers.
    If I use DMA to queue to BUY 200 lots at 2.02, you will see the BUY queue at 2.02 jump to show 433 buyers.
    Same same if I key in a SELL.


    If I sell by throwing 200 lots to the buyers at 2.02, you will see the buyers in the queue reduced by 200.

    That's what DMA means. Every action you make, BUY or SELL affects the Order Books of The Exchange.
    DMA also mean you can participate in Pre-Opening and Pre-Closing which is VERY important.

    Your IG Platform is by default set to Market Maker Model.
    To have DMA, you must enable your account by enabling Data Access and that's when they will levy you
    a charge of $60. But if you do 4 trades within that month, you get a full refund of the charge.

    Market Maker Model, which is the default setting means you CANNOT queue and cannot participate in
    Pre-Opening and Pre-Closing. And the most salient feature of Market Maker Model is when you want to
    BUY, you MUST buy at the current SELL price. And when you want to SELL, you MUST sell at the current
    BUY price.

    Say CMA is now trading at 2.02 : 2.03.

    If I want to sell 20 lots, the price will be 2.02. There is no queueing.
    If I want to buy 20 lots, the price will be 2.03. No queueing too.
    I cannot buy at 2.02 or sell at 2.03. Not with the Market Maker Model.
    And whether I buy or sell, my action DOES NOT affect the Order Books of The Exchange.
    Becoz when I buy or sell, I am trading against the House. The House becomes macam like a bookie lidat to collect my bet.
    If I win, the House pays me. If I lose, the House Chiak me.
     
    Last edited: Aug 27, 2014
  15. nottibird

    nottibird Moderator

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    Why I Use A CFD Account To Trade And Not A Cash Account

    I am a CFD trader. I trade wholly and exclusively via a CFD Account. Hence, there is no such thing as contra for me. I can open and close a position within intraday or I can hold for as long as necessary till my position bears fruit or when I decide to cut and take the loss. Its only a question of paying finance charges for my open positions. So the longer I keep a position open, the more finance charges I incur. Why I prefer CFD? Becoz of 3 very important reasons:

    1. My com is only 0.09% (inclusive of GST) of contract value. This means for stocks trading at between 0.005 ct to $5.50, I can run with just 1 lousy bid, if need be. The ability to run with just 1 bid gives me a VERY important edge over other traders. For stocks trading at $5.51 to $11.00, I need only 2 bids to run. Take a heavyweight counter like UOB trading at $20.94. If you trade with an online Cash Account say at 0.25% com + clearing fee + GST, you need 14 bids to cover your 2-way charges. So if you LONG 1 lot of UOB at $20.94 and you SELL at $21.09, ie. at 15 bids profit.... you make $10.00. Your broker make $140.00. Whereas for me when I do the same with a CFD Account, I make $110.00. My CFD House makes $40.00. You get the drift now why low com is so very important and it gives me an edge over online Cash Account traders?

    2. The next VERY important reason why I trade via a CFD Account is that I can SHORT the market as well. An online Cash Account trader can only LONG. No SHORTing is allowed unless you take the risk of covering your SHORTs intraday WIN LOSE or DRAW and that is like trying to walk on a tightrope suspended 20 metres above the ground without any training and without a safety net below you and hoping not to fall. The BULL does not reign and run all the time. When the BULL is exhausted, he will leave the market to make way for the BEAR to take centrestage. And when this BEAR starts to maul, stock prices will take a plunge and freefall. In such a market, the only way to make money is to SELL HIGH and BUY BACK LOWER to profit from the difference. And you can do this only if you are able to borrow scrips (which is very cumbersome and costly) or if you SHORT a counter via a CFD Account which is very convenient and hassle free.

    An effective trader is one who can play from both sides of the market. BULL or BEAR, rally or correction, a CFD trader is kept busy in both phases of the market. But an online Cash Account trader is helpless during a correction, retracement or pullback. He becomes a sitter. He can only wait for his stock to bottom out before he can trade again. Being able to SHORT is very important for one other reason. When prices rise, they rise slower than when they fall. When prices rise, some weak traders will take profits. This translates into price pullbacks which slows down the ascend. But when prices fall during a correction, there is no buying support to slow down the decline. Instead, panic selling or indiscriminate throwing will accelerate the fall of a stock's price. Did you notice that a stock can take 1 month to rise by 50 cts but yet can lose half or more of that rise, in just one or two days? Now you know why. Becoz when prices fall, they fall faster than when they rise. Which means if you can SHORT, it will take you much, much lesser time to profit from that position than if you LONG.


    3. CFD is a leverage product. It offers margin financing. This is of course a double edged sword. It can make you, in good times. It can break you, in bad times. Margin is like fire. Control it...and it can serve you. And you can use it for cooking, lighting, heating, etc. But lose control of it and it can burn down your house and everyone in it. Margin gives me much needed additional firepower. But this additional firepower must NOT be used recklessly. Or it will wipe you out in just one bad trade.

    Take UOB as an illustration. If I want to LONG 50 lots of UOB at $20.94 with an online Cash Account, how much must I have to pick up those 50 lots? $1,047,000 !!! But at 10% margin, to do the same with a CFD Account, I need only to put up with $104,700. And when will I do a trade like this. Certainly not when UOB is trading at $20.94. Maybe, if UOB is trading at $20.00. Better still, if she is trading at $19.00. If the market should go into a minor correction, we may see UOB fall to $20.00 or below $20.00. If the correction is very nasty, we may then see $19.00 to $19.30. At this level, I will dare to LONG UOB when she starts to rebound. 50 lots to 100 lots is what I will be looking at. Coz if the entire market has bottomed out and the market is ready to stage its next rally, UOB will trade back up to $21.00. And if it coincides with Earnings Reporting Season and dividend announcement, UOB can continue her rally towards $22.00. A move from say $19.30 to $22.00 is $2.70. This can happen within 1 to 2 months. A trade of 50 lots will yield $135,000. And if you have enough capital to do a 100-lot trade, your harvest is $270,000. Far fetched? Look at the chart of UOB for the last 1 year and you will know what I mean. You can make money from her Big Moves. You just have to be patient to wait for her to Bottom Out (to LONG) and to Top Out (to SHORT).


    Scanning The Market

    In any market across any time frame, there are ways to make money. We just have to FIND them. And understand what kind of set up must occur before a profitable trading window opens up. And then patiently wait for it to appear. And when we see it, to act immediately to seize the opportunity. Hence, over the weekends, I scan the market to look for such money making opportunities.....and their set ups. Sometimes I find a couple. Sometimes I dont. It is not all the time that such set ups will occur. We just have to be patient. Afterall, we dont have to trade everyday. Trade only when it is easy to make money. And it is easy to make money when those money making set ups appear.
     
    Last edited: Nov 30, 2013
  16. nottibird

    nottibird Moderator

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    How Not To Lose Money In The Market?

    When do we lose money?
    When we cut.
    As long as we dont cut, we wont lose money.
    So try to reduce cutting loss in our trades.
    That way, we also reduce losing money.
    And how do we do that?
    By buying/shorting stocks which will "Never Fail To Come Back" up or down.
    Timing is very important.
    LONG a stock when it is near its bottom.
    Meaning...downside is limited and a reversal should be nearby.
    That way, if the price continues to dip after you have LONG it, you dont have to cut.
    You can LOON and wait for it to reverse.
    Then add positions after the reversal comes.
    Likewise, SHORT a stock when it is near its top.
    Meaning....upside is limited and a correction should be nearby.
    If you SHORTed too early, you dont need to cut.
    Just LOON and wait for the stock to top out and come back down.
    Then add SHORTs when the correction comes.

    As long as you never need to cut, you will never have to take a loss.
    And as long as you never have to take a loss and you LONG or SHORT a Never Fail To Come Back stock,
    your positions will sooner than later become profitable. And you will consistently make money in this game
    in the long run.


    Professor JohnPaul has been doing this for decades.
    Mother Hen Adonis also has been using this strategy for many years.
    And both of them are living off the market.
    That speaks volume about how workable this strategy is. :yes:

    Try it.
    Change your perspective about trading.
    Change your strategy.
    And change your trading outcome.
    And your life.
    And the lives of your family as well.

    The gist of the above message is "As long as you have a trading strategy which does not
    require you to cut, you will not lose money" and
    it is aptly demonstrated by a recent
    conversation between me and adonis and JohnPaul.

    And bear in mind the two traders who agreed with me are the very ones who never cut loss and are living off the market. :yes:

    I hope to join them soon. View attachment 14999
     
  17. nottibird

    nottibird Moderator

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    How To Ensure Your Order Is Filled During Pre-Opening/Closing ("PO/PC")

    The PO/PC Software is programmed to obey the following Rules:

    1. No buyer will be matched at a price higher than his BUY order.
    2. No seller will be matched at a price lower than his SELL order.
    3. Buyers offering to BUY at a price higher than the indicative price will be matched first.
    4. Sellers offering to SELL at a price lower than the indicative price will be matched first.
    5. The final matched PO/PC price will be the price which will match the most number of orders.

    If say the indicative price is $10.00 and there are more buyers than sellers, all the sellers will be
    matched at $10.00. But not all the buyers will have their orders filled. If say there are 100 buyers
    at $10.00 but only 80 sellers at that price, only 80 out of the 100 buyers will be matched at $10.00.
    The remaining 20 buyers will see their BUY order "Not done". So in this example, if you are a buyer
    and you want to be matched, be the first 80 buyers in the queue at $10.00. If you are the 81st
    to 100th buyer, you will NOT be matched. Becoz there are only 80 sellers at that price. So how to
    ensure that you are the first 80 buyers in the queue at $10.00? By offering to BUY at $10.01. That
    way, you will jump the queue and be matched ahead of all other buyers who offered to buy at $10.00.
    Likewise, a buyer who offers to buy at $10.02 or higher, will be matched ahead of you becoz he is
    offering a BUY price higher than yours.

    Using the same above example, if there are 80 buyers and 100 sellers at $10.00, all the buyers will
    have their BUY order filled. But only the 1st 80 sellers in the queue at $10.00 will be matched. The
    remaining 20 sellers will see their orders not filled. So if you are a seller, do not be the 81st to 100th
    seller in the queue. Offer to SELL at a lower price, say, $9.99 and hope to be matched at $10.00. By
    offering a lower price, you will jump queue ahead of all other sellers who offer to sell at $10.00. And
    a seller who offers to sell at $9.98 or lower will jump queue ahead of you.

    As the indicative price do change whilst PO/PC is in progress right until the cut-off time, you need to
    keep watching the indicative price to see if you need to increase your BUY price or lower your SELL
    price to ensure that you are ahead of the queue. Of course, you must be mindful that you could end
    up being matched at the price you offered and you will have to live with it. So if the indicative price
    keeps moving and is beyond your target price, you will have to stop chasing it.

    Quite simple, isn't it? Now you know how it works. [​IMG]
     
  18. nottibird

    nottibird Moderator

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    PLEASE DO NOT POST HERE

    This is NOT a discussion thread. This is my Cyber Storeroom, a convenient place to keep my own postings and
    other trading reference materials for easy access and recollection.

    If you wish to discuss the contents of anything found here, please cut and paste the material at The Trading Floor
    and post your query and comments there for discussion.

    THANK YOU
     
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