ASX CFD. $100k to $312k in 4 days!!!

[KrisK]

Hi Guys

I've started playing this game, I've no idea how I managed to do so well but today I went from 1200th rank to 62nd rank!

I turned my $100k initial investment to $312k through trading the volatility of BHP shares in big volumes (Was trading 95,000 shares at one stage @ $46.55)

Here are my stats before some questions:

Kris Keen
Cash Balance: $312,271.26
Cash Reserve: $0.00
Cash Available: $315,121.26
Overall P/L: $218,477.51
Current Margin Obligation: $1,481.25

Overall Market is FALLING
Your Portfolio is FALLING
Overall Cash Change: +214.15%
Return On Investment: +43.29%
Cash Balance High: $314,281.26
Cash Balance Low: $4,723.75
Current Cash Balance: $314,146.26
Cash flow
Contract Interest Paid/Received: -$1,209.80
Open Interest Charge: -$279.19
Dividends paid/received: $0.00
Franking credits paid/received: $0.00

Here is my transaction history:

BJ 12/10/07 13:54:11 SHORT 95,000 @ $46.44 $0.00
BJ 12/10/07 12:32:29 LONG 85,000 @ $46.48 -$197,540.00
BJ 12/10/07 12:21:13 SHORT 65,000 @ $46.53 $0.00
BJ 12/10/07 12:19:46 LONG 65,000 @ $46.47 -$151,027.50
BJ 12/10/07 12:18:56 SHORT 60,000 @ $46.53 $0.00
BJ 12/10/07 12:01:03 LONG 50,000 @ $46.49 -$116,225.00
BJ 12/10/07 12:00:16 SHORT 40,000 @ $46.52 $0.00
BJ 12/10/07 11:59:36 LONG 45,000 @ $46.45 -$104,512.50
BJ 12/10/07 11:59:05 SHORT 50,000 @ $46.50 $0.00
BJ 12/10/07 11:56:46 LONG 40,000 @ $46.42 -$92,840.00
BJ 12/10/07 11:55:08 SHORT 25,000 @ $46.43 $0.00
BJ 12/10/07 11:54:21 LONG 25,000 @ $46.42 -$58,025.00
BJ 12/10/07 11:53:43 SHORT 20,000 @ $46.47 $0.00

In my transactions I started with 20,000 shares and the profit I received I reinvested in more shares to build up my volume numbers (not bad trading 20k to 95k ? )
As you can see, I basically brought large amounts for a good price, and sold large amounts for more.

My question relates to real world fees. Macquarie Prime charge 0.9% equal to the value transacted, so am I right in saying that each time I did this I would be paying 0.9% of the total value (ie 95000 x 46.50 for arguements sake = $4.41million) OR do I pay 0.9% of my margin which is set for 10% in the ASX game? It seems if it was the value I'd be charged $36,400 therefore wiping out my profit!

Can day trading in volality be successful? from this example it looks like it is. But given the fees, how do you make money? In the real world can I buy/sell as quickly as this online?

The market has now dropped and I got out by liquidating all my BHP and have a large cash amount ready for tomorrow (didnt want to pay interest!)

Please help. Im totally new, I just sorta wanted to play around...)

Thanks!

 

[s_t]

You've done well, but please don't take those 4 days of trading as representative of how you'd go in real life! For 2 main reasons:

1. your trading decisions will be different when trading real money. The fear/greed isn't there when no real money is on the line.

2. You have used absolutely massive leverage. A small losing streak, which every trader should expect/allow for every now and then, would have wiped you out!

 

[KrisK]

You've done well, but please don't take those 4 days of trading as representative of how you'd go in real life! For 2 main reasons:

1. your trading decisions will be different when trading real money. The fear/greed isn't there when no real money is on the line.

2. You have used absolutely massive leverage. A small losing streak, which every trader should expect/allow for every now and then, would have wiped you out!

Hi ST

Yep, very true.

I used 90% leverage. And at one stage got very low on cash, down to $4000 as you can see. My examples are pure luck. BUT, do people trade like this? Surely I can start out in a small amounts?

Cheers

 

[s_t]

Yes, that is exactly what some do, though I haven't personally traded CFD's. I have done Forex which is similar in that large leverage is also possible. If you want to try it, yes, make sure you use small amounts as you say. A basic way to think about it is to risk no more than a certain % of your capital. The recommended % (for any particular trade varies) depending on who you ask, from less than 1% to 5 or 10%!

 

[KrisK]

Yes, that is exactly what some do, though I haven't personally traded CFD's. I have done Forex which is similar in that large leverage is also possible. If you want to try it, yes, make sure you use small amounts as you say. A basic way to think about it is to risk no more than a certain % of your capital. The recommended % (for any particular trade varies) depending on who you ask, from less than 1% to 5 or 10%!

Thanks s_t, ill keep playing and see what I come out with. What about fees though? 0.9% of such huge amounts is ALOT , how do they work out the fees?

EDIT: its 0.0.9% of the value of the trade, so 4million its like $3860.

 

[The Y-man]

EDIT: its 0.0.9% of the value of the trade, so 4million its like $3860.

$3860 isn't a lot if you are making a few hundred k's?

Cheers,

The Y-man

 

[Brenda Irwin]

Brokerage is paid +GST when you buy AND when you sell.
I often think, wow I could make a few quick dollars but the shine sort of comes off it a bit when brokerage in added.

I started at brokerage of .9% (minimum $90), then I got a discounted rate of .8% and now on certain shares I pay .65%.

 

[Sunfish]

Trading costs with CFDs are quite variable. But I have booked a couple of Ks real profits trading BHP CFDs lately myself.

These are typical costs on a BHP trade and I think my provider is cheaper than average for a small trader:

To buy 100 BHP through my provider, nom val $4458 would require $223 margin and interest payment of $1.17/day. If the price of BHP goes up, so does the daily interest and it will increase as interest is capitalised. There would be $10 brokerage (minimum up to $20k) and 2.2 cent spread (0.05%) on both buy/sell.

 

[KrisK]

Im using this to learn a few basics about hwo it works but the trading fees are quite high if you buy/sell very often!