Handbook on CFDs Trading – Book Review

Book: Handbook on CFDs Trading
Author: Nicholas Tan
Publisher: Rank Books
Read on: 12 January 2015

41 Take-aways:

  1. . Stocks for CFD varies from broker to broker.
  2. . Pay only 10 to 20% of underlying stock value.
  3. . Do not own underlying stocks but beware dividend.
  4. . Upon dividend payment, must pay back if short.
  5. . CFDs have no expiry date unlike options.
  6. . Must have deposit of min 20% contract value.
  7. . If fall below 20%, margin call to top up.
  8. . Must pay interest for open position till sold.
  9. . Earn interest if short position.
  10. . Must pay commission charge per transaction.
  11. . No fixed contract size.
  12. . Can trade SGX, overseas shares, forex and commodities.
  13. . In a wrong directional trade, loss can be big.
  14. . Always put a stop loss order on open positions.
  15. . Use hedging strategy against direction change.
  16. . Use Pair Spread Strategies in uncertain market situations.
  17. . Buy one stock and sell another at the same time and same cost.
  18. . Buy one equity with strongest outlook and another with the weakest.
  19. . Fundamental news resources:
  20. . Research.sgx.com
  21. . Remisiers.org > Research
  22. . Trading opportunity Information to look out for:
  23. . Company securing contracts.
  24. . Company Financial earnings report and release date. Act before the announcement.
  25. . SGX.com > Company Announcements
  26. . Brokers upgrade or downgrade of stocks will impact the stock price.
  27. . Sponsored research reports have little impact on the stock price.
  28. . More impact come from reports by bigger broking houses like Goldman Sach, J.P. Morgan and Merrill Lynch.
  29. . Subscribe to Dow Jones news.
  30. . Check the news every morning before the market opens.
  31. . Look up for recommendation by bigger broking houses.
  32. . Make sure the counter is either an active counter or an index stock.
  33. . Make sure the difference between the current trading price and the projected price is significant.
  34. . Look out for trading gaps. Huge price difference between opening and last done.
  35. . Common gap: within trading range. No effect.
  36. . Breakaway gap: break from recent high or low or support or resistance. Likely to continue in the same direction of the breakout.
  37. . Midway gap: occurs midway through the trend. Very useful info. Indicates the end point in the same direction. Symmetrical to previous high/low.
  38. . Exhaustion gap: a midway gap that does not continue but gets filled up in a couple of days. Indicates reversal of trend.
  39. . Use support and resistance created within the gap zone. Trade within the zone. Stop loss at 2 points below or above if breakout.
  40. . Use trading momentum retrace method. Buy a dip in a strong trend. Use MACD (EMA 20) to confirm the end of the dip. Use ADX (>30) To gauge the strength of the trend.
  41. . Price pull back on EMA20. ADX >30. MACD line turning after histogram peak. Cut if price drop below previous low. Profit target above previous high.

Source:
Handbook On CFDs Trading: How to Make Money When the Market Is Up or Down

Handbook on CFDs Trading - Book Review

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AdrianLee

I am Adrian Lee from Sunny Singapore. My passions are in digital electronics, quantum physics, and exploring lifestyles. In this personal blog, I journal my thoughts and lessons. Enjoy!

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