A. Thank you for the question Happiness and glad to have you on board.
Let’s use one of my recent trades I sent out… Here are the specifics for the trade.
Type: Long (buy)
Market: BHP Billiton
Stop loss: R442.57
Take profit: R507.00
Margin: R52.50 per CFD (deposit)
Now, let’s first calculate what the loss percentage on what you put in would be, if the CFD trade hit the stop loss.
Here’s the calculation to use:
Loss percentage on margin
= (Entry – Stop loss) / Margin X 100
= (R468.61 – R442.57) / R52.50
= 49.60% on Margin
This means you would have lost 49.60% on what you deposited if the price hit the stop loss…
For example. If you deposited R1,000 into the BHP Billiton trade, and the trade hit the stop loss, you would have taken a R496.00 loss (49.60% X R1,000).
Fortunately, the trade hit our take profit price.
So, here’s how to calculate the gain percentage on our initial deposit.
Gain percentage on margin
= (Take profit – Entry) / Margin X 100
= (R507.00 – R468.61) / R52.50
This means you would have banked 73.12% (excluding costs) on what you deposited when the price hit the take profit level…
For example. If you deposited R1,000 into the BHP Billiton trade, and the trade hit the take profit, you would have banked a R731.20 gain (73.12% X R1,000).
Q. “Timon I have two questions. First, as you’re in Greece, what is your view with the increase in Covid-19 cases in Europe? Also, do you think we will see another spike in cases in South Africa and will it also have an effect on the rand?”
A. As an outsider (living in Greece), I can only share my opinions on what I’ve seen and researched.
In Greece as I am writing this, today there were over 8,500 new cases.
Unfortunately, we have had a 4th wave hit Europe & the UK with a surge incases, despite the vaccinations in play.
Here are the number of new cases hitting countries today, just to give you an example:
France – 19,749
Germany – 34,877
Austria – 14,042
I believe the cases are going to continue to go up, which makes South Africa and the rand vulnerable in the near future.
For instance, if you turn on the news, you’ll see a number of experts and banks making predictions of a 4th Covid-19 wave to hit South Africa in as early as December.
The main reasons are the following.
First, during the holiday seasons, people will go out to more social occasions to see friends and families. We will also see a surge of retail buying of gifts and food during Christmas and New Year.
Second, I suspect and expect there’ll be an inflow of tourists who will most likely fly to South Africa, to escape the chaos and rioting in Europe and UK.
This will make South Africa more vulnerable to an increase in Covid-19 cases. And so, we could once again have a 4th wave hit the country which will have a negative impact on the economy which will impact the rand.
For instance we could see,
A longer curfew, restaurants and pubs will close again and there’ll be a restriction on trade (imports and exports).
With the current government issues with Eskom, water and Covid-19, investors will flee from the rand which will weaken it further. I also have other reasons the rand will weaken, which I spoke about on Monday… Click here if you missed out…
Analyst, Red Hot Storm Trader