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Why I like CFD's to harness the power of gearing
The Forex Trader Team, recently sent out this trade to our Forex Trader subscribers: We told them to sell (go short) the Great British Pound to the Australian Dollar at $2.0288 and put their take profit level at 1.9920. Traders could have entered this tra... ››› more
Investing for the long-term is a great way to grow your wealth. But what if you want to try to cash in on short-term movements in the stock market?
If this interests you, then trading may be for you. As long as you can handle the extra risk it brings, you can potentially make quick, substantial gains.
So how can you trade the stock market?
Let's take a closer look at three different waysâ... ››› more
If you're looking to trade shares, there are two main trading instruments traders tend to use: Single stock futures and contracts for difference.
The main difference between these two trading instruments is the contract and this makes the way they work different.
So what are these differences?
Read on to find out…
Definitions of single stock futures and CFDs
The basis of single... ››› more
CFDs (contracts for difference) are trading instruments that you can use to trade assets like shares, indices and currencies.
You can also use trading instruments like single stock futures and spreads to trade shares and indices.
So what makes CFDs different?
Let's take a look…
CFDs have no expiry date
CFDs have no expiry date.
This is unlike single stock futures and spread ... ››› more
If you're looking for a way to trade the stock market, one option to consider is single stock futures.
Single stock futures are financial derivatives that allow you to trade a large number of the shares listed on the Johannesburg Stock Exchange.
But single stock futures trading isn't for the conservative trader.
Read on to find out more…
What are single stock futures?
When you ... ››› more
If you trade single stock futures on South African stocks, do you know you can trade international stocks too without taking your money offshore?
You can do this by trading the Johannesburg Stock Exchange's International Derivatives.
So what are International Derivatives? What are the benefits of trading them? And how can you trade them?
Read on to find out…
Introducing Internatio... ››› more
Options trading is by far the most popular trading tool in the US. As a South African trader you can trade this popular instrument too.
The Johannesburg Stock Exchange's Derivative Market lists options on the single stock futures it lists.
So what exactly is an option? And how much risk do they come with?
Let's take a closer look…
What are options?
In South Africa, options are ... ››› more
You may think that single stock futures trading is for the speculative trader, but you can also use them as a tool to protect your existing portfolio.
But trading single stock futures comes with risks. They're geared financial instruments.
So how does gearing with single stock futures work?
How can you use them to exploit moves in the market and protect your portfolio?
And how do you... ››› more
Trading single stock futures appeals to many would-be traders because of their gearing aspect.
This is all thanks to trading on margin.
By putting down a small deposit to trade a large number of shares, you can multiply the gains of their price movements. But this gearing also multiplies your losses.
So is single stock futures the right financial instrument for you?
Read on to find ou... ››› more
There are a number of factors that have a bearing on your success as a single stock futures trader.
The psychology of a trader has a big effect. Let your emotions interfere with your trading and chances are you're going to lose money.
And as single stock futures are geared financial instruments, mistakes can cost you dearly.
So let's take a look at the two main emotions that can have a de... ››› more
If you're serious about trading single stock futures, you'll have to know how much it's going to cost you.
To trade single stock futures you need the services of a stock broker.
So you'll have to pay your broker a fee for his services. And to open a futures trading account, you'll need to deposit a minimum amount too.
Let's take a closer look at the costs involved with trading single sto... ››› more
As with investing in shares, if you want to trade single stock futures, you'll need a stock broker.
A stock broker will put on your single stock futures trades on the Johannesburg Stock Exchange's Equity Derivatives Market for you.
So how can you find one of these brokers?
Read on to find out…
How to trade single stock futures
If you already have an account for investing with a... ››› more
Trading single stock futures isn't all about trying to make a quick profit from the ups and downs of share prices.
You can also use single stock futures to hedge your current portfolio.
So how does this work?
Read on to find out…
Using single stock futures to reduce your portfolio’s risk
Despite being a risky financial instrument, single stock futures can help you to hedge yo... ››› more
If you stick to traditional investing methods, you can only profit if the price of the share you buy rises in value over time. But with single stock futures and other derivative instruments, you have the opportunity to profit from a share price's fall.
So how does this work?
Let's take a closer look…
Trading single stock futures when a share price rises and falls
If you think a s... ››› more
Some investors may use single stock futures as a way of hedging their portfolio. By shorting shares they hold long positions in, they can offset losses.
But the main reason behind most investors using single stock futures is the gearing they offer. By trading single stock futures, you can potentially make quick, substantial profits.
Let's take a closer look at how this works…
How gea... ››› more
If you don't want to invest in individual stocks, exchange traded funds (ETFs) provide you with an easy way to invest in specific sectors of the stock market.
These funds offer you instant diversification. And, compared to buying the underlying shares in a fund, they're cost effective.
So how can you use ETFs to build a portfolio? And what other options do they give you?
Read on to find o... ››› more
Gearing is one aspect that attracts traders to single stock futures.
It's gearing that multiplies your potential profits (and losses).
So how does gearing work? And how can you work out the gearing of your single stock futures trade?
Read on to find out…
What is gearing?
Gearing is when the potential positive or negative outcome is magnified. It’s this magnification aspect of... ››› more
At first, single stock futures can appear rather complicated.
There is one main aspect of single stock futures that you need to get to grips with so you can understand exactly how they work. And, more importantly, so you can get closer to trading them.
This aspect is the margin.
Let's take a closer look at how the margin works…
The margin in action
The best way to see how the ... ››› more
Single stock futures are trading instruments that allow you to trade shares listed on the JSE.
They're geared instruments. This gearing multiplies your potential profits and losses.
So what aspects of single stock futures do you need to understand to get started?
Let's take a closer look…
An introduction to single stock futures
To understand how single stock futures trading wo... ››› more
Single stock futures, along with the likes of contracts for difference (CFDs) and spread trading, are derivatives.
Derivative are financial instruments whose value depends on an underlying asset's value. With single stock futures, they derive their value from the underlying share they're based on.
So how do they work?
Let's take a closer look…
How do single stock futures work?
... ››› more
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