Trading Aussie (ASX) Share CFDs with TRUMarkets

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TRUMarkets offers trade suggestions on ASX CFDs providing an entry, stop loss and exit level via SMS and email.

The following is a typical trade suggestion that you would receive as a Subscriber to TRUMarkets:

Trade example:

Entry:

On the 9th September 2009 @ around 3pm. , RIO Tinto (RIO) was trading at $58.08 and our Resource Analyst from our trading desk attained a “Buy” signal.

An SMS text message and email was sent out our TRUMarkets’ subscribers as per the following:

"TRUMarkets: Entry signal- Position Size $800 - Buy RIO Tinto (RIO) CFDs @ $58.08/Target $64.00/Stop Loss $55.15”.

• On our web site, Members of TRUMarkets would be able login and attain a succinct fundamental and technical summary behind the reasons for the CFD trade suggestion along with a supporting chart.
• The subscriber can choose to trade the suggestion as per our recommendation and would either log in to their platform or call their CFD Provider to action the trade.

Reason for Trade suggestion

• The daily RIO chart reveals the break out through the down-sloping resistance line yesterday on a bullish gap.
• There has been moderate follow through today, albeit the price has come off its session highs during afternoon trade following softer retail sales data released locally.
• The price has now surpassed the 14-day MA line and the stochastics when read in conjunction with the break above the MA line, reaffirms the change in trend.
• In addition the RSI has regained a mark above 50, which should see it advance further.
• With the USD remaining under extreme pressure, it bodes well for the present commodity price strength to continue over the near term.
• Both the EUR and AUD reached 12-month highs overnight, which will spur further interest in metal stocks over coming sessions.

Exit:

On the 17th September 2009, @ around 11 am. RIO’s share price was $61.40 and our Resource Analyst attained an “exit” signal. This is a 5.7% gain in the share price.

TRUMarkets Share CFD trade email/SMS read:

"TRUMarkets: EXIT signal - Sell RIO Tinto (RIO) CFDs at around $61.40 to take profit ahead of original target”.

Profit Calculations:

CFD Providers provide different leverage levels in relation to share CFDs, though the majority of them deliver 10 X leverage to 20 X leverage on your investment.

Assuming a trader traded a short-term position size of $800 - Based upon 20 X leverage, a notional position size is $16,000 (5% deposit).

The share trade, without leverage, yielded a $3.32 or 5.7% profit over 6 trading days.

On a 20-times leverage, this trade suggestion would have delivered the trader a gain of $914.60 in gross profit or a 114% return on an outlay of $800.

NOTE: The cost of brokerage and the interest-rate component on the borrowed amount differs from CFD Provider to CFD Provider. As such, we do not take into account those variables. In addition, the leverage levels for individual stocks can vary amongst the providers.

Basic points:

• The share CFD price moves in tandem with the underlying share price.
• Leverage is attained may vary from CFD provider to CFD provider, though typically deposits of between 5 – 10% (leverage of 10 x to 20 times) are taken on core blue chip stocks for ASX CFDs.
• As the degree of leverage you undertake will vary depending upon your own circumstances (risk profile and capital available to trade), we will provide a general guide as to trade size to assist Members in generating their own capital management plans.

Types of Share CFD trades TRUMarkets suggests:

1. Position size of $A800, (based on 20 x leverage for share CFDs). The short-term time frame is envisaged, so a tight stop is used.The trade will generally have a tight stop loss and will be closed during the same session that the trade is opened.
2. Position size of $A600, (based on 20 x leverage for share CFDs). A medium-term time frame is envisaged, it allows for a trade with a wider stop level.
3. Position size of $A400, (based on 20 x leverage for share CFDs). A longer-time frame is envisaged and a lower $ value is chosen.
4. Position size of $A200, (based on 20 x leverage for share CFDs). A 'position trade' time frame is envisaged, with the longest perceived time frame. The $ value risk exposure enables the widest stop level.