CFD trading - anyone playing?

Ark_Welder

swift1 wrote: »

Naturally, but normally there would be some forewarning that the divi will be cut and one could close the position if it was no longer viable.

Also in the height of the credit crisis in 2008/9, aviva hit a low of 160p in mar 2009! yet the divi was not too adversely affected, back then the divi was a staggering 33p and on 160p gives a yield of 20%!

My concern is we are supposed to be in a much much worse position than 2008 and yet shares in general/FTSE100 have not gone down to the 2008 levels!

No point in looking back and saying 'if only...'. It is how you move forward from where you are, not how you look back at where you weren't.

The effect of Lehman Bros. was largely out of the blue. The eurozone isn't. Sovereign debt is in a much worse position, but on the whole, corporate debt (or at least, net cash holdings) is much better than in 2008/9.

Aviva has large exposure to the eurozone, by the way. Both in terms of its business and its exposure to bank debt: google Aviva’s capital buffer falls by a third from the FT. Works out at around one third of current market capitalisation.


If I was interested in using your strategy then I would probably look for a company with a much lower beta than the market too. Aviva is currently 1.41 (FT).

sabretoothtigger

Insurance sector is generally cheap I believe. I'd rate Standard life as generally better risk vs reward, nice div and being raised every year I think with overseas business outside of the EU
Or maybe PRU who operate well in asia apparently

http://www.youtube.com/watch?v=2-AZeqV2Y8k&feature=mfu_in_order&list=UL

morganedge

Been trading on and off (small stakes) for about 4 years now.
Currently just trading very small stakes before and after work.
Hard game.
about £10 profit today

http://imageshack.us/f/221/fggmsil.jpg


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swift1_2

Ark_Welder wrote: »

Aviva has large exposure to the eurozone, by the way. Both in terms of its business and its exposure to bank debt: google Aviva’s capital buffer falls by a third from the FT. Works out at around one third of current market capitalisation.


If I was interested in using your strategy then I would probably look for a company with a much lower beta than the market too. Aviva is currently 1.41 (FT).

In the article, if I remember rightly, in the previous quarter to it falling by 1/3 it had risen from 3.3bln to 4bln before falling to 2.7bln - so its not far off from where it was. Also its significantly higher than it was in previous years around 2.5bln and the markets were quite happy with that. Also it exposure to euro is around 1.3bln so quite managable.

The beta on aviva allows for considerable capital appreciation if buying at the lows. If I were to carry out this strategy I would probably spread the leveraged funds over several high yielding stocks above 7% say. In terms of low beta, RSA is a solid stock, I've been following this stock over many years and its less volatile than VOD, even during the 2008 credit crisis RSA moved only within certain price range typically 1.15-135 abosolutely solid.

I would probably need the kahunas of a gorilla to leverage up and carry this out.

I typically use cfds for short term and don't use leverage, just use it the same way as I would if I were buying the shares.

It seems very similar to what buy to let investment, borrow money at low interest invest in property yielding a some percentage points higher and sit back and watch the cash roll in!

Ark_Welder

I'm assuming that by 'leverage' you mean 'take out a loan' rather than meaning the costs of keeping positions open overnight? If my assumption is wrong then just skip to the last paragraph and miss out the rest!

Remember that CFDs are already a leveraged product: that is how they are able to give the same return as the asset to which they apply but for only 10% of the outlay. Borrowing, i.e. leveraging up, to do this would mean substantial grearing to the performance of that underlying asset, and it is that kind of gearing that has put paid to a number of hedge funds over the years.

CFDs and spread betting are things that I do not do. But if I did then the only way that I would even consider applying further leverage to the position would be to have less than 100% cover.


Also remember that a low can only be properly identified with hindsight!

swift1_2

Ark, appreciate the response, I mean leveraging up using cfds, as you know you can leverage upto 10x the capital - I never do this, I simply use cfds as I would to buy the same number of shares the traditional way, advantage being to bypass stamp duty as I typically only hold for a few days to a few weeks at most.

sabretoothtigger

Naturally, but normally there would be some forewarning that the divi will be cut and one could close the position if it was no longer viable.

Also in the height of the credit crisis in 2008/9, aviva hit a low of 160p in mar 2009! yet the divi was not too adversely affected, back then the divi was a staggering 33p and on 160p gives a yield of 20%!

Aviva and other big div stocks are mentioned here

http://www.stockopedia.co.uk/content/dividend-dogs-of-the-ftse-100-six-stocks-for-dividend-hunters-62503/?utm_source=sendgrid.com&utm_medium=email&utm_campaign=Site%20Features

If the div is cut you wont be able to sell in time really, it will reduce by the cut amount immediately

My concern is we are supposed to be in a much much worse position than 2008 and yet shares in general/FTSE100 have not gone down to the 2008 levels!

yet the companies may be better prepared and also each pound is worth less then 2008. Companies are supposed to advance in worth, that contrast should show in the price

maclgee

i lost on several trades with galvan; i took a risk and it didn't work out for me so i decided to go it alone and stick to long term investing which is working out far better!

the question that goes through my head now regarding these advisories is if there is so much money to be made, why do they need our commission, why don't they do it with their own money which if they were that good, surely they'd be making lots of it!
truth of the matter is that they know just like i do now that there is no such thing as easy money. if it's too good to be true it probably is.

another thing about this very annoying galvan is that they pass on your details to EVERYONE, absolutely EVERYONE, and all of a sudden you start getting post and phone calls from charities and other 3rd party companies who want to sell you something.
i also get many random txt messages

choose GALVAN ADVISORY if you want but be aware of what you are signing up for...

JohnRo

swift1 wrote: »

My concern is we are supposed to be in a much much worse position than 2008 and yet shares in general/FTSE100 have not gone down to the 2008 levels!

Don't forget that since then most retail banks have managed, through central banking trickery, to transfer their technical insolvency to national governments and tax payers.

Davidee

Decadent_Fool wrote: »

I'm testing the waters at the moment, and I like it - yes, I know the risks, and thank god for stops

Just wondered if anyone else is playing the game, and what their experiences have been?

Most people who play that game loses to be honest.

Further more, many brokers are Market Makes who take the other side of their clients trades and actively bet against their customers and want to see their customers lose.

The two most important things to look for in a CFD provider is where they are based, who regulates, them and the way they execute their client's trades...


Good luck