Trading Strategies

Your dedicated broker can help you understand and implement a variety of trading strategies. While all of our advice is general advice (by this we mean we don’t take into account your personal circumstances or objectives) we make strategic trading recommendations and empower you with information to make informed decisions.

Apply for an account today and you will receive free trading tips and insights from our leading market strategists.
 
Below you will find what we hope is useful information to assist you. Remember, with CWA Global Markets you can always Talk to an Advisor; Not a Platform so you should contact us for ideas and information.
 
Or you can visit our Frequently Asked Questions Section. If you are unsure what we mean by some of the terms we use check definitions in our Glossary.
 
CFD Trading Examples
 
CFDs work well as a short-term strategy that can protect your longer-term investments.
 
Here’s how: You’re holding 2,000 Foster’s Group Ltd shares and are concerned about the near-term outlook for beer prices and therefore brewery stocks. The current Foster’s share price is $5.50/51. This level represents a healthy profit for you. These shares are a ‘core’ holding for you and you’re mindful of other considerations, such as tax implications. For these reasons you don’t want to sell your FGL shares.

How can you protect your share holdings using CFDs?

By going short with Fosters CFDs, you can hedge against share price falls. You sell 2,000 Fosters CFDs at the bid price of $5.50. The ‘market information’ page on the platform reveals that the commission rate is 0.15%, and the margin factor is 10%.
 

If Fosters shares now fall to $5.00:
 

You should be aware that the reverse effect is also true – if Fosters shares go up any profit on the share holding will be offset by a corresponding loss on the CFD, and you will be required to provide extra margin cover. However, in the example above you have effectively insured against a $1,000 loss on your Fosters shares for the cost of $31.50 in commission.
 
FX Trading using CFDs
 
Information is readily available for FX, making it easier to make an informed trading decision. It is the largest global trading market, with high volatility and liquidity, that both increase your trading profit potential.
 
You believe the outlook for the Australian economy is positive, particularly in relation to the US economy. You consider either the Australian 200 share index or the AUD/USD currency pair, due to the lower costs and tighter spreads these CFDs display.24 hour trading and a buy signal on the AUD/USD chart persuade you to buy Australian dollars against US dollars.
 
How does the trade work?
 
The current CWA Global Markets quote for AUD/USD is 0.9047/50. You place an opening trade to buy 10 AUD/USD FX CFDs at the market offer price, in this case 0.9050. This means that for every 0.0001 change in the AUD/USD the profit or loss position will change by 10 US dollars. Checking the AUD/USD ‘market information’ page on the platform reveals that the margin requirement on the currency pair is 2% of the notional value.

              
Over the trading session, the AUD/USD moves in your favour – up to 0.9130/33. This is near the level where you’re expecting resistance, so you decide to close the trade by selling 10 CFDs at the bid price 0.9130.

You pay no commission and as the trade was opened and closed in the one day, there are no funding charges.
 
Managing risk
 
Managing risk is a fundamental part of any trading strategy. Potential losses can be limited by using the risk management tools available on our Trading Platform. We strongly recommend taking advantage of these, particularly in volatile markets.
 
Orders
 
Orders are flexible tools with which you can open or close trades. They are essentially instructions to trade that can be valuable in managing risk. CWA Global Markets offers a range of orders to help you get into, and out of, positions at the price you want.
 
Limit orders
 
A limit order is an instruction to buy or sell at a price better than the current available price. Place a limit order and if the market moves in the direction you expect, you can lock in profits.
 
Stop orders
 
A stop order is the opposite of a limit order: it is designed to limit losses on an open order by closing a losing trade at a worse price than the original purchase price. A stop order can also be used to open a trade at a lower price.
 
Stop In orders
 
Our clients can access a rarely offered limit order that allows you to place orders to buy above or sell below the market. The order is triggered when the stock moves through that pre-determined point - similar to a conditional order in share trading.
 
Stop loss orders
 
Stop loss orders reduce risk and limit potential loss on open positions. Placing a stop loss order before, after, or as you enter a position, at a price worse than your original opening price, automatically closes your position if the market moves through that price - therefore limiting your potential loss. Your position is closed at the best price available when the order is triggered, but if the market gaps, the best available price could be less than the price set in your stop loss order.
 
Guaranteed stop loss order (GSLO)
 
Like a stop loss, a GSLO automatically closes an open position if the market moves through your trigger price. However the guarantee means that even if the market gaps, your trade will close at the exact price you specified in your order. Some conditions do apply and there is a fee for this service. Please note that GSLOs are not available on all markets.
 
One cancels the other order (OCO)
 
Limit loss and protect profits with an OCO. An OCO is essentially two orders linked to each other. When one order is activated, the other is automatically cancelled. This prevents the unused order from opening a new position