Leveraged Trading: A professional approach to trading FX, stocks on margin, CFDs, spread bets and futures for all traders by Robert Carver

Author:Robert Carver [Carver, Robert]
Language: eng
Format: epub
Published: 0101-01-01T00:00:00+00:00

AUDUSD sp ot FX £1,100

S&P 500 margin trading of the SP Y ETF $7,100

These values are double those in table 13, as per my recommendation from chapter five to use twice the minimum capital, and have also been rounded up. Here capital is only specified in GBP or USD, however traders in other countries can also use the Starter System, as long as the relevant product s are legal.

Get relevant instrument parameters

To translate the exposure you need for a given instrument into contracts or a bet per point, you will need the appropriate position sizing parameters for the instrument you ’re trading: Table 14 shows the relevant parameters for each of the example products, as currently provided by my brokers.

Table 14: Trading parameters for example products

• The minimum is actually one share, but the costs are prohibitive unless at least ten shares are traded.

Tasks on day one

In this section, I describe the tasks that need completing on your first day of trading, using the four example instruments.

All the example calculations here were done on 19 June 2018, when I began writing t his chapter.

Get a price series and last price

20 20

You need a history of daily closing prices 77 76 for your chosen instrument for the opening and closing rules. This history should include the previous day’s closing price, which you will use to calculate your position size and stop loss level. Fortunately, 20 20

there are many websites with free daily closing prices, 77 77 and you can also get prices from your broker. Most websites allow you to download historic prices into a .csv file, which you can then transfer into a spreadsheet for further c alculations.

To calculate instrument risk, you will require at least 20

trading days of daily prices, excluding weekends and market holidays. For the opening trading rule, you need at least 64 days of d aily prices.

Once you have a spreadsheet of historic prices, you can add each days new closing price as an additional row. If you miss a few days then you just need to return to your source of historic prices and grab the mis sing prices.

The wacky world of back-adj usted prices Most of the examples in this chapter are for dated products , where we trade an instrument with a specific expiry date. This is because dated products are almost always cheaper to trade than their unda ted cousins.

However, this gives us a problem, which is best illustrated with an example. Suppose we’re using a dated instrument to trade gold, where there is normally a new dated instrument every two months.

Imagine that it’s May 2020, the current dated bet expires in mid-June 2020, and we’ve been trading the current incarnation of gold for a month.

Instead of the 64 days of closing prices that are required to calculate our opening trading rule, we only have a month (about 20 days). To solve this problem, we need to stitch together the prices of previous dated gold expiries to create one long series of prices.

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