市場新聞與洞察

What are CFDs? A contract for differences (CFD) is an agreement between a buyer and a seller that the buyer will pay the seller the difference between the current value of an asset and its value at the time of the contract. CFDs provide traders and investors with the opportunity to profit from price movements without owning the actual assets.

The value of a CFD is determined solely by the change in price between the trade entry and exit, without considering the underlying asset's value. This arrangement is established through a contract between a client and a broker, bypassing the need for involvement with stock, forex, commodity, or futures exchanges. Trading CFDs offers several significant advantages, contributing to the immense popularity of these instruments over the past decade.

Summary A contract for differences (CFD) is a contractual arrangement between an investor and a CFD broker, where they agree to exchange the difference in the value of a financial product between the opening and closing of the contract. In CFD trading, the investor does not possess the actual underlying asset; instead, they earn profits based on the asset's price fluctuations. CFDs offer several advantages, including cost-effective access to the underlying asset, easy execution, and the flexibility to take both long and short positions.

However, a disadvantage of CFDs is the immediate reduction of the investor's initial position, determined by the spread size upon entering the CFD market. Risks associated with CFDs include potential market illiquidity, and the necessity to maintain an adequate margin / margin calls. How do CFDs work?

When engaging in CFD trading, the process does not involve the actual purchase or sale of the underlying asset, whether it's a physical share, currency pair, or commodity. Instead, CFDs allow you to speculate on the price movements of various global markets. Depending on your prediction of whether prices will rise or fall, you can buy or sell a specific number of units of a particular product or instrument.

Our platform offers CFDs on a wide array of global markets. With CFD trading, your profit or loss is determined by the movement of the instrument's price. If the price moves in your favour, you gain multiples of the number of units you have bought or sold for every point it moves.

Conversely, if the price moves against your prediction, you incur a loss. This characteristic highlights the leverage associated with CFD trading, allowing you to control a larger position with a smaller upfront investment. What is margin and leverage?

CFDs, or Contracts for Difference, operate as leveraged products, requiring only a fraction of the total trade value as a deposit to open a position. This practice, known as 'trading on margin,' allows traders to increase potential gains. However, it's crucial to understand that losses are also magnified, calculated based on the entire position's value.

Costs of Trading CFDs Spread - In CFD trading, like any other market, traders are required to pay the spread, which represents the gap between the buy and sell prices. When initiating a buy trade, you use the quoted buy price, and when exiting the trade, you utilise the sell price. As a renowned CFD provider, we recognize that a narrower spread translates to needing less price movement in your favour to make a profit or incur a loss.

Therefore, our platform consistently offers competitive spreads, enabling you to maximise your potential profit and trade more efficiently. By minimising the spread, we aim to enhance your opportunities for securing a favourable outcome when you’re trading CFDs. The cost to enter a trade - As with Forex, with CFDs you have the opportunity (as well as being aware of the risks) of using leverage to enter positions.

Unlike Forex there is not a set margin, so as with index CFDs, each equity CFD has its own set margin level. Again, these may be found in the ‘specifications’ box. For example, ANZ has a margin applied of 0.05 or 0.5%, whereas with BHP the margin applied is 0.075 or 7.5% (See below).

In this example, if we take BHP at this margin rate and we open CFDs to the value of 10,000 the margin requirement on this position will be $750. Holding Costs - Similar to Forex trading, if you decide to engage in longer timeframes that involve holding a position overnight, your account may incur a debit or credit. The specific charge applied is contingent upon the direction of your trade, whether it's long (buy) or short (sell), and the associated 'swap rate' applied to the position's direction.

These rates vary and are essential to consider when holding positions overnight, as they influence the overall cost or benefit associated with your trading strategy. Understanding these swap rates is crucial for traders planning to keep positions open overnight or for extended periods. For more information on trading see our Education Hub resources, or try our free demo account.

Options trading is a complex and fascinating arena that offers traders a wide array of strategies and opportunities to profit from price movements in various financial assets. One fundamental concept that traders encounter frequently is the term "at the money," often abbreviated as "ATM." In this article, we will delve into the meaning of "at the money" in options trading, its significance, and how it influences trading decisions. Understanding "At the Money" In options trading, the phrase "at the money" refers to a specific situation where the price of the underlying asset is approximately equal to the strike price of the option.

In other words, when an option is considered "at the money," it means that the market price of the underlying asset and the strike price of the option are very close or nearly identical. To illustrate, let's say you hold a call option on Stock ABC with a strike price of $50. If the current market price of Stock ABC is hovering around $50, that call option would be described as "at the money." Similarly, if you have a put option with a $50 strike price and the market price of Stock ABC is also $50, that put option would be "at the money." Why "At the Money" Matters The designation of "at the money" is crucial because it has a significant impact on the pricing, behavior, and potential profitability of an option.

In fact, it serves as a dividing line between two other key options classifications: "in the money" (ITM) and "out of the money" (OTM). In the Money (ITM): An option is considered "in the money" when the market price of the underlying asset is favorable for the option holder's position. For call options, this means the market price is above the strike price.

For put options, it means the market price is below the strike price. Out of the Money (OTM): Conversely, an option is classified as "out of the money" when the market price of the underlying asset is not favorable for the option holder's position. In the case of call options, this means the market price is below the strike price, while for put options, it means the market price is above the strike price. "At the money" is the point where neither party (call option holder or put option holder) has a clear advantage.

It signifies a neutral position, where the cost of exercising the option is approximately equal to the current market value of the underlying asset. This neutrality is reflected in the option's premium or price, which tends to be lower than for options that are "in the money." Pricing of "At the Money" Options The pricing of options, including "at the money" options, is influenced by several factors, known as the option's "Greeks." The most important Greek that relates to the pricing of options at or near the money is the "Delta." Delta: Delta measures how much an option's price is expected to change in response to a $1 change in the underlying asset's price. For "at the money" options, the delta is typically around 0.50, meaning there is a 50% probability that the option will finish "in the money" by expiration.

For example, if you have an "at the money" call option with a delta of 0.50, and the underlying asset's price increases by $1, the option's price is expected to rise by approximately $0.50. Conversely, if the underlying asset's price decreases by $1, the option's price should decline by about $0.50. This delta value of 0.50 for "at the money" options highlights their near-neutral position in terms of potential profit or loss.

Traders often use delta as a way to gauge the likelihood of their option ending up "in the money" or "out of the money" and to manage their risk accordingly. Trading Strategies Involving "At the Money" Options Traders employ various strategies when dealing with "at the money" options, depending on their market outlook and risk tolerance. Here are a few common strategies: Long Straddle: This strategy involves buying both a call and a put option with the same strike price, typically "at the money." Traders use this strategy when they anticipate a significant price movement in either direction but are uncertain about the direction of the move.

The goal is to profit from the volatility that often accompanies such price swings. Covered Call Writing: In this strategy, investors who already own the underlying asset sell "at the money" call options. By doing so, they generate income from the premium received while also providing some downside protection if the stock price declines slightly.

If the stock rises significantly above the strike price, they may be required to sell the asset but will still profit from the premium received. Protective Put: Traders and investors can buy "at the money" put options as insurance against potential declines in the value of their holdings. If the underlying asset's price falls below the strike price, the put option can help offset the losses.

Risks and Considerations While "at the money" options can be a versatile part of an options trading strategy, it's essential to understand the risks involved. Options, in general, can expire worthless if not exercised, leading to a loss of the premium paid for the option. Additionally, the price movement required for "at the money" options to become profitable can be significant, as they are closer to the boundary between "in the money" and "out of the money." Traders should carefully assess the market conditions, implied volatility, and their risk tolerance when considering "at the money" options in their trading decisions.

In conclusion, "at the money" options play a crucial role in options trading, representing a neutral position where the market price of the underlying asset aligns closely with the option's strike price. Understanding the significance of "at the money" options, their pricing factors, and the various trading strategies that involve them can empower traders to make more informed decisions in the dynamic world of options trading. However, it's essential to remember that options trading carries inherent risks, and it's advisable to seek professional advice or conduct thorough research before engaging in options trading activities.

One Cancels the Other (OCO) is a trading strategy commonly used in financial markets, including options trading. It is a conditional order that allows traders to place two orders simultaneously, with one order serving as a hedge or protection against the other. The primary purpose of OCO orders is to manage risk and limit potential losses while still capitalizing on potential gains.

OCO orders are often used to set up two different types of orders, for example, a stop order and a limit order, for the same underlying security. Example: 1. Stop Order: This is an order to buy or sell an option when the market price reaches a specified trigger level, known as the "stop price." For example, if you hold a long call option and want to protect yourself from substantial losses if the market moves against you, you can place a stop order to sell that call option if the underlying stock's price falls below a certain level. 2.

Limit Order: This is an order to buy or sell an option at a specific price or better. In an OCO order, this order is typically placed at a more favorable price compared to the current market price. For example, if you hold a long call option and want to take profits when the market price reaches a certain level, you can place a limit order to sell that call option at that predetermined profit level.

The OCO order then links these two orders, stipulating that if one of them is executed, the other will be automatically canceled. Here's a breakdown of the scenarios: - If the market price reaches the stop price specified in the stop order, the stop order becomes a market order, and it is executed. At the same time, the limit order is canceled. - If the market price reaches the limit price specified in the limit order, the limit order is executed.

The stop order is then canceled. - If neither the stop nor the limit condition is met, both orders remain active until one of them is triggered or manually canceled by the trader. OCO orders can be useful for managing risk and protecting profits in options trading. They allow traders to set predefined exit points for their positions, reducing the need for constant monitoring of the markets.

Practical Considerations and Tips: While OCO and stop-limit orders offer numerous advantages to options traders, it's important to approach their use with a clear strategy and understanding of market conditions. Here are some practical considerations and tips for effectively implementing these orders: Define Your Objectives: Before placing OCO or stop-limit orders, have a clear understanding of your trading objectives. Are you looking to lock in profits, limit losses, or both?

Your objectives will determine how you configure these orders. Monitor Market Volatility: Be mindful of market volatility when setting stop and limit prices. Highly volatile markets may require wider price ranges to avoid premature order execution or missed opportunities.

Practice Risk Management: OCO and stop-limit orders are powerful risk management tools, but they are not foolproof. Always be prepared for unexpected market moves and consider using them in conjunction with other risk management strategies. Regularly Review and Adjust: Market conditions change, and so should your orders.

Regularly review and adjust your OCO and stop-limit orders to align with your evolving trading goals and market outlook. Stay Informed: Stay informed about market news and events that could impact your positions. Sudden developments may require immediate adjustments to your orders.

Trading terms glossary A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z - B Backwardation This is a state when the price of a futures contract is trading lower than the expected spot price. Learn more about backwardation Base rate The interest rate a central bank will charge for lending to other banks. Base currency In trading the term base currency is the first currency listed in a currency pair.

It can also mean the accounting currency used by banks and other businesses. Basis point A basis point is a unit of measurement, equal to one one-hundredth of a percent (0.01%). It is used to quantify the change between two percentages, also sometimes referred to as ‘bp’, which is pronounced ‘bip’ or ‘beep’.

Bear trader A bear trader wants to short sell financial instruments, believing that a market, asset or financial instrument is heading in a downward trajectory. Opposite to "bulls" or "bull traders." Bear market When the market is on a sustained downward trajectory, with the majority of investors selling. Bearish Being bearish means a trader believes that a market, asset or financial instrument is going to experience a downward trajectory.

Opposite of "bullish." Bear call spread A strategy in options trading, combining a short call option and a long call option with a higher strike. Basically, a short call with lower strike price + long call with a higher strike price. Beta A measure of the risk or volatility of a security or portfolio, when compared to the wider market.

Bid The price a trader is willing to pay for a certain asset. Bid-Ask Spread The difference between the best buy price (bid) and best sell price (offer) for an asset. Learn more about the Bid-Ask Spread Blue chip stocks Blue-chip stocks are the shares of companies that are reputable, financially stable and long-established.

A company that is considered blue chip is generally large, at the top of its sector, features on a recognised index, and has a well-known brand. Blue chip stocks may change over time and are therefore difficult to define. Bollinger bands Bollinger bands are a popular form of technical price indicator, based on an asset's simple moving average (SMA).

Often referred to as a 'lagging indicator,' as they are reactive not predictive. Learn more about using Bollinger Bands in FX Trading. Bond trading Bond trading is one way of making profit from fluctuations in the value of corporate or government bonds.

This definition can also mean the trading of bonds by a broker on the floor of an exchange. Learn more about Bond Trading Bonds Bonds investment securities, that involve lending money to an institution for a fixed period of time. They can come in two varieties: corporate bonds and government bonds.

Book value The monetary value of an asset reflected in an entity's accounting books/balance sheet, not based on future appreciation or depreciation. Bottom line A company’s bottom line refers to the profit, net income, net earnings or earnings per share (EPS) of a business. Brent crude Brent crude is one of the major oil benchmarks used by those trading oil contracts, futures and derivatives.

As oil from different fields varies in value, oil benchmarks are a way for traders to understand which types of oil they are trading. Brent crude is mostly drilled from the North Sea oilfields: Brent, Forties, Oseberg and Ekofisk (BFOE). Broker A broker is an independent person or a company that organises and executes financial transactions on behalf of another party.

They can do this across a number of different asset classes, including stocks, forex, real estate and insurance. A broker will normally charge a commission for the order to be executed. Bull trader Bull traders believe that a market, instrument, or sector is going on an upward trajectory.

Opposite to "bears" or "bear traders." Bull call spread A trading strategy that takes advantage of upward market movements, while limiting profit and loss. It is used by trader when they believe a stock will have a limited increase in price. Learn more about Bull Call Spreads Bull market A market when the majority of investors are buying.

Opposite of "bear market." Bullish Expecting that a market, asset or financial instrument is going to experience an upward trend and acting accordingly. Opposite of "bearish." Buy Taking ownership of a financial asset, whether it is a commodity, stock or another asset. Buyer/Taker Refers to the holder of an option, who has the right to purchase the underlying security.

Nvidia has been the star of the US markets since the AI hype kicked off late 2022. The trillion-dollar chip manufacturer’s shares have almost tripled in 2023 alone, with the price increasing every month so far this year. In May, Nvidia surprised the markets by posting earnings and revenue figures well above analysts’ expectations.

This sent price rocketing and adding almost $184B USD to the market cap during the following daily session. Nvidia is set to release their Q2 results on Wednesday, so the markets will be watching to see if they have been able to maintain the strong momentum over the past quarter. Markets are estimating earnings of $2.076B and revenue of $11.14B.

Technically, the price has been ranging sideways between $400-$480 since around June 2023. There is a strong support level around $400 that held multiple times in the past few months, so this will be a key level to hold if the earnings on Wednesday are below expectations. If earnings beat expectations, the price could head back north towards the resistance zone at about $470.

Traders will be watching this level to see if there is enough momentum to break through to all- time highs again. With the AI hype cooling off slightly over the past few months, it will be interesting to see how Nvidia performed over the past quarter and if the momentum was sustainable.

In 2022, it was believed that the Bank of Japan (BoJ) intervened three times, in September when the USDJPY was at 145.80, and in October and November when the USDJPY was at the 151.50 and 146.50 price levels respectively. For each of the 3 interventions, the USDJPY reversed strongly by more than 500pips. With the recent steady climb in the USDJPY in August, rising from 138 to the high of 146.50, there have been increasing comments from members of the BoJ and Japanese government regarding the need for an intervention.

The BoJ has avoided interventions, possible for the interim, by announcing increased flexibility on its yield-curve control (YCC). However, the markets viewed the action as insufficient and the stronger DXY continued to take the USDJPY higher. Continued upside on the USDJPY cannot be ruled out, especially if the DXY continues to strengthen significantly.

However, if the USDJPY continues to trade between the 145 and 146.50 price range, the possibility for an intervention from the BoJ increases. For an impactful intervention, the scale and timing of the decision would not be scheduled. A signal would be based on price volatility, in this case, if the USDJPY breaks through the bullish Ichimoku cloud and down from the 145-round number support level, which aligns with the 23.6% Fibonacci retracement level.

A reversal of 500 pips, similar to previous interventions, could see the USDJPY retest the trendline, along the 140 price level, with interim support at the 61.8% Fibonacci retracement and 141.60 price level.