Thursday 17 July 2008

Playing with my CityIndex CFD account

It's gotten a bit boring watching the value of my geared stock accounts drop further and further each day. And in the past couple of days my Forex trading with CMC Markets has also given back the gains I'd made so far in July, and the latest monthly valuation figures for my real estate show an overall decrease.

So with all the doom and gloom around I decided to take my mind off the woeful state of my investments by dabbling a bit more with my CityIndex CFD account. I didn't like my earlier trades of commodities (gold and oil) on this account, as the minimum contract size was too large compared to the modest value of this account ($250 I initially deposited plus another $250 "bonus" money credited by CityIndex for opening the account). Today I thought I'd use the account to buy into the Australian stock market at it's current level, so I hunted around for a proxy for the overall market. The actual ASX200 futures contracts might suit, but I thought I'd start out by simply buying the minimum 1 unit of Australian Foundation Investments Co (AFI) CFD. AFI and ARG (Argo Investments) are listed investment companies that act a bit like a managed fund and perform very similar to the overall market (see the charts below), but with much lower fees than managed funds. The CityIndex stock list included AFI but didn't show ARG, so I decided to buy the minimum quantity if AFI. The stock was trading at $4.64 and the CFD for this stock has a margin requirement of 15%, so buying 1 unit cost $0.69 of my available funds (approx. $411 at the moment). Having confirmed the low amount of money required to buy a unit of this stock, I was intending to top up my holding to 100 or 200 units of AFI if it dropped a few more cents. However, the stocks CFD listing suddenly disappeared off CityIndex screen, and can now only traded by phone! Although CityIndex touts it's web-based trading platform as being much more dynamic that the java app provided by other CFD providers (such as CMC Markets), I'm finding the ability for stocks to be added (and removed) at will by CityIndex to be more of a nuisance than a benefit.

Anyhow, I then bought one unit of Westfarmers just before the market closed for the day. I'm not sure whether I'll buy a few units of various Australian stock CFDs and create a virtual diversified 'portfolio' in my CityIndex account, or if I'll have a go at trading the ASX200 futures CFD. Anyhow, this account only involves a few hundred dollars of 'play' money, and will give me something to fiddle with while ignoring the large changes in the value of my long-term stock and real estate investments.

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