Thursday, May 31, 2007

Simulated SPI Trading

When I get worried about something I tend to do some research on the issue to reassure myself that it's not a real problem. So in this spirit I am doing some simualted trading of the Australian Stock Index Futures known as "the SPI". SPI stands for "share price index". It is based on the ASX/S&P 200 index (top 200 Aussie stocks). One point on the index is worth $A25. So the contract size (around $US130k) is almost double the size of an SPX E-Mini contract or more than 3 E-Mini NASDAQ (NQ) contracts. The required margin is roughly equal to that for two NQ contracts. The commission is $A5 a contract which means it's actually cheaper to trade.

I just want to see how this works before trying it for real. Executing the order is seamless using Interactive Brokers even though you are making a trade in a different currency in a different country. The account screen is more complex due to the introduction of a second currency. Seems that the current profit or loss is displayed in Australian Dollars but the margin contributed is displayed in US dollars. The current total account liquidation value is still displayed in USD. The exchange rate looks very favorable. So it's no harder than trading the US market in theory except where it comes to accounting for the profit and loss of closed trades.

1 comment:

Anonymous said...

Best wishes, trading the Australian SPI. It can be a volatile, bucking bull at times. But compared the HSI it should be easy.
Keep us posted. I'm keen to follow your progress.

Cheers, Muddy Farmer.