How Do I Day Trade the ASX Top 20 Stocks Using CFDs?


The most successful business people of our time all discovered very early on in life the importance of being able to leverage their time and efforts. When it comes to your personal CFD trading portfolio that same rule applies and in particular we’ll be looking at how it applies to the larger stocks like the ASX top 20.

Is your CFD Trading Business scalable?

Imagine operating a business whereby your upside potential is limited. You poor you blood, sweat and tears into the business only to realize down the track that your business cannot scale up along with the popularity of your product. Your CFD trading business is no different.

Your mindset needs to be ‘How would I be trading if I had $1 million under my control?’ and its with this mindset that eventually shapes your trading methodologies. With a $1 million trading float there is no way you’ll be trading the small cap stocks in the bottom 500 as you’ll be making the market and dropping thousands of dollars in slippage every month.

Instead you need to think like a hedge fund manager with over $1 million under your control. Liquidity is now of prime importance and so you need to be developing strategies based on the top 20 ASX stocks. Stretching it out to the top 100 could be on the cards but by focusing your efforts on the top 20 you’ll never run into troubles with getting in and out of those positions.

Analysing the top 20 stocks to locate your trading opportunities

One of the key differences you’ll notice about the top 20 ASX shares is that they aren’t as volatile and have smaller daily ranges compared to the more active low cap stocks. It goes without saying that a $70 stock has to do a lot more to move 10% than does a 20 cent stock. As a result your trading methodology for the top 20 will be slightly different and should look to take advantage of the fantastic liquidity presenting itself. This may mean you trade larger positions sizes for smaller daily to weekly moves.

By starting out at the big end of town you’ll find you can concentrate on fewer stocks, get to know them much better and develop a better intuition when it comes to trading them. By spending time here you’ll also get the mindset of the right position sizing methods to best achieve your goals in trading online.

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