Delta Index is regulated by the Financial Regulator Delta Index The Sweepstakes Centre Merrion Road, Ballsbridge Dublin 4, Ireland.
Lo-Call Phone Fax Email
1850 88 20 20 + 353 1 664 8500 + 353 1 664 8555 info@deltaindex.com
Contracts For Difference
The alternative to traditional share investment
Ireland’s Leading Online Trading Company “I would say one of their core values is efficiency. It’s so easy to use, and the responsiveness is great.” “I went to one of the tutorials… in fact I went to two of them. They were great… I thought it would be a sales job but they give you the information and then it is up to you to use it…” “Delta Index run a very tight operation…they are very professional, very organised, right from the presentation and workshop to talking on the phone.” “…they are very responsive - very quick at getting back to me.” “…anytime I have met them, or spoken to them on the phone they have been very professional.” “I used to trade stocks but with the internet functionality and flexibility Why would you not use CFDs?”
Contents Introduction to Contracts for Difference
2
The Benefits of CFDs
4
Is trading CFDs with Delta Index right for you?
5
How do Contracts for Difference work?
6
Getting Started - Open an Account and Make a Deposit
8
What to Trade
10
Managing Risk when Trading
11
Trading by Phone
12
Trading Online
13
FAQs
14
Contracts for Difference are a leveraged product and could result in losses that exceed your initial deposit. It may not be suitable for everyone, or for every financial trading opportunity, so please ensure that you fully understand the risks involved.
An Introduction to Contracts for Difference Dear Friends, It is indeed a pleasure to be able to welcome you to Delta Index. Delta Index was set up in 2001, to give investors the ability to trade the financial markets in a way that liberates them from high transaction costs associated with buying and selling financial products through traditional distributors. Since then we have become the destination for the online investors who want to invest in their own ability; who understand risk, but want to venture their knowledge, intelligence and mettle against the market to make a profit. We provide you with a superbly performing online trading platform, XDeal that delivers faultless transactions and information and competitive transaction costs across a wide range of financial instruments. Our dedicated Client Services team would be delighted to take you through how you can use these financial instruments as part of your investment portfolio, how to control your risk and how to develop a successful trading strategy.
Contracts for Difference are an easy, flexible and cost-efficient alternative to traditional share investment. You can make a profit by using your own judgment and knowledge to predict whether the price of a share is going to go up or down, and trading on this movement. Because you don’t actually buy the underlying asset (such as the share) there are a number of valuable benefits to trading in this way:
Low initial outlay and competitive transaction costs, typically as low
as
0.10% for equity CFDs.
You can profit in falling as well as rising markets.
Our portfolio is not limited to just shares - you can also trade a wide variety of commodities and indices.
Whatever your experience we have the tools and insight to take your trading to the next level. If you want to talk to us, just call and we’ll take care of you. Yours Sincerely,
Dermot O’ Donoghue : Chairman
02
Who’s who at Delta Index
A Personal Approach
Delta Index is Ireland’s experienced online financial company
Your experience with Delta Index is a one-to-one relationship focussed on improving your knowledge and maximising your trading capabilities.
It is privately owned and was founded in 2001 by Actuary Conor
Recognised for integrity, credibility and experience in the market, Delta Index
O’Neill and Technology Specialist, Michael O’Shea. The team is led by
provides exceptional on-going support and services.
Chairman, Dermot O’Donoghue, formerly Head of Treasury at AIB.
We have put together a team whose job is to help you trade well,
The team also includes: Dr. Sean Baker (formerly founder and director of Iona Technologies) and Chris Curran (formerly Bank of Ireland Private Banking).
by encouraging you to adopt and maintain winning strategies. You can meet us either at our offices or a place that suits you. We will work with you, whether you are starting to trade or are more experienced, to
ensure
that
you
understand
how
CFDs
work,
what
the
Delta Index is a wholly Irish owned and managed company which offers you the opportunity to trade on a wide range of financial instruments – such as indices, commodities, individual Irish, UK, German, US shares and many more.
risks are and what the relative advantages and disadvantages are versus
You have complete control and can trade the markets either online or over the phone, whichever suits you.
you will find information and tools that will help understand key concepts and
traditional trading. Our team of professionals are on hand to deal with your questions. We don’t offer investment advice but we do run one-to-one tutorials as well as trading seminars and conferences to build your competence and confidence. Please take the time to review our learning centre online – here acquire the skills that you need before you trade to help make you a more profitable financial investor.
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specialising in derivatives trading, especially Contracts for Difference.
03
The Benefits of Contracts For Difference Low Cost – Our transaction charges on equity CFDs are low - typically 0.10% per side.
We’re here to help – Our team are here from 7.00am to 9.15pm and whilst we do not offer advice on any given contract, we will help you make decisions about your overall strategy. Trading Strategies & Opinions – Every Friday we send our clients our analysts’ view of the week’s market news and views to keep you up to date. Charting – Making a trading decision often involves researching the historic movement of prices. We provide our clients with free real time charts on all contracts including the facilities to draw trend lines and to calculate moving averages.
Leverage – A deposit of just €10,000 in your Delta Index account means you can make trades with an equivalent value of approximately €70,000 of Irish shares or €500,000 of currencies. So if you want to make big trades you don’t need to tie up your valuable resources and can use your capital efficiently. Leverage magnifies the potential for both gains and losses.
Profit from falling as well as rising markets – You can make a profit when the share prices fall – you can choose to sell or “go short” if you think this is how the price will move. Automatic Orders – Our fully automated system allows you to leave precise instructions to close a trade at a target level at either a profit or a loss. This allows you to make the most of opportunities and to protect yourself on the downside. Orders are not automatically guaranteed.
04
Is CFD Trading with Delta Index right for you?
RIGHT FOR YOU IF :
WRONG FOR YOU IF :
•
You are a risk tolerant individual
•
You do not feel comfortable taking financial risks
•
You have capital available to you and you are prepared to put it at risk in order to make potential gains
•
Your financial security would be affected by any losses incurred
•
You have an interest in and an understanding of world markets
If you have any queries or are not sure if this type of investment is for you, call us on 1850 88 20 20 (or +353 1 6648500 if you are calling us from outside of Ireland) and arrange a one-to-one tutorial so you can make a well informed decision.
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CFDs may not be right for everyone. It’s important that you feel comfortable with the process and with the risks involved before choosing your first contract.
05
How do Contracts for Difference Work? You predict the direction - you make a profit You decide that a share price is going to move in a particular direction – you think it will go either up or down in price. You “buy” if you think the price will
MY VIEW IS “ABC LTD.” WILL RISE IN PRICE
go up and you “sell” if you think it will go down. You trade a certain number
SHARE PRICE
of CFDs, for example 1,000. If the share price moves in the direction that
16.00
GAIN
you predict then you make a profit. If, on the other hand you are wrong about the price movement, you make a loss. Take a look at the example on the opposite page, which shows clearly how Contracts for Difference work.
15.00
In both situations the price has to move by more than the transaction costs before you start making a profit. You must also keep the cost of overnight financial charges in mind.
14.50
LOSS
TIME
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A Basic Trade
quote for “ABC Ltd.” Sell - Buy
You think the share price will fall, so you go short and sell 1000 CFDs
15.30 - 15.40
You think share price will rise, so you buy 1000 CFDs at 15.40
BUY
Share price for ABC Ltd falls
Share price for ABC Ltd rises
Share price for ABC Ltd falls
Share price for ABC Ltd rises
New quote 14.30 - 14.40
New quote 15.70 - 15.80
New quote 14.70 - 14.80
New quote 16.40 - 16.50
Close position Buy 1000 CFDs at 14.40
Close position Buy 1000 CFDs at 15.80
Close position Sell 1000 CFDs at 14.70
Close position Sell 1000 CFDs at 16.40
YOU WIN
YOU LOSE
YOU LOSE
Loss: 0.5 x 1000 CFDs
Loss: 0.7 x 1000 CFDs
YOU WIN
0.9 x 1000 CFDs
0.7 x 1000 CFDs
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SELL
07
Getting Started Open an Account & Make a Deposit
Generally, the margin rates* required for different markets are as follows:
Before you can trade you need to make a deposit to your account. This is to cover any losses if your trades go against you. The amount required in your account depends on the size of your position and what markets you want to trade. Each market requires
OPEN AN ACCOUNT
a specific amount to be deposited, which we call the Initial Margin
10% to 25%
Indices
5%
Commodities
5%
Currencies
1-2%
Decided that you’d like to get started? It couldn’t be easier.
Required (IMR). You’ll need to maintain at least this amount in your account to keep the position open.
Equities
You can open an account by calling us or going online and we will set up your
DELTA TRADING SIMULATOR
account and get you trading.
To calculate how much of a deposit you need you simply multiply your
CLIENT LOGIN
number of CFDs traded times the price times the % margin required. You’ll find the IMR for any contract by clicking the
i button on the
BY PHONE
markets screen.
@
So, for example: •
The price is € 20 . 00
•
The IMR is 15%
•
You want to buy 1000 CFDs
•
@
CLIENT LOGIN
User Name Password You will need €3,000 in your account to make that trade
The margin required depends on the liquidity and volatility of a contract – the more liquid a contract, the lower the margin, the more
GO
ONLINE
Call us on 1850 88 20 20. We will go through everything with you and send you out an Account Application form by fax or post.
Log on to www.deltaindex.com and fill out an online application form, making sure all fields are completed.
Fill out your form and return it to us, making sure you have signed it.
Download a copy from our website, fill it in and return it to us.
1850 88 20 20
www.deltaindex.com
OR
volatile the contract, the higher the margin. Please note that the margin required for equity contracts is based on a percentage margin. *subject to change, please check the Product Guides online for the most up to date figures.
08
Depositing Funds
Bank transfer
Monies can be lodged to your account by cheque, banker’s draft or electronic funds transfer. We also accept payments by credit / debit card.
Monies can be sent directly to the Delta Index ‘Client Asset Account’ by bank transfer. Please quote your Delta Index account number in the Credit Narrative. Also please note that funds received after 5pm will not be processed until the following working day.
Credit Card/Debit Card
The details of the Client Accounts are:
Cheques Please make cheques payable to “Delta Index Client Asset Accounts”. The amount will be allocated to your account once the cheque has cleared. For existing customers, please quote your Delta Index account number on the back of the cheque. Cheques should be sent to Accounts, Delta Index Ltd., The Sweepstakes Centre, Merrion Road, Ballsbridge, Dublin 4.
Withdrawing Funds With Delta Index it’s very easy to access your funds: just call or email us and we’ll send funds back to your nominated account by credit transfer.
Delta Index Client Account 02545093 93-10-63 Allied Irish Bank 52 Upper Baggot Street, Dublin 4
OR Account Name: Account Number: Sort Code: Bank: Bank Address:
Delta Index Client Account 19969815 90-14-90 Bank of Ireland Head Office, Lwr Baggot Street, Dublin 2.
OR Account Name: Account Number: Sort Code: Bank: Bank Address:
Delta Index Client Account 10169461 98-50-13 Ulster Bank 166a Shelbourne Road, Ballsbridge, Dublin 4.
Note: The main Irish banks provide the ability to transfer funds via Internet Banking
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We accept credit and debit card transactions over the phone and in real time via the banking tab on the trading platform. Please note that while Laser card transactions are free, there is a 2.5% charge on all credit and debit card transactions which is waived for the opening of an account but which applies to all following transactions.
Account Name: Account Number: Sort Code: Bank: Bank Address:
09
What to Trade Now you need to think about what you want to trade. In making your decision
Apart from how you trade, remember that what you trade has a big impact on
you should consider what your strengths are. For example if you work in a
your risk profile:
particular industry you will have a better understanding of how the market is going to fare in this area, and should use this knowledge to your advantage. Keep an eye on the news for that market and learn as much as possible.
don’t choose a high risk instrument with a big position value
if you’re not a big risk taker.
Because it’s impossible to know each of the hundreds of markets, the best idea is to focus your attention on a small number of contracts. We deal in a range of indices (such as the Dow Jones and FTSE), hundreds
Similarly, choose products with leverage that matches your
risk appetite (for example leverage on Irish shares is usually
6-8 times and leverage on currencies can be over 50 times).
of equity contracts and international markets and commodities such as oil, wheat and gold.
Make sure to choose contracts that you feel comfortable with –
We automatically put in a Stop Loss at 50% of the margin
needed to make the trade. You can change this level at any
time, please refer to the XDeal User Guide online for
more information.
10
Managing Risk when Trading What you trade has a big impact on your risk profile
Now that you have considered the downside you should think through the upside. We recommend that if you are risking â‚Ź1 per CFD traded you should have a target gain of at least â‚Ź1 per contract. This is the Limit Distance, the target price at which you will be prepared
Step 1. Capital at risk
to close the trade and take your profit.
Your first priority when trading is to protect your capital. When you make a trade you should first consider the down side - what proportion of your capital you will put at risk if the trade
You can close a trade at any time when the market is open, and you can change orders even outside market hours.
goes against you. Amount of Capital
Proportion at Risk
e10,000
10%
= e1,000
Step 2. Amount at risk to stop loss/ pre planned exit Next you should decide where your Stop Loss Order goes. We call this the Stop Loss Distance and it represents how much money you are prepared to lose before closing your position.
To calculate the number of CFDs you trade divide the amount you are willing to risk by the Stop loss distance. Amount at risk
= e1,000
Stop Loss Distance
= e1
Quantity
= 1000 CFDs
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Step 3. What size should i trade?
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Trading by Phone Dealing lines are open from 7.00am – 9.15pm Monday to Friday. Call Delta Index on 1850 88 20 30
AN+353 ACCOUNT OR our International phoneOPEN number 1 6648500 and :
Provide your name and account number and
CLIENT LOGIN answer a security question.
Please check the
i button on the platform to see the mimimum
stake size.
@
@
Our dealer will give you a live market quote.
Tell the dealer if you want to buy or sell (if the price is moving
rapidly the dealer will let you know). CLIENT LOGIN
DELTA TRADING SIMULATOR
User Name The dealer will make the trade for you and your account Password GO will be updated immediately on the system.
1850 88 20 30
12
Trading Online You can trade online at www.deltaindex.com. When you open an account online you’ll be given a username and password to ensure that all your account details are confidential. You can log on at any time to check your account details and your open positions. 1
and password. 2
Choose a market group from the Market Group Selector.
3
Take a look at the prices for the market that you’re
www.deltaindex.com
interested in. 4
If you want to trade then enter the number of contracts you wish to trade in the quality box for the market. Now click the trade button.
5
If you want to go ahead and trade then click “buy” or “sell”. If you don’t then just click cancel.
6
The Trade Confirmation Window confirms details of the trade.
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Go to www.deltaindex.com and log on with your username
Delta Index adds new contracts all the time. If there is one that you are particularly interested in, simply give us a call and we will research it for you to see if it’s a viable contract.
13
Frequently Asked Questions About Delta Index What are the trading hours?
OPEN AN ACCOUNT
If I wish to trade a contract not currently on your system, can I put in a request?
DELTA TRADING SIMULATOR
Let us know either by phone or email what you are interested in trading in.
Delta Index is open for trading 7.00am – 9.15pm, Monday to Friday. How can I find out more? Web access is 24/7/365 to manage orders. For individual markets check the
CLIENT LOGINWe will send your request to the trading desk where it will be researched. If it is liquid enough and we have a live feed from the market we will put it on our
i
system as soon as possible.
button to see when you can trade. You can also find our XDeal User Guide online. This is a detailed guide on how to get the best from our proprietary trading platform XDeal. How does Delta Index make money form my CFD Trade?
Can I increase the margin beyond what is required and move the Stop
@
@
Loss Order down/up further? Yes, this is possible. There is no limit, however, there is a small exclusion zone
CLIENT LOGIN close to the price so that your order doesn’t get hit straight away.
We charge a transaction costs for each trade. These may be expressed as a spread, User Name a commission or both. Password
Can I lose more than my deposit?
What is the difference between Financial Spread Betting and CFDs?
could lose more than your deposit. We automatically put in a Stop Loss at
The main difference is that if you use FSB rather than CFDs, you will not pay any
50% of the required margin.
Capital Gains Tax on profits in the Republic of Ireland or the United Kingdom.
Does Delta Index offer trading advice?
Rolling bets are almost identical to CFDs in that you are charged overnight interest on your trade if you are long and receive interest if you are short.
GO
Yes, if a contract moves against you further than the value of the deposit, you
No, we don’t offer advice in what to trade, but we’re happy to talk through any questions or thoughts you might have. We can also make you aware of any market developments that may shape your thinking further.
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15
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Frequently Asked Questions Money Matters
You are buying a house for
€1,000,000
What protection is available to me?
You deposit
€100,000
You borrow
€900,000
Delta Index is a member of the Investor Compensation Company Limited under the Investor Compensation Act, 1998 (the “ICA”). The ICA provides for compensation (to the extent of 90% of an investor’s net loss as defined by the ICA or €20,000, whichever is the lesser) for “Retail Clients” of investment firms that are unable to return client monies and/or investment instruments belonging to Clients. For the purposes of the ICA “Professional Clients” as defined under the MiFID Regulations are excluded from the Investor Compensation Scheme. What are the effects of leverage? Leverage magnifies the potential for both losses and gains. In CFD trading you are not required to have the full value of a trade in your account in order to make that trade. This would be similar to when you buy a house using a mortgage. Consider this example:
Prices rise 10% and you sell Gain is
€100,000 or 100% of your deposit
Prices fall 10% and you sell Loss is
(€100,000) or 100% of your deposit
CFD trading carries the same leverage related risks and returns. You trade CFDs worth
€100,000
Margin required 20%
€20,000
Prices rise 10% and you sell Gain is
€10,000 or 50% of margin deposited
Prices fall 10% and you sell Loss is
(€10,000) or 50% of margin deposited
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Pricing
My Account
How is the price determined?
Do I receive Trade Confirmations? Yes, you get these electronically when you trade and can print them out.
Why aren’t Delta Index prices the same as those in the newspapers? Our prices for indices and commodities may differ from the corresponding cash price that you can see in the newspapers or television. This is because the futures price is a combination of the cash price, the dividend expected and the cost of financing the position up to the expiry date. What is gapping? A gap is a break between prices that occurs when the price of a contract makes a sharp move up or down with no trading occurring in between. Gaps can be created by a number of factors including regular buying or selling pressure, earnings announcements, a change in an analyst’s outlook or any other type of news release. Gapping can occur both on the up and downside. If a market gaps through an order, the order will be filled on a best efforts basis at first available price (not order level). It is your responsibility to ensure that you are aware of the risks involved in nonguaranteed stops and the potential liability that you may incur should the markets gap or encounter a Force Majeur. You may chose to guarantee your stops for a small premium.
How can I withdraw my funds? By bank transfer only – we wire your money directly into the account you give us on your application form. Is there a charge if I decide not to trade and withdraw my funds? No. How close can I put my Stop Loss? This depends on the contract you are trading but roughly 20 points away from your open position. Be careful not to put your Stop Loss too close as the noise of the markets could trigger your stop and close you out. Can I move a Stop Loss if the market is closed? You can change a Stop Loss or a limit order on the phone from 7.00am to 9.15pm Monday to Friday or on line 24/7. What is the minimum opening deposit? You can open an account with as little as €1,000. Are there terms and conditions? Yes, they are available at www.deltaindex.com
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The competitive transaction costs charged by Delta Index vary from contract to contract. We offer fixed spreads on indicies and commodities and wrapped pricing on shares. Detailed and up-to-date information is available in our product guides online.
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