- trading very small moves in the index - entering and exiting very often
This rules you out of using warrants/options. Why?
Warrants & options (expecially options) have significant spreads between the bid and offer price. Trading small percentage moves using these instruments will be very problematic for this reason. The profit margin you'll expect to make on any overnight movement is likely to get significantly eaten up by the spread.
A better option would be to sign up with Dealforfree.com.
I'm quite sure that they'd have securities consisting of a basket of share that track the index almost spot on.
You're allowed to go both long and short very easily on Deal for free, and as the name suggests, there are no commissions (which is very significant advantage if you're planning to trade small moves in the index).
The spreads they offer are also said to be almost matching the market (that's just what i've been told).
If i were in you position i'd:
- Check the record of you system on 10 years of historical data. - Order an options/warrants booklet from the ASX, and an information booklet from the SFE. - Read a few books on the derivatives market, until i had a thorough grasp of how it functions. - Contact Dealforfree.com to see what they offer. - Paper trade for atleast a three month period, using market prices. - Only outlay a small percentage of my capital when initially to trading the index (less than 10% of total capital)
