Day trading is a term used to refer to a trader that opens and closes a position prior to the market closing. For ASX Equity CFDs this would mean opening a position after 10am (AEST) and closing it out prior to 4pm (AEST) on the same day.
By closing out a position prior to 4pm a trader is not obligated to meet ASX Equity CFD cashflows including both interest and dividends.
Day trading example
Harry is a ‘day trader’ who generally opens and closes positions
prior to 4pm. He believes that resource prices will rally today and
thinks ANZ will rally off the back of them.
Harry places an order to buy 1,000 ASX ANZ CFDs at 2600 = $26,000 value.
Harry pays the Initial Margin of $1.30 per contract = $1,300.
At 3.00pm ASX ANZ CFDs are trading at 2700.
Harry sells to close 1,000 ASX ANZ CFDs at 2700 = $27,000 value.
Harry makes a profit of $1,000 or 77% of the initial outlay.
Harry’s initial margin is returned.