Day trading is a term used to refer to a trader that opens and closes a position prior to the market closing. For ASX Index CFDs this would mean opening a position after the index has opened for trading and closing it out prior to 4pm (AEST) on the same day for the domestic S&P/ASX 200 index and the following day for all international indices.
By closing out a position prior to 4pm a trader is not obligated to meet ASX Index CFD cashflows including both interest and dividends.
Day trading example
Tom - a 'day trader' who generally opens
and closes positions prior to 4pm - believes that the ASX S&P/ASX
200 Index will be strong today.
Tom places an order to buy 10 ASX S&P/ASX 200 CFDs at 6700 = $67,000 value.
Tom pays the Initial Margin of $100 per contract = $1,000.
At 3.00pm ASX S&P/ASX 200 CFDs are trading at 6800.
Tom sells to close 10 ASX S&P/ASX 200 CFDs at 6800 = $68,000 value.
Tom makes a profit of $1,000 or 100% of the initial outlay.
Tom’s initial margin is returned