Sometimes, you just want to play a hunch, or pick a bottom, or otherwise break your rules. Or, if you’re just getting started and don’t have much to lose, you want to trade small — smaller even than what the mini contracts offer. Either way, you find yourself wanting to trade, but don’t have the stomach for the amount of risk offered even by mini-futures, and you want something a bit less clunky than an exchange-traded fund (ETF). Then, you stumble across ABN Amro’s marketindex (www.abnamromarketindex.com/uk/Home.aspx for the English version) and come to believe you’ve found the best of all worlds.
The Marketindex platform is a multi-asset-class certificates platform that not only lets you trade crude oil, soybeans, precious metals, bonds, FX, and stock indexes, but also lets you define the contract size and the leverage. And if you want to trade small, you can do a $5 position at 30:1 leverage, for example. Put up $5 in margin, and you control $150 or $300 worth of crude, currencies, or beans. You don’t pay commissions, but instead accept a bid-offer spread that remains constant regardless of how big or small your trades are. Unlike most certificates programs, there isn’t even a financing fee. And the interface is as simple as it gets: a chart with a pop-up order entry form, both generated using Java, which means no proprietary programs to download. If you want to overlay classic indicators like Bollinger bands or stochastics, just click on the tools box. Want to draw trendlines or define price channels? Piece of cake. If you want to trade on the run, even from an Internet café, just log on and hope they don’t have a restrictive firewall, as can happen in rare instances.
If you want to execute a basic option strategy like a straddle or strangle, click on the “box option” link and draw a box around the price and time parameters you want to be inside or outside of, get the quotes, and make your decision. It’s the same system that powers the Oanda platform (see “Build Your Own Intraday Options,” November 2002), so you will get to see your position and risk in real time, marked to market every few seconds. You can change your orders as often as you like, and you can enter all sorts of order types (fill-or-kill, stops, market-if-touched, one-cancels-the-other, etc.). You won’t get margin calls, but you will get warnings if your net asset value falls close to 50% of the initial margin required to keep all positions. If you don’t heed those calls and your balance drops below 50% of the initial margin, all your positions will be liquidated. Just don’t try to open an account if you are a U.S. citizen, even if you’re living abroad. That’s because ABN Amro delivers the service by making a market in all the products offered, and then hedging the risk in futures. As such, it’s a classic boiler room under U.S. laws — although some would argue, not in reality.