TWOWAY REFLECT
FAQ's
Q.I have previously tried a CFD account managed by a firm of stock brokers which lost me money. So do you think that your ‘TwoWay-Reflect’ scheme is any different being based on chart analysis rather than company research?
A. Yes, our system is very different to the fundamental analysis approach. There is not a lot of room in our technical analysis for subjective judgement. A share will go up in price if buyers outnumber sellers irrespective of what the ‘fundamentals’ may say – and that is what our system finds for us. It then measures the growth performance against the other shares in the same index so that we only select and go with the top performing shares that are in process of breaking out above (or, for ‘short-sells’, below) resistance.
Q. You mention that the 'TwoWay-Reflect' service uses market prices. This is great news! Is any spread applied to these prices as in normal spread betting?
A. No, the only spread is the normal market’s bid and offer price differential. IG Markets provides market quoted prices and will not make any additional charge beyond to their modest 0.0025% charge (with a minimum of $10 per trade).
Q. Why is the minimum account size as much as £20,000, could it not be a lesser amount, e.g. £2000?
A. The minimum account size of £20k is not through choice but because of the strict money-management rules that we suggest in an effort to keep the 'risk' element within reason.
We set a maximum risk, per trade at 1% of the capital base (e.g. £200 on the account size of £20,000) and so, with a smaller capital base of, for example, £2000 the maximum that could be risked would be £20 - and it would be impossible to make any trades with this as the maximum risk figure.
We would suggest that you take up our 'ShareHunter Alerts' service instead so that you could trade, using our alerts, and build your capital base that way.
Q. Will the Twoway-Reflect service trade rolling instruments and, if so, what will be the rolling costs?
A. Yes, every trade uses a ‘rolling’ CFD contract. The cost is a small daily interest charge for ‘buy’ contracts. For ‘sell’ contracts a small daily interest credit is paid in to your account.
Q. Will I have to pay capital gains tax on my profits?
A. Under current legislation there will be a liability to capital gains tax on any net gains in your 'TwoWay-Reflect' account.
Q. Will I receive information when a new trade is made?
A. Yes, you will receive an email advice from Twowaymarkets Ltd immediately any trade is opened or closed on your account so you are kept fully in the picture. And there is an account valuation every month or more frequently if you require.
Q. Taking £20,000 (the minimum) as 1 unit, how much is invested in each individual trade and how many trades are likely to be open at any one time?
A. Strict ‘money management’ and ‘risk control’ system are operated by which up to 1% of the capital base (i.e just £200 or less) is the maximum that will be risked in any one trade. The maximum number of trades at any one time is governed by the margin requirements for each trade. The maximum ever held at any one time so far has been about 30 trades.
Q. Can you confirm the expenses/charges for Twoway-Reflect.
A. There are no charges or fees beyond a Performance Fee of 25% of Profits (calculated quarterly) charged by Twowaymarkets Ltd and IG Markets charge of just 0.025% (min. £10 per trade) on the value of each share trade plus there is a small daily interest charge for ‘rollover’ (or a daily interest credit payment to your account for short trades rollover).
Q. Stamp Duty? Safe Custody Charges?
A. None! and None!
Q. What about Dividends?
A. Dividends are credited to your account on the day that the share goes ex-div! Where you are in a ‘short’ trade any dividend on that share will be debited to your account.
Q. Do you have an idea of the maximum amount that will be at risk or should we assume that the whole £20K will be at risk?
A. In theory, if we had 80 trades open, and they had all been opened at the same time, the nearly all of the £20K could be at risk. However, in practice, this would not happen as it takes time to build to even 30 open positions and, by then, the longer held ones ought to be in profit. Although it cannot be taken as anything other than an indication, it might be considered that an ‘average’ potential maximum loss amount (i.e. maximum possible ‘drawdown’) might be on, say, 10 – 15 positions; so, in the event of a sudden market reversal after new positions had just been opened, the maximum drawdown might be say, £2000 - £3000.
Q. Can I cancel at any time and take my money out?
A. Yes. There is no problem with immediate closure of your IG Markets account.
Q. Is interest paid by IG Markets on any unused balance of my account?
A. No, interest is not paid on the account balance.
Q. Are the stop-loss prices Guaranteed Stops?
A. No, the stops are not guaranteed so there is always a possibility of a variation. This is usually very slight but there can be the odd exceptional situation where there is a ‘gap’ opening way different from the stop price. Thankfully, this happens only very rarely.
Q. What if, at the end of a quarter, there is a loss to the core £20K; would I be obliged to refill the pot back up to the min. £20K level?
A. No. You would not be asked, or expected, to top-up back to the £20K level.
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