Hi Bik. Just saw your post. A bit dated but its worth commenting on.
Forming a view on a stock and figuring how to best execute on that view, are different things. You got the first part right, the second part wrong.
After a long period of trying to resolve the issue you raise and studying and working with different derivatives to understand their characteristics, the first answer is: don't use margin. In fact, I go further and set up leveraged positions so I don't need to use Stop Losses at all.
Say if I had a view on NCM long, I might have a target price in maybe three months time or whatever. The point is that I want to structure a derivative position that reflects being right or wrong in three months time, but not necessarily every day in between, which is what you are betting with your cfd play. Stock prices are too volatile to expect they will trend consistently towards your target without significant diversion along the way.
An In-The-Money Exchange-Traded Call option would have better reflected your NCM view and allowed you to see it through. An option effectively has a time stop, in that it expires after a fixed predetermined period, but can be used without a price stop. That's the trade off but is easier to judge. (A cfd is the reverse, it has to be used with a price stop, but is open as to time).
For example in July 2015 with BSL at $3.20, I took a 2 year $3 (I think) call option for $0.70 with a share price target of $11.30. Its nearly there now although I closed the position after one year for an 8 bagger. The point is the stock price could have gone wherever it wanted between my buy and sell points, I had no stop and no margin. Didnt care, didnt have to watch it daily. I was going to be either right or wrong at the end of my holding period, not everyday in between. That's the way to solve your issue.
If a long term hold with leverage is desired, so that open-ended time is important, then I will occassionally use Mini warrants, but deep in the money, as they have Auto-Stops but at least no margin. Needs to be maximum 60% LVR/40% equity and probably 50/50 to be safe.
Essentially, you were using the wrong tool for the job. Execution needs proper study, not just analysis of the stock.
NCM Price at posting:
$21.64 Sentiment: None Disclosure: Not Held
