This is the first of a continuing series on my thoughts on trading the STI with CFDs.

I have had some success looking at momentum strategies for trading the HK and SG indices, but I have always assumed zero transaction costs, which of course is not reflective of reality. After educating myself somewhat on CFDs, I wanted to take a look at whether there was still any leftover alpha to be had after transaction costs.

Studying the CFD

I am taking Phillip CFDs as a reference point – please let me know if there are cheaper CFDs out there I should be looking at. It behooves me to define a few standard terms to make discussion easier in the rest of this article:

• Contract Size = $5 * STI.
• Equity = The amount of money physically sitting with Phillip. Also known as ...