Hi
I thought the same as you untill you scratch beneath the surface .
The ftse for example is a comprised of what you said however when you think that all the different sectors are given a different weighting to the affect they have on the ftse. they are driving the ftse . If you treat the ftse no different to any stock you may
trade and apply same rules . I trade from a T.A and swing trading as recently become my "suitable " style , (for the moment
) dont forget the rule of fractals runs completely and utterly through all stocks and indices . I think a lot of people trade the ftse or an indice because of amount of points that can be made for a move of say,,,1% on the ftse at the moment could be aprox 43 points . you wont get that many points on many ,no any stocks you may trade in the ftse on a 1% move ? and some traders philosophy is why try and learn the flow of hundreds of stocks when you can (hopefully) become an understander on 1 and one that can be very rewarding for small moves not forgetting the big move days of course . A move of say,,,3% of the ftse could bring in 130 points hope this helps
Danpayne
Index trading is lower risk in some respects -
* no company announcements to cause unexpected price moves
* price does not drop on dividend payments
* no risk of company being nationalised or declared insolvent, wiping out shares
* no risk of government / regulatory changes depleting market
* no risk of competitor introducing better business model or more efficient product and undermining market
Of course, some of the above events could also be good for an individual company share price, but insurance always has a price.
Dividends - I think index ETFs like iShares even pay dividends, derived from the dividends for the underlying component shares.
TA - just as valid for indices as for shares, but watch out for some indices closely tracking others - e.g. FTSE100 often mimics Dow and S&P.
* no company announcements to cause unexpected price moves
* price does not drop on dividend payments
* no risk of company being nationalised or declared insolvent, wiping out shares
* no risk of government / regulatory changes depleting market
* no risk of competitor introducing better business model or more efficient product and undermining market
Of course, some of the above events could also be good for an individual company share price, but insurance always has a price.
Dividends - I think index ETFs like iShares even pay dividends, derived from the dividends for the underlying component shares.
TA - just as valid for indices as for shares, but watch out for some indices closely tracking others - e.g. FTSE100 often mimics Dow and S&P.
pedro01
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First off - you don't trade indices, you trade futures or ETFs on the index.
I like the US Futures because
- the majority of the time, you know when news will be announced that will move the market & you can choose to be in or stand aside when it happens. The same can't be said about an individual stock
- you are trading the market and it's more macro-economics you need to be aware of, not whether a specific CFO is cooking the books
- there is more leverage than stocks
- fact that it is based on a group of stocks makes it less prone to big intra-day spikes
- The day trading account limits do not apply to futures accounts
- Extremely liquid, 1000s of contracts going through per minute
It's just whatever you feel comfortable with but I guess the lower entry limit has to be one of the main reasons beginners are attracted to it. Many don't have the $25K for a pattern day trading account.
I like the US Futures because
- the majority of the time, you know when news will be announced that will move the market & you can choose to be in or stand aside when it happens. The same can't be said about an individual stock
- you are trading the market and it's more macro-economics you need to be aware of, not whether a specific CFO is cooking the books
- there is more leverage than stocks
- fact that it is based on a group of stocks makes it less prone to big intra-day spikes
- The day trading account limits do not apply to futures accounts
- Extremely liquid, 1000s of contracts going through per minute
It's just whatever you feel comfortable with but I guess the lower entry limit has to be one of the main reasons beginners are attracted to it. Many don't have the $25K for a pattern day trading account.
But if you are looking to trade S&R or perhaps in conjunction with candle patterns, how can an index be a true reflection of a resistance point, for example, if it's made up of many different companies?
When you say fractals, you mean Bill WIlliams' fractals method?
When you say fractals, you mean Bill WIlliams' fractals method?
As someone who exclusively trades FTSE100, I agree that I find it difficult to spot S&R that other traders call out. I think there is possibly some averaging effect happening. An index is not normally affected by the S&R of a single company, but each company has it's own S&R, when macro-economic news moves the index, each company will move to it's own S&R relative to the news (some contrarian as well) and thus create an S&R in the index.
Mostly, trading indices is about the liquidity and being able to get in and out of the market quickly... i.e. it's scalping territory. I would think (I haven't tried) scalping an individual share would be very difficult, possibly even suicidal.
I was just looking through the charts and there are some obvious S&R points combined with candle patterns at those points. It just seemed strange to me that an index would be behaving this way - sometimes to an exact line.
I've been trading forex mainly but am guessing some of the similar rules apply say aiming for what a 20 point move, closing half and letting it run? Current daily ATR looks to be about 100
Not neccesarily his method but when you consider that everything in nature is compiled from fractuals. plants,humans etc that brings it into play in the markets because the trader is the injection of nature into the system I dont use his methods per se but I am always aware of the nature of fractuals in the market , I believe it goes part of the way to explain hunan behaviour in the narkets .I guess thats why we keep seeing history repeat itself in so many charts to one degree or another
Just my opinion
new_trader
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As pedro001 quite rightly said, a Futures contract is an 'independent' instrument. You can only trade the cash index through S/B and it will more than likely follow the futures index. You shouldn't be confused about the fact that an index is comprised of individual component companies. Treat it as if it is not. I exclusively trade the ES contract and it 'acts' like any other share in that it is subject to the same forces, characteristics etc. Anyone who says you can only scalp an index hasn't got a clue about what is what. They should be ignored.
Hmmm... I did say "I haven't tried".... Have you?
Someone who makes a "naked" statement like this with no facts to back it up needs to prove that they have the experience and longevity before they can be trusted.
From other statements I've seen you make on this Web site, I don't believe you have any trading experience whatsoever, and I would advise people not to take any notice of what you have to say until you can prove yourself.
Perhaps you'd like to make a few live calls on a single share tomorrow?
pedro01
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Are you objecting to the statement made ?
The statement was purely that anyone that says an index cant be traded in longer timeframes than a scalp is incorrect. I would agree with that entirely.
I'd say that it is the onus of the person saying that indices can only be scalped to provide some backup.
For instance, if you believe that institutions play trade the indices as a hedge, then you have to believe that taking the opposite side of that position is possible.
Also - what about multi-day/week/month trading ? Are we saying that it is impossible to trade a view on macro-economics with these indices ? They ARE the market - if you can judge where the market will go, then you can trade these instruments and not just in lower timeframes.
Try overlaying the YM or ES on 50 US stock charts. See the similarity ? See how most stocks move in step with the market ?
Grey1 would be turning in his grave....
no it as plenty to do with it , its the mathmaticals of it that lends itself to trading , I meant I dont trade to his style
Hmmmm... OK, there is definitely some ambiguity in his statement. However, if his meaning is your interpretation then it is too obvious to even mention (i.e. that an index can be invested in both long and short term). I would definitely agree with that.
However, NTs posts always contain some form of snide comment, therefore I'm certain that what he is implying is that a single share can be easily scalped.
I would like him to prove that it can be done profitably. A scalper should be able to pull out a profit every day, so I think if he makes three calls on any single share of his choosing tomorrow, and pulls a profit then he will have proved that a single share can be easily scalped.
However, since he has also said (in this thread) that he "exclusively trades ES" (an index), I believe the guy is just spouting his usual nonsense.
GCC
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True. The stocks or markets may be different, but the overall market sentiment and social mood is the same.
new_trader
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Buyers and sellers, what can be so hard to understand? Do you think someone buying a share in a company is doing something different to someone buying a Futures contract? Do you think the laws of supply and demand are so inconsistent? I suppose you do, since you think the market changes every 2 or 3 months and that trading in 1984 is completely different to 1929 or even 2009...I suppose you have direct experience of trading during these times? Do you think the laws of supply and demand are so inconsistent?
Thank you for showing on this thread (as you have on others) that you really don't know anything.
Of course the laws of supply and demand are different from market to market and time to time. You really think that buying IBM simply because MCD is rising is a good trade?
Point proved.
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HaloTrader
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He meant the mechanics of supply and demand - Not their application... Which ofcourse can give different results depending on your methods and depending on your markets.
The basic concept remains the same.
new_trader
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I have criticized Halo in the past but in this instance he has clearly demonstrated that he actually possesses much more intelligence than you, much, much, much more. I suppose you will also try to prove I'm wrong by saying that I think the demand for housing should be used to determine the price of sugar...
