To spread or not to spread?

[fhb22266]

The thing is, what do YOU understand by the 'daily cash DOW'?
They're pretty much the same thing - But they are SB's own prices based on calculations of risk around the main index

I think the argument over which is 'BEST' is a sterile one. As long as you understand what it is you are trading + the pitfalls then I'm certain it is possible to implement profitable strategies with both. You need to understand the working of both to utilise them to best effect though.

Thanks for explaining those points Peter.

I use e-Signal software and follow the DJIA and place bets using Finspreads Wall Street Daily cash index which (apart from their bias) closely matches the real prices on the Dow.

I want to trade on the Dow intraday on other SB firms (CS or D4F). I understand what you're saying about derivative markets but I'm now totally confused as to the difference between the Dow markets quotes by SB firms; Cash, Rolling, Day future. Can you explain the difference? Which one is best for intraday trading the Dow and what symbol do I need to follow it on e-Signal? Do you see where I'm coming from, I want to be sure the market I'm trading in is the one I'm watching on my real-time charting software.

I'm very new to this, if there's a thread I should read that explains it all in detail please let me know.

 

[1lotwonder]

More rubbish edited by rossored.

 

[rossored]

Goodbye.

Hopefully this thread can now continue without further disruption.

 

[FetteredChinos]

edit:- pipped to the post.

 

[peterpr]

Thanks for explaining those points Peter.
I use e-Signal software and follow the DJIA and place bets using Finspreads Wall Street Daily cash index which (apart from their bias) closely matches the real prices on the Dow.

fhb
ESignal's $INDU symbol is the DJIA itself. It is an index calculated real time from the transactions taking place on the NYSE in the constituent stock. You cannot trade that symbol at all. There are many derivative instruments (ie futures, options, tracker stocks etc) that are based on the index and traded on Exchanges like individual stocks. The SB offerings are NOT traded on exchanges. They are their own derivatives. Other than following a real-time quotes graph from the SB provider itself (IG have the faclity for example) it is a question of following the one(s) that give the most accurate clues to the SB derivative movement. The underlying instruments that influence SB quotes most rapidly (during market hours anyway) are the current most liquid futures contracts. In the case of the DOW there are at least 2 - the YM #F and the DJ #F - both ESignal symbols. However, you may have to pay the relevant exchange fees before you can use them. Also, they will always be at least a bit higher than $INDU and the SB quote. This is a function of what is known as the 'fair value' price of the future which takes account of the costs of holding a contract to maturity. Right now it is over 30 points because the March future is now closed and we're working with the June one (mainly). You need to research futures etc and could do worse than persusing the educational stuff on the web sites of the various futures exchanges (LIFFE, CBOT etc)

.....I'm now totally confused as to the difference between the Dow markets quotes by SB firms; Cash, Rolling, Day future.

They are NOT markets - they are derivatives that are not even traded on markets.

I want to be sure the market I'm trading in is the one I'm watching on my real-time charting software.

See above. The only way to do that is if your SB provider were to stream their prices to ESignal - which they are simply NOT going to do. Otherwise the best you can do is watch the various proxies mentioned above. This is a good illustration of why SB derivatives are not optimum for real-time intra-day trading - you simply cannot use them for 'scalping' - unless you are clairvoyant of course.

 

[ketank]

DOW JONES Spreads

HI!!

Anyone know the where i can go to bet the DAILY DOW with the lowest spread?

 

[Roberto]

I want to be sure the market I'm trading in is the one I'm watching on my real-time charting software.

Hope you're becoming a little less confused after reading Peter's _excellent_ explanations?

I can appreciate your wanting to move from Fins to some other company. If it helps, I can offer you the observations that deal4free have rather a poor record for customer service (and if you look all around here and on some other internet forums, you'll see that I'm perhaps putting it mildly) whereas CapSpreads are exactly the opposite.

The market you're trading, by definition, _can't_ be exactly the one you're watching (and least of all from eSignal, which has certainly had its share of problems recently if its subscribers are to be believed!) because, exactly as Peter has pointed out, what you're trading this way is a derivative of a derivative: it isn't anything "real". But IMHO that doesn't necessarily matter very much. At least if you use the CapitalSpreads "Wall Street Cash Daily" or "Wall Street Rolling Daily" you can be sure that any "pip-difference" between what you're looking at and what you're trading will be the same when you close your trade as it was when you opened your trade, so why worry about it anyway?

The only difference between "Wall Street Cash Daily" and "Wall Street Rolling Daily", as far as I'm aware, is that a position on the former closes itself out automatically at the end of the day whereas one on the latter will stay open overnight (which I wouldn't fancy, myself). But their customer service people are brilliant and will happily give you a full explanation anyway.

By the way, for looking at the Dow (or any other US and most European indices) you might (at some point, if not now) like to know that ProRealTime is widely regarded as very similar to eSignal but very much more reliable and versatile, and a fraction of the price. (They also have a free trial available, if you want to have a look at it for yourself).

I hope I've helped rather than added to the confusion!

 

[haleh]

try finspread Rolling Dow is only 4 points

 

[rossored]

I have merged these two threads as the question just asked by ketank has already been asked within this thread.

 

[wisestguy]

Only we weren't talking about the markets that you trade. You said "futures" - I'm pointing out that YM (a future) can be traded out of these hours.

I sincerely hope you're not suggesting I'm a fool.

maybe , but in reality there are few futures worthwhile trading o/s of mkt hours.

who I think are fools should not matter to you . what you think of yourself as a person and as a trader is the important thing . I should hope you know this , as well as the widely accepted maxim that illiquid markets are bad for trading.

I hope you know why ? are you going to ask ?

I'll save you the throuble and tell you right now .

let's say the dow is closed , and the dow emini globex is doing 2 bid x 1 ask , with equally thin volumes either way . you have strong " gut " feeling that the mkt will shoot up when it opens , you dive in and take the ask of 1 lot. the mkt then moves 3 tics you way , you feel like like a clever soandso.

then another not clever guy enters and sees the mkt now 2 bid x 3 ask , and he thinks he is Mr. big as he has 15 lots to play with . so of course , he sells all 16 at mkt .

the mkt being thin can't really take it and it slips 18 tics due to lack of volume , so you are now net 15 tics down from entry .

and so and so forth . you are down not because of anyhing to do with the real market but due to the piddly vols on so called 24 markets.

this will very rarely happen on SBs.

 

[wisestguy]

What questions are they wiseguy?

I have answered the question of the thread starter and that is that most people will be better off financially trading futures, IMO of course and not try and highjack a thread for personal reasons.

Thankyou for this great contribution it really clarifies things, talk about sitting on the fence, watch that you don't fall off.

And regarding

That seems pretty rich to me considering that I have only made 223 posts over a 2 year period yet you have made 412 posts in just 8 months.

You seem to think that there is just one way to trade the markets, in fact there are many ways to make money. I do not like trading shares but there are many people on these boards that are successful and very profitable with shares, I admire them because I think it is more difficult.

Very clear what Q's , go post # 32.

I'm being objective about the topic which better than you who makes unbacked claims.

there number of posts is nothing , it's what you say that counts.

there IS more than 1 way to trade , but I sure as hell can't see how your method would work .

 

[fhb22266]

I hope I've helped rather than added to the confusion!

Roberto, that's excellent, and thanks to PeterPR again.

Today I tried out the Capitalspreads simulated account and found it much quicker and simpler than Finspreads. I was paying close attention to the Wall Street Rolling prices and they seemed pretty well locked onto the values coming up on e-Signal. I managed to scrape a few points together on CS and Finspreads with a real trade but the difference is amazing; FS prices were miles away from INDU. You'll be pleased to hear I have applied for a CS account and hope to hear from them tomorrow.

I filled in the Deal4free application yesterday, thinking it may take a while and was intending to wait for a bit to deposit funds, but I got a call from a rep today asking if I had any questions and checking up on my proof of identity. They seem pretty keen to get me on board quickly. But I may have to let them down as I've now decided to try CS first as most people seem to rate them higher.

If CS turn out as good as they sound I may just stick with them. Direct Access is something I may try in the future though. It seems to me that if you can find a good SB firm that just takes the spread and doesn't try to bias too much in their favour that there would be little to choose between spread betting and direct access.

I shall check out ProRealTime. I've got quite used to e-Signal now and find it very good, it doesnt seem to lock up on me and I've found the support is great. That's not to say I'm not interested in something else as good if it saves me some cash.

 

[Edster]

What people need to realise is that there is no 'best one' between DA and SB. It's whatever suits your style of trading.

I've been SB'ing for over two years now and have done OK. I'm in the process of setting up a DA account to try a different style. If it suits then I'll keep using it (alongside SB which I'll use for other stuff). If I don't like it then I'll stop.

I'll keep you posted on my progress if people are interested and let you know my opinions in due course.

For intra-day trading the DOW, though, I must say that from what I understand then DA seems to be much better. Only if you're hoping for the odd 3 or 5 ticks here and there though.

Cheers,

Edster

 

[bluetipex]

Roberto, that's excellent, and thanks to PeterPR again.

Today I tried out the Capitalspreads simulated account and found it much quicker and simpler than Finspreads. I was paying close attention to the Wall Street Rolling prices and they seemed pretty well locked onto the values coming up on e-Signal. I managed to scrape a few points together on CS and Finspreads with a real trade but the difference is amazing; FS prices were miles away from INDU. You'll be pleased to hear I have applied for a CS account and hope to hear from them tomorrow.

I filled in the Deal4free application yesterday, thinking it may take a while and was intending to wait for a bit to deposit funds, but I got a call from a rep today asking if I had any questions and checking up on my proof of identity. They seem pretty keen to get me on board quickly. But I may have to let them down as I've now decided to try CS first as most people seem to rate them higher.

If CS turn out as good as they sound I may just stick with them. Direct Access is something I may try in the future though. It seems to me that if you can find a good SB firm that just takes the spread and doesn't try to bias too much in their favour that there would be little to choose between spread betting and direct access.

I shall check out ProRealTime. I've got quite used to e-Signal now and find it very good, it doesnt seem to lock up on me and I've found the support is great. That's not to say I'm not interested in something else as good if it saves me some cash.

You'll have to let me know how you get on with CS. Their web site and promotion material looks quite good. As I said, I use D4F and am very happy with the trading platform.

Good Luck!!

 

[juanbyte]

Sorry Wiseguy I did not know that your knowledge of trading was so limited, my fault, I should have realised when I saw your post asking what commissions are payable for futures contracts.

A bit strange for someone who claims to have traded them.

See post 28 for results, it should be clear to anyone when presented with every each buy and sell together with the times of the trades and prices traded at that I was talking about net profits.

The commission I pay is $4.12 RT which equals 0.824 points per trade.

The total points won was 62 and actually 46.344 points net.

but I sure as hell can't see how your method would work

You cannot see how it would work because if you were spreadbetting with a 5 point spread you would have won 62 points less 19 trades x 5pt spreads = 95 which equals a 33 point loss.
Bet you can't show me how you are better off spreadbetting these trades.

there number of posts is nothing , it's what you say that counts

agree, if you have ever said anything usefull please direct me to your post.

I'm being objective about the topic which better than you who makes unbacked claims

Never unbacked, I have published actual trades, statements and contract notes, I have yet to see just one from you.
My post was not a recommendation to trade a certain way but to answer the original question to point out the facts and show the difference between spreadbetting and future i.e. a $165 loss spreadbetting or $233.72 win trading futures.
My only other cost besides commission is a real-time charting package which is less than $10 per month.

 

[fhb22266]

What people need to realise is that there is no 'best one' between DA and SB. It's whatever suits your style of trading.

I've been SB'ing for over two years now and have done OK. I'm in the process of setting up a DA account to try a different style. If it suits then I'll keep using it (alongside SB which I'll use for other stuff). If I don't like it then I'll stop.

I'll keep you posted on my progress if people are interested and let you know my opinions in due course.

For intra-day trading the DOW, though, I must say that from what I understand then DA seems to be much better. Only if you're hoping for the odd 3 or 5 ticks here and there though.

Cheers,

Edster

Yes please, I'd be very interested to see what you think as I may go that route some time.

Cheers,

Forbes.

 

[fhb22266]

You'll have to let me know how you get on with CS. Their web site and promotion material looks quite good. As I said, I use D4F and am very happy with the trading platform.

Good Luck!!

Hi BT,

well so far it's been encouraging.

Even though it's a java applet in IE it's much faster than Finspreads; only a second or two delay refreshing most screens. On the Dow Daily Rolling prices quoted are 3 points above/below price. The lag behind the live dow ranges by nothing to 5 points. I asked for an explanation from Capitalspreads and got it. Simon gave me a detailed response which you can read in the Capitalspreads thread and I'm quite happy. Their margin requirement is only 50:1 on the Dow so if you want to increase your risk factor out of all proportion - you can! There is no minimum account balance. Automatic stops are put on for you at a very long way from your entry point - I think it's a calculation based on your available balance/risk but it gives you some comfort knowing that if you put on a quick trade you've got some protection straight away. Stops can be placed about 5 or 6 points from the live price. My only gripe here is that you aren't shown the minimum stop value so you have to use some quick arithmetic you work it out. If the price reaches your target you can quickly close the trade at a 2 point spread making 5 in total, or just use a trailing stop of course and loose an extra few points. Their charting is very good much better than FS, plenty of options for added studies, lines, text, etc.

So far so good.

So score out of 10 I'd say:

Finspreads = 6 points (slow platform, excessive price lag)
Capitalspreads = 8 points (much quicker, simpler, easier to use, better charting facilities, excellent support).

I haven't tried D4F so I can't compare, sorry, their trial Moneymaker application that I down loaded didn't work.

Regards,

Forbes,

 

[Edster]

Yes please, I'd be very interested to see what you think as I may go that route some time.

Cheers,

Forbes.

OK, as promised. My account was fully set up with Interactive Brokers on Monday. Started trading the DOW on Tuesday.

Please bear in mind that I am only a beginner and am currently only trading 1 contract until I find my feet and feel comfortable with the whole 'experience'. Also bear in mind that I can only spend maybe an hour at a time at the computer watching the action so I'm not there for the full 6.5 hours.

OK, day 1. Still trying to work out the Sierra Charts / IB platform / Bracket Trader setup. Made 9 Trades - 7 win, 2 lose; total points gained - 15; net points after commissions - 7.6 ($37.92)

Day 2 - 10 trades - 7 win, 3 lose; total points gained - 10; net points after commission - 1.76 ($8.8)

Day 3 - spent longer trading today hence 24 trades - 22 win, 2 lose; total points gained - 91; net points after commission - 70.4 ($352)

Day 4 - 12 trades - 9 win, 3 lose; total points gained - 33; net points after commission - 20.64 ($103.2)

So, as you can see, my first few days having a bit of a dabble made just over 100 points ($500) and I don't really know what I'm doing!!

If I did the same strategy spread-betting then, well, erm, I couldn't have done it. Like I said before though, it's a completely different kettle of fish. Day trading - I'm happy to make $10 here, $20 there. Spreadbetting I'm happy with £100 here. £500 there blah, blah.

I will continue to do both - mainly due to the fact that I had a good SB week last week too. I just wish that I was confident enough to ditch the day job as well. At least I work shifts so I can play with the DOW more than if I had a 'normal' job.

I'll post more result at the end of next week (unless I lose loads of course )

Edster

 

[fhb22266]

OK, as promised. My account was fully set up with Interactive Brokers on Monday. Started trading the DOW on Tuesday.

Please bear in mind that I am only a beginner and am currently only trading 1 contract until I find my feet and feel comfortable with the whole 'experience'. Also bear in mind that I can only spend maybe an hour at a time at the computer watching the action so I'm not there for the full 6.5 hours.

OK, day 1. Still trying to work out the Sierra Charts / IB platform / Bracket Trader setup. Made 9 Trades - 7 win, 2 lose; total points gained - 15; net points after commissions - 7.6 ($37.92)

Day 2 - 10 trades - 7 win, 3 lose; total points gained - 10; net points after commission - 1.76 ($8.8)

Day 3 - spent longer trading today hence 24 trades - 22 win, 2 lose; total points gained - 91; net points after commission - 70.4 ($352)

Day 4 - 12 trades - 9 win, 3 lose; total points gained - 33; net points after commission - 20.64 ($103.2)

So, as you can see, my first few days having a bit of a dabble made just over 100 points ($500) and I don't really know what I'm doing!!

If I did the same strategy spread-betting then, well, erm, I couldn't have done it. Like I said before though, it's a completely different kettle of fish. Day trading - I'm happy to make $10 here, $20 there. Spreadbetting I'm happy with £100 here. £500 there blah, blah.

I will continue to do both - mainly due to the fact that I had a good SB week last week too. I just wish that I was confident enough to ditch the day job as well. At least I work shifts so I can play with the DOW more than if I had a 'normal' job.

I'll post more result at the end of next week (unless I lose loads of course )

Edster

Hi Ed,

sorry for the delay replying....

It sounds like you're off to a good start.

What symbol are you trading -- YM? I see IB offer INDU in their portfolio, how does that work?

Are you manually entering trades or are you using an automatic system?

I found an auto system for the Dow which looks very good. In my Esignal back testing it reckons I could collect $20,000 from a $3,000 balance in just three days, based on INDU 1 minute chart, only $7,000 from YM - I guess because it's a bit more choppy. So now I'm very interested in IB

 

[Edster]

Hi Ed,

sorry for the delay replying....

It sounds like you're off to a good start.

What symbol are you trading -- YM? I see IB offer INDU in their portfolio, how does that work?

Are you manually entering trades or are you using an automatic system?

I found an auto system for the Dow which looks very good. In my Esignal back testing it reckons I could collect $20,000 from a $3,000 balance in just three days, based on INDU 1 minute chart, only $7,000 from YM - I guess because it's a bit more choppy. So now I'm very interested in IB

Well, a bit more of a learning curve this week - mainly due to trying different things with Bracket Trader (scaling in etc). Also got done by a couple of nasty spikes so that's something else that I've got to watch out for although I'm not sure how ou can really avoid them. Just unlucky I guess that I was long when the downward spikes occured.

I'm not using an automated system - just IB through Bracket Trader.

What automated system did you backtest? Sounds too good to be true.

Oh, and yesy, I'm trading YM. I'd be happy with 'only $7000 in three days' though!!

Edster