fudgestain
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Is there a best thread to go to, to enter or compare notes daily with those spreadbet trading the Dow?
rossored
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I dont know about comparing notes as such, but if you go to the "indices" forum, you'll find two decent threads : Dow Intraday Charts by Chartman, and US Indices by Sunseeker.
If you can, pop into the chatroom during the US working day and you'll find plenty of people in there.
If you can, pop into the chatroom during the US working day and you'll find plenty of people in there.
fudgestain
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Rossored, thank you for your advice. Do you spreadbet trade the DOW or do you otherwise have a view on it as, say, the spreadbettors 'Mecca'?
rossored
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I used to spreadbet the Dow, but now I trade it via direct access, as I finally got fed up with SB bias, and not being able to effectively trade the smaller moves because of that.
I think a lot of people view the Dow as "the mecca" because it has some big moves and that means, to a lot of people, huge profit. Not always the case, of course : it also means you can lose out in a big way if you happen to be on the wrong side of a trade when it goes nuclear.
I have to say though - and I think many people on the website will agree - that the US markets are the way to go. Europe is just too flat, boring and unexciting for me....plus it means I get a lay-in if I want to!
But each to thier own. That will probably open up a huge can of worms!!
I think a lot of people view the Dow as "the mecca" because it has some big moves and that means, to a lot of people, huge profit. Not always the case, of course : it also means you can lose out in a big way if you happen to be on the wrong side of a trade when it goes nuclear.
I have to say though - and I think many people on the website will agree - that the US markets are the way to go. Europe is just too flat, boring and unexciting for me....plus it means I get a lay-in if I want to!
But each to thier own. That will probably open up a huge can of worms!!
fudgestain
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Again thank you Rossored.
Agree with you about trading the Dow means that you can nicely rot in the sack every morning - oh its the life of a gentleman not to have to start 'work' until say 1 or 1.30 before the DOW opens at 2.30pm - also I'm only after the first hour and half (not to say I wouldn't trade later or the last hour and half - just haven't given it detailed study at other times).
Originally looked at the ftse 100 where the first hour or so has some attraction .. but the Dow is so compelling with a small enough spread by CMC which means you can trade the smaller moves. So have concentrated on the Dow .. such that I can understand the parameters of the first hour and half.
Rossored you refer to direct access Dow instead of SB .. can you elucidate?
Agree with you about trading the Dow means that you can nicely rot in the sack every morning - oh its the life of a gentleman not to have to start 'work' until say 1 or 1.30 before the DOW opens at 2.30pm - also I'm only after the first hour and half (not to say I wouldn't trade later or the last hour and half - just haven't given it detailed study at other times).
Originally looked at the ftse 100 where the first hour or so has some attraction .. but the Dow is so compelling with a small enough spread by CMC which means you can trade the smaller moves. So have concentrated on the Dow .. such that I can understand the parameters of the first hour and half.
Rossored you refer to direct access Dow instead of SB .. can you elucidate?
fudgestain, Direct access trading the Dow futures with a 1 or 2 point spread and fills within a second, have a look at www.interactivebrokers.co.uk
rossored
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Yes, Boy is correct : the fills are pretty good in busy times, plenty of contracts being traded (although nowhere near the liquidity of the S&P) and its wonderful being in profit after 1 tick...a small move that I took on Friday (11 points) and you get 11 points profit - less commissions and tax, of course. :cheesy: With my old broker, I wouldnt have dared take it : factor in the bias and the spread, and that trade would have been a loser.
fudgestain
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Boy and Rossored.
Went straight to the IB website but was unable to access anything on the DOW or direct access DOW - always the way; anything on the obvious or most traded instrument has to be securely hidden away from the prying attentions of newcomers. Or may be I'm missing something. But will try again.
Many thanks, nevertheless.
Went straight to the IB website but was unable to access anything on the DOW or direct access DOW - always the way; anything on the obvious or most traded instrument has to be securely hidden away from the prying attentions of newcomers. Or may be I'm missing something. But will try again.
Many thanks, nevertheless.
rossored
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No, i think you misunderstand : IB are a broker who give you direct access to the markets, be that the US or European markets. You place money in an account with them, and this then allows you to trade the your chosen instrument : that can be futures/stock/etc etc.
Dow futures, for example, are traded on the ACE exchange, and the ticker symbol for this is YM. You would normally trade a $5 contract on the mini Dow (so called because it's a small contract size). This is roughly equivalent to a £3 spreadbet. Try looking under "resources" then either "products and exchanges" or "margin".
Worth noting though (and this is meant with the greatest of respect) that if you don't fully understand what you're getting into with regards to trading futures, then it's probably best avoided for the time being until you have more of an understanding of it.
The futures market, in essence, drives the cash price that most people spreadbet on. The underlying futures market normally trades around 20-30 ticks below the cash price (this is for a September contract, which would expire on the 3rd friday of Sept 03) For example, when the "cash" index closed on Friday, it closed at 9191, but the futures market at 9pm BST was at 9169, and continued to trade up to close at 9182 at 10pm BST. If it remains here, then the cash price on Monday will open approx 15-20 points higher.
Feel free to PM me if you've got any other questions, but as I say its probably worth getting some good experience spreadbetting (if you havent done so already) before looking at trading futures.
Dow futures, for example, are traded on the ACE exchange, and the ticker symbol for this is YM. You would normally trade a $5 contract on the mini Dow (so called because it's a small contract size). This is roughly equivalent to a £3 spreadbet. Try looking under "resources" then either "products and exchanges" or "margin".
Worth noting though (and this is meant with the greatest of respect) that if you don't fully understand what you're getting into with regards to trading futures, then it's probably best avoided for the time being until you have more of an understanding of it.
The futures market, in essence, drives the cash price that most people spreadbet on. The underlying futures market normally trades around 20-30 ticks below the cash price (this is for a September contract, which would expire on the 3rd friday of Sept 03) For example, when the "cash" index closed on Friday, it closed at 9191, but the futures market at 9pm BST was at 9169, and continued to trade up to close at 9182 at 10pm BST. If it remains here, then the cash price on Monday will open approx 15-20 points higher.
Feel free to PM me if you've got any other questions, but as I say its probably worth getting some good experience spreadbetting (if you havent done so already) before looking at trading futures.
Grey1
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Please see the attachment
This will be the outcome of your trading in 100 trades using a SB firm with 8Point commission round the trip provided you took profit twice bigger than the money you are risking while trading only 1% of your capital in each trade.. ( Remember I am talking about risk of each trade using a SB firm here which is slightly different to share trading )
At £1/ point you have 20 points tolerance before you are forced out ( 16 points only including spread)..
Now lets us look at this case scenario..
Pro:--
Your maximum gain after 100 trades would be £3342 with tiny drawdown.. nice one
Cons:--
1) you more than likely be stopped with 16 point stop loss, Remember your 50/50 system might have a volatility based stop loss than a money management system.. The same strategy with money management stop might not even perform 30 % of the time..
2) It is extremely difficult to achieve a consistent 2:1 reward /Risk . For get about those Guru’s who preach they can consistently achieve that..
It is not all that easy to have a 50/50 system.. Again forget about those firms that claim they give you a full proof system ..These people often back test, based on historical data and most of them curve fit to optimize return .. An extremely dangerous strategy..
Conclusion :
a) To improve trading performance one has to increase stop loss by reducing stake if spread betting to around the volatility of the time frame he is trading …( this is tight enough stop )
b) Spend most your time on learning ENTRY .. There are those Guru’s who preach about the importance of EXIT . of course this is true but show me how can it be done using your crystal ball.. Exit or reward should be a by product of Good Entry . The BATTLE BETWEEN RISK AND REWARD MUST START WITH RISK OF EACH TRADE THAN REWARD IN EACH TRADE.
c) Only engage in those trades that there is a POSSIBLE 2:1 reward attach to it .. To achieve that Look at the VWAP reading of a parallel trade such as MSFT while trading DOW ( this is just an example).. A professional trader does not trade around VWAP.. Institutions do not trade around VWAP.. Trade around 2 Stand division away from VWAP.. ( Bargain hunting) .. What does RSI know about bargain hunting ? It is just a dummy indicator. Change its settings and the same stock is not a bargain any more.. )
Assumptions :--
1) To calculate the worse case scenario of losses on 100 trade , I have used Monte carlo simulation.. This system assumes the dispersion of risk and reward are with in a normal distribution curve,.,,
2) Past correlates to future in back testing so a 50/50 system in the past will perform the same ratio in future..
3) Risk assessment based on historical can be mathematically extended into future.( For further reading look into VAR/.. Value at risk )
This will be the outcome of your trading in 100 trades using a SB firm with 8Point commission round the trip provided you took profit twice bigger than the money you are risking while trading only 1% of your capital in each trade.. ( Remember I am talking about risk of each trade using a SB firm here which is slightly different to share trading )
At £1/ point you have 20 points tolerance before you are forced out ( 16 points only including spread)..
Now lets us look at this case scenario..
Pro:--
Your maximum gain after 100 trades would be £3342 with tiny drawdown.. nice one
Cons:--
1) you more than likely be stopped with 16 point stop loss, Remember your 50/50 system might have a volatility based stop loss than a money management system.. The same strategy with money management stop might not even perform 30 % of the time..
2) It is extremely difficult to achieve a consistent 2:1 reward /Risk . For get about those Guru’s who preach they can consistently achieve that..
It is not all that easy to have a 50/50 system.. Again forget about those firms that claim they give you a full proof system ..These people often back test, based on historical data and most of them curve fit to optimize return .. An extremely dangerous strategy..
Conclusion :
a) To improve trading performance one has to increase stop loss by reducing stake if spread betting to around the volatility of the time frame he is trading …( this is tight enough stop )
b) Spend most your time on learning ENTRY .. There are those Guru’s who preach about the importance of EXIT . of course this is true but show me how can it be done using your crystal ball.. Exit or reward should be a by product of Good Entry . The BATTLE BETWEEN RISK AND REWARD MUST START WITH RISK OF EACH TRADE THAN REWARD IN EACH TRADE.
c) Only engage in those trades that there is a POSSIBLE 2:1 reward attach to it .. To achieve that Look at the VWAP reading of a parallel trade such as MSFT while trading DOW ( this is just an example).. A professional trader does not trade around VWAP.. Institutions do not trade around VWAP.. Trade around 2 Stand division away from VWAP.. ( Bargain hunting) .. What does RSI know about bargain hunting ? It is just a dummy indicator. Change its settings and the same stock is not a bargain any more.. )
Assumptions :--
1) To calculate the worse case scenario of losses on 100 trade , I have used Monte carlo simulation.. This system assumes the dispersion of risk and reward are with in a normal distribution curve,.,,
2) Past correlates to future in back testing so a 50/50 system in the past will perform the same ratio in future..
3) Risk assessment based on historical can be mathematically extended into future.( For further reading look into VAR/.. Value at risk )
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fudgestain
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Note your detailed response, Rossored - and helpful too. Was aware IB is only the broker - was just looking for any info they might have had for trading the direct access Dow to which you referred.
You say that CMC lays off on futures for any net buying/selling they receive at any one time, say, from their Dow index trading customers. Is that right?
You say that CMC lays off on futures for any net buying/selling they receive at any one time, say, from their Dow index trading customers. Is that right?
rossored
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"You say that CMC lays off on futures for any net buying/selling they receive at any one time, say, from their Dow index trading customers. Is that right?"
I'm not sure I totally understand your question as I didnt refer directly to CMC : however, all the SB companies "cash" index prices are driven by the underlying futures market. This goes some way to explaining the SB bias, because the futures market is more volatile and moves quicker. Hence, when the futures start to tank/rocket, the SB price moves BEFORE the cash chart price moves. Some of this can be worked around because certain SB companies (CMC is one, I think) drive thier own charting package off their prices, rather than a third party for price information.Hence, thier charts accurately reflect the SB price movement.
Have a look at the attached chart, this might make it a bit simpler : the first chart shows Dow futures at 2.30BST on Friday. The second example shows Dow cash at the same time. The two large white bars are the cash market rising rapidly at open in order to "catch up" with the futures market. This price difference will already be reflected in the brokers price and thier quotes will open at the higher level. However, the chart feed (driven in my example by MyTrack) would be behind the SB price. The SB broker, of course, knows where the futures are before the market opens, so his quotes do not allow this rapid climb to be exploited, otherwise we'd all be having the SB companies pants down every day. This isnt really a fair example but it does show the difference clearly. Normally there is only a few seconds (sometimes less) between the futures chart and the cash chart.
Also note how much more volatile the futures are. These are both 1 minute charts, yet the futures chart shows more spikes on the candlesticks than the cash chart, which looks quite smooth. Also note the difference in the MA lines ; my 100EMA line (the blue one) on the futures chart is pretty close to the price, because the futures normally trade quite flat prior to the open (news excepted), yet on the cash chart is moves rapidly up.
Hope this helps.
Matt
I'm not sure I totally understand your question as I didnt refer directly to CMC : however, all the SB companies "cash" index prices are driven by the underlying futures market. This goes some way to explaining the SB bias, because the futures market is more volatile and moves quicker. Hence, when the futures start to tank/rocket, the SB price moves BEFORE the cash chart price moves. Some of this can be worked around because certain SB companies (CMC is one, I think) drive thier own charting package off their prices, rather than a third party for price information.Hence, thier charts accurately reflect the SB price movement.
Have a look at the attached chart, this might make it a bit simpler : the first chart shows Dow futures at 2.30BST on Friday. The second example shows Dow cash at the same time. The two large white bars are the cash market rising rapidly at open in order to "catch up" with the futures market. This price difference will already be reflected in the brokers price and thier quotes will open at the higher level. However, the chart feed (driven in my example by MyTrack) would be behind the SB price. The SB broker, of course, knows where the futures are before the market opens, so his quotes do not allow this rapid climb to be exploited, otherwise we'd all be having the SB companies pants down every day. This isnt really a fair example but it does show the difference clearly. Normally there is only a few seconds (sometimes less) between the futures chart and the cash chart.
Also note how much more volatile the futures are. These are both 1 minute charts, yet the futures chart shows more spikes on the candlesticks than the cash chart, which looks quite smooth. Also note the difference in the MA lines ; my 100EMA line (the blue one) on the futures chart is pretty close to the price, because the futures normally trade quite flat prior to the open (news excepted), yet on the cash chart is moves rapidly up.
Hope this helps.
Matt
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fudgestain
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Rossored, your explanation is really interesting stuff - a great help. I use the live feed lycos/quote.com Dow; actually I don't find the SB bias bothersome .. often it is consistently under lycos, say, 5 points or so. Now the CMC live price is often a tad ahead of the lycos moving price .. just occasionally CMC appears to lag the lycos price so for example you can hit the a lagging CMC price with a 'sell' when lycos has gone 'toppy' and is turning down.
On the other hand recently just after 10 NY time I hit (sold) a third mini-top (similar price), refused the CMC re-quote (9 points under) and the price fell 70 points gross, top to bottom, under 4 minutes.. very exciting but wasn't on board. These sharp price falls happen as you know .. but I don't hold my breath waiting for the next one.
But you certainly seem to know your onions, Rossored.
On the other hand recently just after 10 NY time I hit (sold) a third mini-top (similar price), refused the CMC re-quote (9 points under) and the price fell 70 points gross, top to bottom, under 4 minutes.. very exciting but wasn't on board. These sharp price falls happen as you know .. but I don't hold my breath waiting for the next one.
But you certainly seem to know your onions, Rossored.
rossored
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Ah, appearances can be deceptive.... 
Seriously though, I have gained a lot of knowledge from talking to various people I've got in contact through via this website, it is an absolute minefield of information. The various postings placed at the end of the day and intraday (the two threads i mentioned earlier, notably) are fantastic sources of information.
I have learnt from this website, so I'm happy to be able to pass on useful information.
Glad to be of help.
Seriously though, I have gained a lot of knowledge from talking to various people I've got in contact through via this website, it is an absolute minefield of information. The various postings placed at the end of the day and intraday (the two threads i mentioned earlier, notably) are fantastic sources of information.
I have learnt from this website, so I'm happy to be able to pass on useful information.
Glad to be of help.
fudgestain
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Well, today, 1st half hour (9.30-10.04 NY time) range 45 pts; one hour 10-11 (10.04-11.01 NY time) range 41 pts (lower end of the scale).
One of those days: computer crashed twice - unusual (the thing is my Word folder can be unstable and it can crash the computer). So didn't get the CMC live prices until just after 2.30 - about 2.34 - so after that followed the moves and didn't play. Usually I run off updated parameter data from my Word file before 2.30 but was behind on things today .. always better to allow greatly more than just enough (or - worse - too little) time.
Can imagine there are some really amusing stories from Dow traders of how things go from taking it easy to hell-in-a -handbasket through own mistakes or computer or trading platform gremlins intervening!
One of those days: computer crashed twice - unusual (the thing is my Word folder can be unstable and it can crash the computer). So didn't get the CMC live prices until just after 2.30 - about 2.34 - so after that followed the moves and didn't play. Usually I run off updated parameter data from my Word file before 2.30 but was behind on things today .. always better to allow greatly more than just enough (or - worse - too little) time.
Can imagine there are some really amusing stories from Dow traders of how things go from taking it easy to hell-in-a -handbasket through own mistakes or computer or trading platform gremlins intervening!
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fudgestain
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The power cut thingey appears to have knocked the guts out of the Friday Dow so far today. Range for the first half hour (9.30-9.59 NY time) just 17 points - low, low, low.
Had Finspreads for the first time - usually play on CMC. Finspreads .. sweet. Presumably not for the frequent intra-day serious trader. Their Dow spread at 7 points is wide but appears to be on the actual moving Dow index number whereas I am comfortable with the bias at CMC as my trading is countermove - selling peaks, buying troughs - whenever I enter.
Intended to zing around on Finspreads on token stakes for testing .. made 6 points net in just one move somewhere in the first 10 minutes. So, yeah, will do some more testing with Finspreads next week (using the first 1 and half hours of the Dow).
Had Finspreads for the first time - usually play on CMC. Finspreads .. sweet. Presumably not for the frequent intra-day serious trader. Their Dow spread at 7 points is wide but appears to be on the actual moving Dow index number whereas I am comfortable with the bias at CMC as my trading is countermove - selling peaks, buying troughs - whenever I enter.
Intended to zing around on Finspreads on token stakes for testing .. made 6 points net in just one move somewhere in the first 10 minutes. So, yeah, will do some more testing with Finspreads next week (using the first 1 and half hours of the Dow).