Do you SB outside market hours ?

[mgergs]

Given that SB companys make the market outside of market hours, does anyone actually trade these out of hours markets ?
The query obviously comes down to whether the companys numbers are accurate and can be traded with confidence ..

Thx

 

[gooseman]

or a more pertinent question would be why are you taking SB prices as gospel?

 

[tomorton]

I haven't gone into this in detail because my preferred trading times coincide with the UK market anyway, and the FTSE100 has the best spreads, so these are generalisations -

the SB index values are usually very close to the underlying instrument during that instrument's trading hours
BUT
the SB daily ranges are generally much greater than the instrument's daily ranges
THEREFORE
the additional volatility must be injected by the SB quotes outside the underlying's trading hours
SO
this increases volatility, reduces the reliability of TA and increases risk
AND
spreads tend to be widened out when the underlying is not trading, so your overheads are automatically that much higher even if you have a winning record
AS A RESULT,
I tend to not actively trade during the overnight,don't depend on the SB's overnight charts as TA, and avoid leaving buy or sell orders in place overnight as the volatility spikes will very regularly hit them with no real TA reason.

At the moment I am avoiding holding overnight where possible becasue the market is reversing so readily and unpredictably, and if I could get to the position where I enter just 1 trade per day which opens an hour after the underlying marker opens and closes an hour before it closes, I would be happy.

 

[mgergs]

thx tomorton thats what i was after

goose who said i was taking them as gospel ? i base all my trading on TA hence the question and tomorton's answer is kinda what i was thinking.

 

[gooseman]

"whether the companys numbers are accurate and can be traded with confidence"

that implies you are using them as your reference rather than an external source.

as usual i don't care what you do-won't bother me of you blow your account or make a mil.

 

[tomorton]

I think the TA represented on SB charts out of hours can be misleading, and some might say deliberately so. Say the price action recently and a low close of the underlying tonight suggests that tomorrow we will have a lower open, possibly with a gap down. A textbook response to this is to enter a sell trade at the closing price, or enter a sell order some way lower than tonight's close or today's low - where exactly depends on your preferred strategy and risk acceptance. But the key thing is your don't want to be long at the open.

If you make a trade on the short side, you might (should) put in a stop north of your entry by XX points or Y%. The SBs are highly likely to take the quotes lower at first but then range them rapidly upwards to hit all the bears' stops. This might only happen at a minute to the opening bell of the underlying, but it demonstrates how you can't accept SB prices as relative to the underlying: SB quotes out of hours are derived from the futures but not exclusively - at times they are mostly relative to the risk the SB wishes to accept. That's not a true market, markets are driven by supply and demand.