FTSE follows the DOW.....how???

[3b8yer]

Hi,

I know this newbie question will probably make a lot of eyes roll, cause a lot of sighs and if not, will probably bring much amusement to you all. I certainly know this will make me cringe reading back on it in a few years time but I really need to ask because I just don't understand. Plus I'm about to take a 10k punt on the FTSE or DOW to go down before the markets open on Wednesday.

So here goes...

...How is it that the FTSE follows the DOW "like a lap dog" when the FTSE opens before the DOW?

Cheers.

 

[Hoggums]

Asking that sort of question you might as well set fire to that 10K - it'll be a lot more entertaining watching the flames than watching your trading account burn.

 

[dan1986ccfc]

'lot of eyes roll, cause a lot of sighs and if not, will probably bring much amusement to you all.'

Yeah, but only cos your frivolously pissing 10k up the wall.

 

[pboyles]

Hi,

I know this newbie question will probably make a lot of eyes roll, cause a lot of sighs and if not, will probably bring much amusement to you all. I certainly know this will make me cringe reading back on it in a few years time but I really need to ask because I just don't understand. Plus I'm about to take a 10k punt on the FTSE or DOW to go down before the markets open on Wednesday.

So here goes...

...How is it that the FTSE follows the DOW "like a lap dog" when the FTSE opens before the DOW?

Cheers.

The Dow futures trade almost round the clock.

Really bad idea to put 10k on the line when you don't have a clue how the whole thing works. In fact its a pretty bad idea even if you dd know how things work, its just gambling. The spread betting company will be very happy to take your business though.

 

[donaldduke]

The OP may have a million in his account in which case 10K is a small 1% risk.

The markets all influence each other, some markets more than others. The ftse and other European markets will move the Dow and S&P futures before the US markets open too, especially before midday. As you get closer to the US open and after the US open, it becomes the turn of the US markets to dictate overall direction.

 

[timsk]

Hi 3b8yer,
Welcome to T2W.

Your question isn't stupid at all although, as others have pointed out, your intention to risk a large some of money when (by your own admission) you don't know what you're doing is what will probably 'make a lot of eyes roll, cause a lot of sighs and if not, will probably bring . . .'

The relationship between different markets is further complicated by the relationship between the cash market and the futures market. If you're trading via a spread bet broker and taking a punt on the FTSE 100 cash index then, IMO, you would benefit enormously by keeping at least one eye on what the futures are doing. When the U.S. opens at 2.30pm U.K. time, this means looking at something like the ES (the e-mini futures contract based on the S&P 500 equity index). If you're not clear about the relationship between cash and futures and why it's so important, the Essentials Of 'Indices' Sticky offers some insight to the topic.

If you go ahead with your proposed trade - there are two probable outcomes:

1. You'll make a killing and then think all the nay sayers on your thread aren't worth listening to. You'll then rinse and repeat hoping for the same outcome next time and the time after that. If you go down this road, I - and most other long term members here - will absolutely guarantee 100% that you'll blow your whole account away in due course. And probably sooner rather than later.

2. If you don't take the trade it will probably go in the direction that you imagined it would and you'll be kicking yourself for listening to the likes of me. However, you will have done the right thing. Most folks on here take joy from any trade that ends in a profit. The hardened pros are different: they'll take more pleasure from a losing trade executed to perfection for the right reasons than they will from a winning trade executed for the wrong ones. In that respect, trading isn't about being right or wrong, it's about doing the right thing (and not doing the wrong thing) at any given time. Without exception, punting large sums when you don't have experience backed by a positive expectancy is always the wrong thing to do. Of course, that assumes you're not deliberately wanting to blow your entire account in double quick time!

Tim.

 

[3b8yer]

Thanks to EVERYONE for your responses and for being kind of gentle.

Special thanks to Tim for such a well written response and making things so clear for me.

For over a month, I heard that there is likely to be a crash by the end of this week. With all the doom and gloom happening in the news of late, I really wanted to take a one-off punt and hopefully retire earlier than planned lol but not before I got some advice from more experienced people which is why I signed up here. I was kind of hoping for a "Yeah mate, easy money" type response but clearly not.

I regularly scalp on betting exchanges so trading has always interested me...cue rolling eyes!

Eventually I decided against spreadbetting today and feel it was the right thing to do no matter what the outcome.

I will be absorbing some of the advice on this thread, reading the T2W book and researching some strategies before I even start thinking about trading again.

Thanks again!

 

[timsk]

3b8yer,
Smart move - you've done the 'right' thing, IMO. Even if the trade you would of taken makes a huge profit, enjoy a wry smile - but don't dwell on it - lots more buses will come along in future.

Besides the Essentials Stickies - check out the Trading FAQ Forum - it should prove helpful. (If it isn't, let me know in what respect and I'll try to improve it!)
Tim.