ftse100 and CFDs

[barbel1]

First question to forums :

Newbie, sorry for basic level. I want to make profits based on the daily movements of stock indices, specifically FTSE100, but I don’t know how to go about this. My plan is to make a daily decision on whether the Index will go up or down, with an estimated (= hoped for) 55% success in judging the direction. I have read about Index Futures, and CFD’s, but I don’t understand whether these are the same thing or different. Which should I think about using? And how would I go about using them? Is it possible to make profits net of dealing charges based on a 55% success rate?

Any advice would be appreciated!

 

[tomorton]

The FTSE (and DAX etc.) can be difficult to trade daily because they are schizophrenic - that is, they take a direction from the London/Europe opens but this is revised as New York opens, when the FTSE reverts to tracking the Dow. To develop better data on the behaviour of the FTSE you might need to split the London trading day into two separate halves, or switch to trading the Dow itself.

As it happens, a 55% win rate on the Dow can be achieved by simply buying at the close when the 50EMA slopes upwards and selling when the slope is downwards, though this is obviously just raw data, not a full strategy.

 

[barbel1]

The FTSE (and DAX etc.) can be difficult to trade daily because they are schizophrenic - that is, they take a direction from the London/Europe opens but this is revised as New York opens, when the FTSE reverts to tracking the Dow. To develop better data on the behaviour of the FTSE you might need to split the London trading day into two separate halves, or switch to trading the Dow itself.

As it happens, a 55% win rate on the Dow can be achieved by simply buying at the close when the 50EMA slopes upwards and selling when the slope is downwards, though this is obviously just raw data, not a full strategy.

Thanks for that. The day splitting makes sense. So far I have been studying historical data from stooq.com but for FTSE this is only showing daily open/close, and also the close is shown as identical to the next day opening. Can you recommend a better (free) source of historical data on both FTSE and DOW, that gives at least hourly figures?

Also, can you comment on what instrument I should look at for trading FTSE - I am thoroughly confused about whether I should be looking at....
-Futures
-Future Options
-SB
-CFD

 

[tomorton]

I only use SB and have found it totally practical for trading the major indices. It has a low minimum deposit and tiny position sizes if you wish and its tax-free. It doesn't have the best spreads for very short-term day-trading but on moves of 4 hours or more not a problem.

CFD trading is almost identical to SB but is subject to Capital Gains Tax. I can't understand why anyone uses them.

I've never used Futures or Futures Options.

 

[barbel1]

The FTSE (and DAX etc.) can be difficult to trade daily because they are schizophrenic - that is, they take a direction from the London/Europe opens but this is revised as New York opens, when the FTSE reverts to tracking the Dow. To develop better data on the behaviour of the FTSE you might need to split the London trading day into two separate halves, or switch to trading the Dow itself.

As it happens, a 55% win rate on the Dow can be achieved by simply buying at the close when the 50EMA slopes upwards and selling when the slope is downwards, though this is obviously just raw data, not a full strategy.

As it happens, a 55% win rate on the Dow can be achieved by simply buying at the close when the 50EMA slopes upwards and selling when the slope is downwards, though this is obviously just raw data, not a full strategy.

Sorry but could you explain this? Is this buying / selling the Dow, based on the 50EMA also of the Dow? If you buy at the close, when do you sell? etc?

 

[tomorton]

Sorry but could you explain this? Is this buying / selling the Dow, based on the 50EMA also of the Dow? If you buy at the close, when do you sell? etc?

this is not a strategy, its just an observable chart feature that you can verify. I don't trade this and I don't suggest anyone else does, though somebody might be able to work this up into something usable.