frugi
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My cat is ill, so I am on nocturnal wine vigil, pointlessly pointing out the obvious to those far sharper than my Sabatier. And getting it badly wrong, no doubt.
The Dow/FTSE points difference is likely to increase as global markets rise and decrease as they fall.
Any given points difference between two markets will behave similarly when the former market is a larger number (as quoted) than the latter.
The percentage difference, however, should remain in a fairly tight range as Wideboy has kindly pointed out.
If you buy £50k of FTSE futures/stock and sell £50k of Dow futures/stock you are trading with regard to percentage differences (mmm...arbitrage) whereas if you buy or sell the simple points difference you are 'merely' betting on general market direction.
It seems to me that IK's system works purely on points difference.
Thus I wonder why IK bothers complicating his trades by executing them through two instruments when really the bet is on general market direction and could be more efficiently routed through a single instrument for lower stakes. He is unnecessarily hedging and incurring pointless costs in so doing.
He may want to startle us with the supposed sophistication of an arbitrary numerical difference: "Like, hey check this out, I play two markets against each other, dude." but I still don't see the point.
Wherein lies my confusion?
The Dow/FTSE points difference is likely to increase as global markets rise and decrease as they fall.
Any given points difference between two markets will behave similarly when the former market is a larger number (as quoted) than the latter.
The percentage difference, however, should remain in a fairly tight range as Wideboy has kindly pointed out.
If you buy £50k of FTSE futures/stock and sell £50k of Dow futures/stock you are trading with regard to percentage differences (mmm...arbitrage) whereas if you buy or sell the simple points difference you are 'merely' betting on general market direction.
It seems to me that IK's system works purely on points difference.
Thus I wonder why IK bothers complicating his trades by executing them through two instruments when really the bet is on general market direction and could be more efficiently routed through a single instrument for lower stakes. He is unnecessarily hedging and incurring pointless costs in so doing.
He may want to startle us with the supposed sophistication of an arbitrary numerical difference: "Like, hey check this out, I play two markets against each other, dude." but I still don't see the point.
Wherein lies my confusion?
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frugi, agreed but surely hedging the position in this way gives a (albeit undefinable) limit to the losses that could be incurred. I certainly find trading like this to be more relaxing than just holding a simple position.
you say 'more efficiently routed through a single instrument '. The only instrument I know of is an index difference trade with IG where the spread is huge. Do you know of any others?
Neil
you say 'more efficiently routed through a single instrument '. The only instrument I know of is an index difference trade with IG where the spread is huge. Do you know of any others?
Neil
Bigbusiness
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I find pairs trading quite different to trading on a single index. As the spread with deal4free is 3 on the FTSE and 5 on the Dow, it's not too much of a problem.
The difference in trading times when you trade a UK index against a US index is one element that you don't get trading a single index. The only way to see this effect is to study it for a while.
The difference in trading times when you trade a UK index against a US index is one element that you don't get trading a single index. The only way to see this effect is to study it for a while.
Bigbusiness
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I have had no great problems with deal4free. They did have a major problem a few weeks ago but I just avoided using them for a few days. I think all the spreadbet companies have problems with their software or hardware at times. The less you trade with them, the better they are
. It can be a pain to sort out problems over the phone but that has only happened a few times.
I use rolling cash bets and they charge a small fee for rolling over longs and pay me an even smaller fee for rolling over shorts. There are other adjustments for corporate actions and the change in futures contracts that you need to be aware of when using rolling cash bets but they seem to offer better value for short term trading than the monthly futures bets.
. It can be a pain to sort out problems over the phone but that has only happened a few times.I use rolling cash bets and they charge a small fee for rolling over longs and pay me an even smaller fee for rolling over shorts. There are other adjustments for corporate actions and the change in futures contracts that you need to be aware of when using rolling cash bets but they seem to offer better value for short term trading than the monthly futures bets.
frugi
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Neil,
Sorry to bang on about this but
I meant that instead of betting on the points difference (which, as far as I can see, is tantamount to betting on general market direction) simply bet on one of the indexes in the pair with the appropriate stake. The result will be much the same and it will be cheaper. The idea that you are hedged is an illusion if you bet on points difference alone. Percentage difference is another matter entirely.
e,g Dow falls from 10000 to 8000 while FTSE falls from 4000 to 3200. Points difference falls from 6000 to 4800 but the % fall is 20% in both cases. So you could have sold the points difference at £10 a point or sold the Dow £6 a point or sold the FTSE at £15 a point and made £12000 in each case. If you got it wrong and the Dow rose to 12000 and the FTSE to 4800 (a 20% rise each) the bets would all lose £12000.
Had you bought and sold equal amounts of Dow and FTSE however, you would win/lose nothing except for paying two spreads.
Apologies for preaching to the choir!
Whether this is relevant to IK's system I'm not sure!
PS I believe Cantor quote the FTSE/Dow differential as well, but I'n afraid I don't know the spread
Sorry to bang on about this but
I meant that instead of betting on the points difference (which, as far as I can see, is tantamount to betting on general market direction) simply bet on one of the indexes in the pair with the appropriate stake. The result will be much the same and it will be cheaper. The idea that you are hedged is an illusion if you bet on points difference alone. Percentage difference is another matter entirely.
e,g Dow falls from 10000 to 8000 while FTSE falls from 4000 to 3200. Points difference falls from 6000 to 4800 but the % fall is 20% in both cases. So you could have sold the points difference at £10 a point or sold the Dow £6 a point or sold the FTSE at £15 a point and made £12000 in each case. If you got it wrong and the Dow rose to 12000 and the FTSE to 4800 (a 20% rise each) the bets would all lose £12000.
Had you bought and sold equal amounts of Dow and FTSE however, you would win/lose nothing except for paying two spreads.
Apologies for preaching to the choir!
Whether this is relevant to IK's system I'm not sure!
PS I believe Cantor quote the FTSE/Dow differential as well, but I'n afraid I don't know the spread
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frugi yes I agree entirely with your points.................however the whole principal of IKs system was that the difference between two instruments is NOT constant and will swing from one extreme to the other. IK exploited those unsustainable swings. Whether you look at points difference for %age difference this will always be the case. Whether you can derive a tradable and profitable system from this knowledge is of course another matter
regards
Neil
regards
Neil
i know everyones been moaning about IK but i'm personally up just over 500 tics on 7 trades since mid sept...with 1 loss....been very lucky with a couple of entries which i think are quite subjective...some trades ive waited before entering instead of doing trade on night of reverse...and enetered 1 position when offside ...currently -93 on ftse trade...was down 150 yesterady.....i'll only start questioning the system when that 500 disappears
yep exactly robber....it became clear to me after a few trades that i was too eager to reverse and getting in at 20-30 over the ideal just to see it back at the ideal level the following day....i think IK said to one of my colleagues that the trades seem to move offside (from the night of the reverse) about 85% of the time....(if that makes sense)....
elliottguru
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My advice to you is beware! there are many cons in this business. For example today I received an email from the daily reckoning (a service from Fleet Street Publication, a suposely well respected site) promoting a new money making share tipping service. It reads "make 10 to 20 times more money than any average investor". Then it continues "identify the exact moment to enter or exit a trade to reap the highest and most predictable return". "Amass significant amounts of wealth in a very few years". "57% in 36 days, 72% in 51 days, 217% in just 48 days".
The author of this tipping service, David Jones, claims that he was a successful currency trader in the city. However, after reading the entire article, I came accross the small print, which in general is very revealing. It reads "the overall gains on trades recommended by David Jones between 11/11/02 and 07/11/03 was -1.5%".
This is quite unbelievable!!! This pretend top trader can't even make money. How can this guy claims that he can make you rich when he is obviously not good at it? Remember his name, David Jones, you've been warned.
The author of this tipping service, David Jones, claims that he was a successful currency trader in the city. However, after reading the entire article, I came accross the small print, which in general is very revealing. It reads "the overall gains on trades recommended by David Jones between 11/11/02 and 07/11/03 was -1.5%".
This is quite unbelievable!!! This pretend top trader can't even make money. How can this guy claims that he can make you rich when he is obviously not good at it? Remember his name, David Jones, you've been warned.
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It's the same old story - if he could make money trading, he would be trading. Instead, he's keeping a roof over his head by being paid to run a share tipping service. Poor chap.
Still, to be fair to him minus 1.5% is still a whole lot better than the pension funds with their minus 20% returns. Perhaps he doesn't realise that with a record like that he should bung it all in the building society and go and sit on a beach somewhere nice. It would be far more profitable! :cheesy:
Still, to be fair to him minus 1.5% is still a whole lot better than the pension funds with their minus 20% returns. Perhaps he doesn't realise that with a record like that he should bung it all in the building society and go and sit on a beach somewhere nice. It would be far more profitable! :cheesy:
I wonder if this is the same chap: http://www.glomtc.com/profiles.htm ?
Makes you wonder?
Cheers
Mayfly
Makes you wonder?
Cheers
Mayfly
elliottguru
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yes, it is the same chap.
I remember I got an email in the past from Global Market Training, an invitation for a free seminar on technical analysis. David Jones was the tutor. On the site it reads "David is now a full time trader specialising in the UK & US equity market" WHAT A JOKE! THe guy can't make money, how can he make a living from it? I guess this is why he teaches other how to make money, his own trading account must be so deep into losses that he needs all the money he can find to fund it.
What I find extraordinary is the fact that a reputable publisher such as Fleet Street Publication is promoting someone who is obviously not good at it. They know that his performance was -1.5% in the last year, so why do they make it sound as if he is the top trader in the country? Surely they are misleading the public. I think I am going to complain to the FSA.
I remember I got an email in the past from Global Market Training, an invitation for a free seminar on technical analysis. David Jones was the tutor. On the site it reads "David is now a full time trader specialising in the UK & US equity market" WHAT A JOKE! THe guy can't make money, how can he make a living from it? I guess this is why he teaches other how to make money, his own trading account must be so deep into losses that he needs all the money he can find to fund it.
What I find extraordinary is the fact that a reputable publisher such as Fleet Street Publication is promoting someone who is obviously not good at it. They know that his performance was -1.5% in the last year, so why do they make it sound as if he is the top trader in the country? Surely they are misleading the public. I think I am going to complain to the FSA.
be-positive
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Hi Hugo,
well done H -------So is it back to Traders helping Traders without any financial gain for any individual :?:
amazing how this chatroom was an IK 'we are not worthy' shrine, then as soon as IK mentioned charging 25 quid a month, all the paper traders turned on IK and the whole system!! (and its only to two bob paper traders that are complaining!) its been like an old wimins moaning society this past week, and i suggest that anyone that doesnt like the system, IK, or making money, should...in the words of Norman Tebbit...."get on yer bike"...and find your way to the 'old wimins moaning room'