Controlled Risk Bets

[Gekko]

Hi.

I have noticed a few people saying that their control risk bet levels have been stopped out overnight by certain spread betting companies. Does anyone have any experience of this and is it because their stops where just to close to the market price?

I am making a shift from daytrading the Dow to holding a position for a few days and would put my stop about 100 points away from a current price.

Thanks

 

[Trader333]

Gekko,

Spreadbetting companies continually adjust their spread overnight depending upon what is happening in the futures market which frequently moves quite a way before the cash market opens. It is probably worth doing some research on the Average True Range (ATR) of the Dow futures but specifically overnight. If, for example, the average true range over 10 days is more than 100 points then there is a reasonable chance that you would get stopped out. If it is down at 50 points then you maybe wouldnt. It will also depend on general market volatility which can be affected by such minor things as potential wars etc

Good Luck


Paul

 

[Gekko]

Thanks for the reply. I was aware they based their prices on the futures but did`nt realise they moved quite so much overnight, probably due to thin volumes. Any idea where I could get the Average True Range data?

 

[Trader333]

Hi Again Gekko,

A good question, I know it was easy for me to say go and get it but because you would be primarily interested in overnight moves only, this may be a bit more tricky to find. I will see if I can come up with something.

Cheers


Paul

 

[NickW]

As chance might have it, I started logging this data on Dec 2nd and finished on 16 Jan (33 data items). But for the overnight S&P future - you should be able to work out an approximation for the dow - but I think dow futures are more illiquid than S&Ps so bear that in mind.

The average overnight range for this period was 8.7, the largest was 17.6, smallest was 1.8. There were 2 under 5pts, 19 under 10pts, 11 under 15pts and one higher than that (17.6).

Other numbers, the median range was 8.0, the standard deviation was 3.8.

These were all bid prices - so add whatever the overnight spread is on top.

Nick

 

[Gekko]

Thanks