Daily Dow

[Racer]

I posted about the daily dow on another thread and included this spreadsheet that I did some years ago, but thought I would like to invite comments on it on the indices board.

Having done several spreadsheets I came to the conclusion that trading the daily dow was extremely difficult and you had to win far more than lose just to break even. So risk reward was unacceptable!

 

[TheBramble]

I came to the conclusion that trading the daily dow was extremely difficult and you had to win far more than lose just to break even.

Erm...if you win more than you lose, you make a profit.

I think you were referring to the outcome of SB prices on the Dow where the spread sometimes (!) reduces the profit on a winning position and enhances the loss on a losing position.

As mentioned elsewhere, providing your trading system has a positive expectancy, you'll do better with a broker than an SB - on balance - for intraday dealing.

 

[Racer]

Yes.. to a cartain extent.. but because of the way they skew the prices, the losers are bigger than the winners and so wipe out all those 'small' wins that you had.

I meant as in % wins compared to losers...

i.e., say 70% winning trades and 30% losing trades..

Win small number of points on those 70% compared to much greater losses on the 30%, so in effect you are losing more whilst winning more...

 

[The General]

FWIW lads, I believe that CJ12's methods could help you get around this - he looks for retracements of moves (usually inter and intra day) and then sets a % of that move as a stop. So, in essence, he never has a fixed 10 or 20 point stop. The actual number of stop points is a function of the initial move which is currently being retraced.

 

[Racer]

If you look at the spreadsheet:

Dow rises 19 points,

you get in at 22...sell at the high 30 equals 8 points

Dow falls 12
short at the high 30 buy back at 22 equals 8

so for a 31 point move on the dow you get 16... if you are very lucky and time it 'exactly'!!

So IMO very hard to scalp the Daily dow.

I did some other spreadsheets that showed even more skew and difficulty for trading, but such a long time ago now can't remember which computer they are on!

 

[PAINTACE]

Racer

"Having done several spreadsheets I came to the conclusion that trading the daily dow was extremely difficult and you had to win far more than lose just to break even. So risk reward was unacceptable! "

Difficult to trade......yes but that is really down to your own ability (me...lack of it )

Unacceptable risk/reward.... no. Your trading plan will only allow you to make acceptable trades. If you trade via SB, your plan will account for any bias in prices.

happy trading

pa

 

[ChartMan]

you get in at 22...sell at the high 30 equals 8 points

If you trade futures ( or cash) with a 10 point spread, You lose 2. twice. If the spread is 5 ( CS cash) you win 3.IF you are lucky.
In practice, NO CHANCE.In practice you'll need to capture a 30 point move to make a profit. Rarely will you get in at the exact peak and trough. To be totally realistic, add another 5- 10 points to the spread for this.