FTSE 100 - Strategies or Plans?

[Splitlink]

A lot of us have this work problem, it goes with the human race. I have to leave three hours before Footsie closes and get home 40 minutes before the Dow closes, so I share trade most of the time and trade Footsie some mornings when I can see something..

I've been through this worry about the markets being too high, before, over the years. You could be right but I don't think that I can see anything, just yet. People were telling me that a year ago when the Dow retreated to around 10000. Look at it now. Nevertheless, you have to follow your own decisions. You, obviously, don't like selling out but you must remember that, even in a bull market, a setback could last several days--better not to be in it, when that happens. Life's more peaceful. I think that what I said about closing and trying to get back in lower down, even if you don't manage it and buy back in a little higher is better than hanging on to falling prices, especially if you feel pessimistic about the future.

Barjon has a Footsie swing trading thread going. Find out what he's up to.

Good trading

Split

 

[ceydababy]

Thanks for your reply SplitLink

The problem I have, is I still expect all markets to get hammered within the next two months, based on the US markets completely overstretched, chinese market overstretched and this Bull run charging without a major correction. I cannot monitor the markets all the time due to work committments, so to close a position down that is running against me, is foolish in my opinion, but can be costly keeping it running. Today is a typical example, this morning I expected the FTSE, DAX and the American markets to rise steeply based on the Assian markets and M&A activity, but it didn't. So I could have closed my DOW and FTSE position before going to work and lost out by the evening. See my predictament !
Anyway, I do need to change my strategy in the near future, so I will keep reading traders comments on this bulletin board and get a few ideas.

Hi there,

If trading the FTSE I generally don't look at anything but the FTSE. What HK, Singapore, Tokyo, China did overnight I just don't look at. I find all this info skews my ability to keep a clear and concise head and trade what the chart is showing me.

Even when reports come out, I just don't hold a position. I try and get involved in the aftermarth when my charts give me a direction, not what I thought the report might mean to the market and take a position prior to the report.

If the FTSE is going to rally because of M&A hitting fever pitch I am confident the chart is going to show me this, rather than me trying to second guess that the FTSE will go up because Reuters are subject to a takeover.

Hope that makes sense.

 

[shortorlong]

two SB accounts equal and opposite trades

how about this:
two SB accounts equal and opposite trades
yes -- abritrage .... someone mentioned it already.
you can trade it two ways -> run your winner or cut your winner (when it is losing)
to run your winner you cut the losing trade (good unless you cut it on the top)
to cut your winner it must be losing what it gained already ( past the top, you are trading a pullback, a swing)

what is the point? why not just trade into the trend?
Well maybe it is phsychology

• it's easier psychologically to take a 'profit' (cut you winner)
• you might run your winners more often
• you have time to decide which trade to make maybe you wont rush into a bad trade

thoughts?
(I have not tested this yet) I don't believe paper trading would not work for this strategy

 

[Hoggums]

how about this:
two SB accounts equal and opposite trades
yes -- abritrage .... someone mentioned it already.
you can trade it two ways -> run your winner or cut your winner (when it is losing)
to run your winner you cut the losing trade (good unless you cut it on the top)
to cut your winner it must be losing what it gained already ( past the top, you are trading a pullback, a swing)

what is the point? why not just trade into the trend?
Well maybe it is phsychology

• it's easier psychologically to take a 'profit' (cut you winner)
• you might run your winners more often
• you have time to decide which trade to make maybe you wont rush into a bad trade

thoughts?
(I have not tested this yet) I don't believe paper trading would not work for this strategy

What you mention is not arbitrage, arbitrage is taking advantage in price discrepancies between two (or three) different instruments - either by comparing prices between brokers/sbs or comparing futures to cash or cross ccy pairs. e.g. if Cap Spreads were offering 6550-6551 on the ftse cash and IG were offerring 6557-6559 then you could by Cap spreads at 6551 and sell IG at 6557 - eventually when the indices moved back in line then you could close both and bag the 6 points profit (actually it would be 4.5 points by the time you factored in the spread) - no matter where or what the market did.

I dont believe the strategy you describe would work anyway because you would often end up in a situation where you close your loser only to find the market changes direction a short time later - turning your "winner" into a loser also - then you end up with 2 losers.

 

[shortorlong]

Hoggums et al

I have observed the prices for capital spreads and CMC get out of line (ftse).. but not by much .. although I have not made a study of it .. are there enough points in this arbitrage method?

someone else posted the same idea as mine . . but they set a stop at 20 points on the loser and just let the winner run .. this was an FX pair trade and by all accounts it worked in that case ..

back testing this on the Ftse (a few days) it worked on the larger moves (in the morning and when the US market took control) .. but it failed on a couple of days .. but maybe the placing of judicious stops should control loses on those days .. meanwhile the winning days gave 20-30 points

 

[Hoggums]

Hoggums et al

I have observed the prices for capital spreads and CMC get out of line (ftse).. but not by much .. although I have not made a study of it .. are there enough points in this arbitrage method?

someone else posted the same idea as mine . . but they set a stop at 20 points on the loser and just let the winner run .. this was an FX pair trade and by all accounts it worked in that case ..

back testing this on the Ftse (a few days) it worked on the larger moves (in the morning and when the US market took control) .. but it failed on a couple of days .. but maybe the placing of judicious stops should control loses on those days .. meanwhile the winning days gave 20-30 points

I don't see the point in entering 2 positions only to close one at a loss at a barrier. Why not do nothing and enter the so called winning position when the barrier is hit? That way you are not handing over the spread of the losing position to the broker.

Can you see this system is no different to another thread on this forum called "FTSE System" (I think) which can work but worryingly doesn't appear to work on all indices.

 

[shortorlong]

I could not find the thread you mentioned
however -- yes you are right ,why not indeed just trade the trend at the point indicated with this arbitrary number..

well .. . .maybe the only benefit might be .. it might prevent me from trading when I should not be trading .. when there is no distinct trend..

 

[migrations]

Hi, may I add something to this.

I'm relatively new. But learning fast and the hard way (£500 down at the mo)! I usually trade a stake of 1 and have been doing whilst I try things out. The losses have nearly ALL been when I've jumped in and lost my cool, tried to recover and made things worse.....
Getting on top of the natural human urge to fiddle with things is the SB company's biggest winner.

So the best thing to avoid sky-rocketing blood-pressure is to have a good plan, BE DEEPLY CONTENT WITH IT, make sure you have plenty of excess funds on your SB account that gives your plan a chance to work out, and get off the computer as soon as possible.

Anyway I looked at the past month on the ftse, rises, falls etc, and calculated that if you'd followed the first move after 8am (long or short basically, that's the choice that is made for you by doing this - as soon as your SB company will let you on...) you'd have profitted very nicely.

Before you do this you must make a vital decision which will affect the way you trade.
Decide the STOP-LOSS question. Stop losses can be a pain. Or they can give you some safety.
My question is, what is the point of a crossing barrier which is in the middle of the road?
I think it is utterly pointless (from personal out-of-pocket experience) having a stop-loss at all if you don't set the shortest one possible. So either have one, or don't.

Over the past month on the FTSE100, interestingly, both options would have left you with a handsome profit.

If you'd traded without your own stop-loss, you'd have made MUCH more - but risked more of course. However, in the past month ONLY ONCE would you have been left high and dry (gone out with a 50 stop-loss). You'd have made a very significant profit over the month in up and down bets, around 450 - 500 points....
Most trades that reverse and go against you, end up coming back - IF you'd traded in the direction of initial flow. Stop losses prevent these additional chances for profit - depends on your stomach as to whether you follow this route!

If you'd used the shortest stop loss of, say, 4, you'd have been stopped out 8 times out of 20. That's 12 profitable trades out of 20, average win 22 or 23 points.....

As for stop losses of any other amount, say 14....or 20...(let's be arbitrary!) - well the wrong trade just goes against you anyway, so why lose more? A loss is a loss, why make it 20 instead of 5? You cannot guess a useful stop loss level anyway! So, decide between minimum, or no SL.

As someone said, a loss is a success if you followed your plan. I really like that.

When you've set the stop loss, SWITCH OFF the computer, and occupy your valuable time doing something else. Until 3pm. Then come back and inspect. Make sure the market isn't moving in your favour before quitting the trade.

Hope this is fodder for discussion anyway!

 

[hobby]

Hi,

I'd reccomand IG INDEX if you are into Spread Betting, as their Platform is dead accurate.

.... if you mean from a price perspective, then IG are *far* from dead accurate! Do you have a live market feed o compare against? IG do way too much price skewing for my liking.

 

[shortorlong]

good work migrations! .. your analysis is very valuable ..
I made 4 trades this morning using the capital spreads simulator all shorts on the dax. the last one went wrong and I shorted again from a higher level .. this would be very risky with real cash but today it worked out .. the worst position on that last trade was £500 down . but, not real money so no pressure. My first trade was selling the spike .. I was only looking for a few points and I got three .. I have placed so many trades which have gone the wrong way after a few minutes .. so this was me trying to collect just a few points at a time .. it should be possible to do this a number of times in the day .. but -- my second trade almost went wrong as I hesitated .. I had the points .. but then it looked like I was going negative pretty quickly so I closed it for one point. The third short went to plan .. check the times . one minute three points .. nice!

Then came the trade that could have messed things up - a definite case of running my loser there. My second short on that last trade was 40 points away from the first trade .. I think I may have closed for a loss had it been real cash. I had no stops in place .. if I had I would certainly have wiped out my previous points .. or maybe your very tight stop idea could have saved me. ..

looking back at the CMC chart reveals shorting to be the wrong direction today .. so I was lucky .. but had I followed a 10 points up from 8PM to decide my direction I would have bought the dax at 7679 @ 8:11 and found myself 19 points down @ 8:29 .. better than my last short but I don't know if I would hold using real cash .. that would have been a real sickener if I stopped out only to watch it rise all day ..

Date Time Ticket Dealer Market Action Stake Price
25-May-07 09:51 1412077 System DAX Rolling Daily Buy 20 7659
25-May-07 09:08 1411859 System DAX Rolling Daily Sell 10 7688
25-May-07 08:30 1411671 System DAX Rolling Daily Sell 10 7648
25-May-07 08:28 1411658 System DAX Rolling Daily Buy 10 7653
25-May-07 08:27 1411653 System DAX Rolling Daily Sell 10 7656
25-May-07 08:25 1411637 System DAX Rolling Daily Buy 10 7663
25-May-07 08:22 1411622 System DAX Rolling Daily Sell 10 7664
25-May-07 08:22 1411615 System DAX Rolling Daily Buy 10 7666
25-May-07 08:18 1411603 System DAX Rolling Daily Sell 10 7669

yes . I realise this is a FTSE thread .. but I decided to trade the DAX after comparing its chart to the FTSE . I was late arriving at the computer this morning and made a hasty decision . if I had trade the ten point direction after 8AM on the ftse I might have done better .. I should say my last trade on the DAX . (the one that went horribly wrong) ..was by far the largest points winner for me this morning .. ah but not real money

 

[Splitlink]

Hi shortorlong,

Yours is a case of getting the trend direction wrong, right from the start, and trading against the trend. I do the same quite often, so have my sympathies, I know what it feels like

What we have to do is get the trend correct, at the start. How to do that?

 

[shortorlong]

hi Splitlink, yeah I really did get the trend wrong.. and maybe I shoulda known better in the current market.

The strategy that I was testing yesterday was scalping a few points here and there since I figure you can't predict what the market will do with any certainty at any time ever. you can't guess the trend

except .. maybe . the market does not travel in a straight line for any length of time .. .. there is always an opportunity to take a few points as it falls off the back of a strong move .. for example the dow yesterday had a wonderful spike on the news at 3pm and then fell away for the rest of the session ..

I think guessing the trend and sticking with it may be the best way to collect or lose large numbers of points .. but do you feel lucky? do ya?

 

[Splitlink]

I think guessing the trend and sticking with it may be the best way to collect or lose large numbers of points .. but do you feel lucky? do ya?

I always feel lucky, otherwise there is no point in doing it

How about, when you are entering a trade, at the same time write the prices for the opposite direstion. If you make two or three lossmakers, how much would you have gained had you been trading the other way? That could give a clue if the trend direction is wrong.

Split

 

[shortorlong]

I always feel lucky, otherwise there is no point in doing it

How about, when you are entering a trade, at the same time write the prices for the opposite direstion. If you make two or three lossmakers, how much would you have gained had you been trading the other way? That could give a clue if the trend direction is wrong.

Split

this is historical .... I don't think you can predict the future by looking at the past .. well in trading anyway

nearly every time I make a trade, I gain a few point and then lose them before closing out.. so .. going back to my wacky two accounts equal and opposite trades method (counter intuitive I know).. cutting my winner quick would let me collect points on the the losing trade as it falls back ..

the point is not to be greedy .. trade very short term .. I guess if I lose points on a trade then my timing is wrong .. close it, take the the loss .. move on ...

I am nearly ready to test this theory with real money .. the SB companies will love it

 

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[shortorlong]

May 29th 2007 to June 1st 2007

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DEAL 29-MAY-07 GBM2RT FTSE 100 Daily 29-MAY-07 6592.30 -£2.00 6582.30 £20.00
DEAL 29-MAY-07 GBM3PQ FTSE 100 Daily 29-MAY-07 6587.00 +£2.00 6578.00 £-18.00
DEAL 30-MAY-07 Z7U6BT FTSE 100 Daily 30-MAY-07 6558.70 -£2.00 6542.00 £33.40
DEAL 31-MAY-07 GBPNRH FTSE 100 Daily 31-MAY-07 6638.30 +£2.00 6638.30 £0.00
DEAL 01-JUN-07 Z7WNKY FTSE 100 Daily 01-JUN-07 6626.30 +£2.00 6647.00 £41.40

All above trades were done straight after 8.00am, and finished before 8.45am with IG Index

Fairly "OK" Week of trading......

Regards

Jonny, London UK

nice work!
but your original plan said only one trade per day and only 14 points either way and leave the screen .. so what actually happened?

 

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[shortorlong]

bad luck DJSole
what is your method for choosing short or long? Your initial post said choose between 8:00 and 8:05. but the market can look like it is going either way in five minutes. Have you defined your method for entering a trade?