How To Trade: Full Stop

[DionysusToast]

TE

When you talk about monitoring the cash and the futures - which index are you referring to ?

For the DOW - it always struck me that there are so few symbols in it, so as a representative of the whole market, it's fairly poor in that respect.

For the S&P - there's the full size, the mini & the underlying as well as the ETF. I always thought that various arb trades between them kept them in synch, although looking at the charts, I can see some disparity. Then again, in theory - doesn't the futures price have an element of interest built in ?

Looking back at the YM - I can see days where one was consistenly under the other - both in up moves & down moves, so you couldn't particularly say it was leading.

I'd be interested in hearing more about this relationship as I do use 'the market' in trading but had never thought to use cash vs futures in any way....

Interesting stuff.

 

[The Expert]

I thought this thread was about US stocks ?

.

One needs to do what one needs to do!

Whenever an opportunity arises you must act, but you must be prepared to act.

I have started a new thread for US Stock picks, feel free to partake if you like.

 

[The Expert]

TE

When you talk about monitoring the cash and the futures - which index are you referring to ?

For the DOW - it always struck me that there are so few symbols in it, so as a representative of the whole market, it's fairly poor in that respect.

For the S&P - there's the full size, the mini & the underlying as well as the ETF. I always thought that various arb trades between them kept them in synch, although looking at the charts, I can see some disparity. Then again, in theory - doesn't the futures price have an element of interest built in ?

Looking back at the YM - I can see days where one was consistenly under the other - both in up moves & down moves, so you couldn't particularly say it was leading.

I'd be interested in hearing more about this relationship as I do use 'the market' in trading but had never thought to use cash vs futures in any way....

Interesting stuff.

S&P 500, as that is where The Generals are at. We will expand later on, and I am sure that a few more here are aware of what I speak, as it is a well known observation used by many futures traders, but some say The Generals do not actually use it, even though they cause most of the movement. Ironic, is it not!

 

[DionysusToast]

Indeed - thanks for the tip.

As you indicated that this is commonly used amongst futures traders, so it didn't take a huge amount of effort to find some resources & articles where this is discussed. Using this information to sniff out program trades is also mentioned.

My first thought was to put cash & futures on the same chart and observe. On looking into this in slightly more detail, it seems a calculation of 'fair value' is needed to see if the futures out of whack. Basically see what the spread should be and what it is.

Perhaps something like : F = S [1+(i-d)t/360]

So - my goal will be a chart with cash, futures and my calculation of where futures should be. Interesting stuff if it can help to determine moves that will follow through.

It is Sunday & there's 2 kids that want a swim. I just wanted to put this out there.

One further question - as I embark on this - can I use the e-mini S&P for this or do I need to use the full size S & P futures ? I don't currently subscribe the the latter & Tradestation charge an arm & a leg for it.

 

[MrGecko]

I think the there is a ticker for this already, try $PREM / $ePREM

 

[DionysusToast]

I think the there is a ticker for this already, try $PREM / $ePREM

On Tradestation - it appears that it's $SPINX and $ESINX.

My gut feel is that this is probably best used to refine the entry. Other things mentioned in this thread are probably more fundamental to the approach.

We seem to be being lead down the route of getting something out of analyzing the ranges and using the gaps, as well as institutional ownership, short ratios, some option info too and possibly earnings announcements.

What I can't get my head around yet is how you'd bring this information together to set up entries and targets ahead of time. To me, daytrading is dynamic and the entry is not something you could call ahead of time.

If you look at this type of daytrading - L2/T&S & price action - it's like the 1 metre view of the market. Swing trading over multiple days would be more like the 10,000 metre view of the market. What I think T E is getting at is a slightly more leisurely 100 metre view of the market if that makes sense.

 

[The Expert]

No No No,I am not on about FV or $PREM.

Of course The Generals use FV and $PREM, for I would imagine that this is an integral part of their programme trading and arb trades, but as I have no interest in same, or ever had anything to do with same, I am just surmising!

I am on about something different, and as you have now raised a good discussion about it, I am not going to say what it is until someone works it out:smart:

Sorry if this hurts, but no one ever said trading was easy:cheesy:

 

[DionysusToast]

OK -so if we want to compare futures and cash, we have potentially 2 other items we could bring into play - TICK & TRIN.

Unless of course, you are talking about the activities of the PPT, in which case, I currently have no clue how to see their footprints in the snow - this being a tropical country and all.

 

[The Expert]

Careful TE, you're in danger of letting slip the secret hidden agenda

Please have that reason posted for me when I return later DB:?:

 

[tss42]

No No No,I am not on about FV or $PREM.

Of course The Generals use FV and $PREM, for I would imagine that this is an integral part of their programme trading and arb trades, but as I have no interest in same, or ever had anything to do with same, I am just surmising!

I am on about something different, and as you have now raised a good discussion about it, I am not going to say what it is until someone works it out:smart:

Sorry if this hurts, but no one ever said trading was easy:cheesy:

It's CL, the crude oil futures, that leads the S&P.

Usually, but not always.

 

[DionysusToast]

OK - DT's theory time. This could be wrong but being wrong is OK.

First - 'The Generals' - perhaps the plunge protection team would be one set of candidates for that title. Perhaps its just large players on the S&P Futures.

Second - the password... T E said he will only help people who will hxxx txxxxxxxxx - it's in one of his posts.

Now you see the PDFs. Do you just see a set of graphs or do you wonder why those symbols were chosen in that order ?

Aren't all of those stocks members of the S&P 500 ? Aren't they in an unusual order ? It's not alphabetic. Don't worry - I haven't figured out the order - it may or may not be of significance. It will come to you if it is.

Is there ever a scenario where stocks will be brought even if the majority of investors following that stock want to dump it (forget for a minute who's buying/selling the most) ?

Similarly, is there a scenario where a stock will be sold, even in the face of good news and lots of buying ?

Well - of course, there is the mysterious beast called an ETF. When people buy the ETF, authorised participants will buy the underlying stocks and vice-versa when people sell the ETF.

When the S&P500 rises, arbitrage ensures that the Index and the SPY ETF follows. In that situation, even your stock that gapped down and started to sell off on bad news will have some buying because the S&P Futures is rising. This may overcome the selling. Whether this buying action is via the ETF or people buying the underlying directly is probably irrelevant.

So - what do we have so far.

1 - The daily chart is mostly irrelevant. The range is more important. All days start from a clean slate.
2 - The gap,earnings, short ratio are important elements as may be option data.
3 - The index is important as is 'cash' vs 'futures' which could refer to a number of things - but I think it's to do with buying going on in S&P500 stocks because the futures is rising as opposed to anything happening in the stock itself

Think about it - if your stock is down and then there is buying pressure because buying is coming in based on the futures direction - wouldn't that give you a nice little bounce ?

Anyway - this is what I have concluded based on what I have read in this thread. I may be barking up the wrong tree.

 

[tss42]

So DT, as a corollary, it should depend on which stocks / sectors are weighed heavily on the major indices / ETFs.

 

[The Expert]

It's CL, the crude oil futures, that leads the S&P.

Usually, but not always.

No, and I keep away from Oil as that market is run by crooks and thieves

 

[The Expert]

OK - DT's theory time. This could be wrong but being wrong is OK.

First - 'The Generals' - perhaps the plunge protection team would be one set of candidates for that title. Perhaps its just large players on the S&P Futures.

Second - the password... T E said he will only help people who will hxxx txxxxxxxxx - it's in one of his posts.

Now you see the PDFs. Do you just see a set of graphs or do you wonder why those symbols were chosen in that order ?

Aren't all of those stocks members of the S&P 500 ? Aren't they in an unusual order ? It's not alphabetic. Don't worry - I haven't figured out the order - it may or may not be of significance. It will come to you if it is.

Is there ever a scenario where stocks will be brought even if the majority of investors following that stock want to dump it (forget for a minute who's buying/selling the most) ?

Similarly, is there a scenario where a stock will be sold, even in the face of good news and lots of buying ?

Well - of course, there is the mysterious beast called an ETF. When people buy the ETF, authorised participants will buy the underlying stocks and vice-versa when people sell the ETF.

When the S&P500 rises, arbitrage ensures that the Index and the SPY ETF follows. In that situation, even your stock that gapped down and started to sell off on bad news will have some buying because the S&P Futures is rising. This may overcome the selling. Whether this buying action is via the ETF or people buying the underlying directly is probably irrelevant.

So - what do we have so far.

1 - The daily chart is mostly irrelevant. The range is more important. All days start from a clean slate.
2 - The gap,earnings, short ratio are important elements as may be option data.
3 - The index is important as is 'cash' vs 'futures' which could refer to a number of things - but I think it's to do with buying going on in S&P500 stocks because the futures is rising as opposed to anything happening in the stock itself

Think about it - if your stock is down and then there is buying pressure because buying is coming in based on the futures direction - wouldn't that give you a nice little bounce ?

Anyway - this is what I have concluded based on what I have read in this thread. I may be barking up the wrong tree.

1. The Generals are those who put big orders into the market, so, they are the movers and shakers.

2. The order is irrelevant, and you have just demonstrated what exactly most traders always do, and that is, looking for something that is not there.

3.The daily chart is very relevant indeed, for remember, we have just scratched the surface of a valid trading approach, and that revealed the prerequisite for successful daytrading. We are a long way from consistent profits yet.

4. Any EVENT that moves the stock price is relevant, for, data is just the recording of events that have transpired.

5. The Futures are of immense importance, as the structure of order flow is intricate and complicated, involving Options, Index Futures and Stock.

We must remember that us little traders are but a drop in the ocean, and of NO SIGNIFICANCE what so ever, no matter how much you think otherwise.

I will give a hint for what I meant about the Futures vs. Cash, and the hint is related to my past words about Barry Rudd and A.N.Other, and the hint is,

The baby is carried around in a nice warm place and can jump out at anytime

 

[The Expert]

So DT, as a corollary, it should depend on which stocks / sectors are weighed heavily on the major indices / ETFs.

I do not follow sectors anymore, but I used to a lot, in fact, I used to watch every tick on the SOX, NBI, GHA, etc, etc, etc

One of the main things that a trader must learn, is to quickly distinguish between what works best, and what does not.

The majority of daytraders will trade as follows.

1. Look for lead sectors.
2. Look for leaders in the lead sectors.
3. Buy breakouts of PDH
4. Sell breakdowns of PDL

Fewer will add the following.

5. Scalp the TICK reversals
6. Scalp the narrow ranges

Very few daytraders will do what needs to be done for the best trades, and we should all know by know what the best definition of "the best trade" is:?:

 

[The Expert]

Another hint then.

Ganndolf is a tall story!

 

[tss42]

The baby is carried around in a nice warm place and can jump out at anytime

Ah, the 'baby' must be the mini index futures, the 'parent' being the pit traded contract.

 

[The Expert]

This one should really help those who have indulged in the art of scrutinizing words.

When they were finished they had a Butterfly!

 

[The Expert]

Ah, the 'baby' must be the mini index futures, the 'parent' being the pit traded contract.

No No No, you are barking up the wrong tree altogether!

Barry & A.N.Other were of immense help in limited scope.

The baby is located in a region where HE lives, and HE, being fond of Ganndolf, went and made a Butterfly with one of the Marx brothers!

 

[The Expert]

Ok, I know it is hard, but it is well worth it if you can crack it, in fact, if you do crack it then I will now say that you are not far from making that big leap from knowing all, to knowing very little, which is what you must know.

The KEY, and I will make this one an easy clue, is in the reading of the written words.

When I first read this one, I said here is another load of crap, but alas, and as I keep mentioning, it did add another mental image that was burned on my left lobe, after that, the rubbish bin was used again.