Index King In Da' House !

[indexking]

Thanks snip you just answered Delboys post for me !

1. No one is being forced to trade.
2. i have stated many times that losses may have to be carried.
3. I am posting trade information as an aid for others and so that they can use this information for their own methods too.

I hoped my trades would be a refreshing change from all the conjecture that goes on at this site. I told people earlier on I wasn't allowed to discuss the mechanics of the system and why, so why are you complaining about that now Delboy ?

The information I post regarding closing prices/targets should also help people with their own methods.Do you really want to censor my posts ??
I'm only trying to help people beat the Sb firms and if you would rather I kept the info to myself then lots of luck my friend !

Regards
IK

 

[oatman]

IK, I'm trying to follow this but you're not very clear mate.

 

[esiotrot]

Hi IK

Maybe you were a day too early?

Difference on close 5168 - now buy Dow/sell FTSE??

 

[mug2k]

Hi IK, the difference now is 5168! Do we buy dow/sell ftse 2moro?

Or do we just wait 4 you 2 tell us when its the right time to trade.

Cheers

Mug

 

[Grey1]

IK ,

Thanks for your contribution ..

I have a similar strategy as yourself trading US stocks.. I however am risk freak and would not allow excess risk in my day trading portfolio.. In fact I first think of the few $$ that I might lose than the possible million $ wins.. ( grey1 is a poor exit Trader )
Today I pair traded MEDI and ABGX to create a market neurtal positon till 6M after which ABGX broke out of 60 Min consoildation and hit its stop letting MEDI to run from 37.19 to 36.89 to produce a net profit of $924.11 as shown ..

The number of stocks was calculated based on BETA of both stocks compare to S*P500..

Unlike your method, I am strict about my stop loss and also donot use the same bet level ..

The chart below is just before closing my position ..

 

[indexking]

Dear all

There is no trade at this time. Do not try Buying Dow/Selling Ftse. That trade is done and was a loser !
Next trade will be Buy Ftse/Sell Dow but not yet, maybe tomorrow.

Regards
IK

 

[indexking]

Grey, that looks interesting tactic you use !. I guess a lot is down to risk tolerance. I am willing to go a long way into a trade to be proved wrong ! In my early days when I used price channels I was always getting caught in bull/bear traps only to quit and find the market moved in my favour..Thats why I like my current method which tells you when to get in and out.
I don't like to spread trade individual shares because of the high spreads on most. I like the indices because it's an overal reflection of market moods.

Regards
IK

 

[Wideboy]

I have been doing a bit of investigation...

For information I have attached a simple chart of the Dow/Ftse difference from beginning of the year to today. Top line is numerical difference, insert is the % difference relative to the level of the Dow at the time.

You can clearly see that in numerical terms the dow has risen further away from the ftse steadily throughout the year.

However the other graph showing the difference in % terms is more interesting. It seems as if there is an optimum level of difference which rests between 52-57%.

At the moment it looks to be in the middle of its 'trading range' so wise to stay out of any trade???

What do you think IK

Wideboy

 

[esiotrot]

Grey1
That's interesting. How did you identify the pair of stocks to trade?

This whole thread has thrown up some really great, new (to me) ideas for trading. The logical extension of pairing indices would be to move to pairs of stocks but I was flummoxed when it came to picking them!

Wideboy
I too have been fiddling around with charting of the differences between indices but I decided that they did not really help me in building a trading method.

I have now constructed an Excel doc which works by calculating a 20sma of the differences and then working out Bollinger Band: upper and lower figures. By then using a trigger level within the bands I could generate "Buy" and "Sell" figures. Seems to work when backtested.

This is plainly not the same as IK because at times we get different trades but certainly I will be pursuing this.

IK
This is a brilliant thread and although you have not given us your method it's certainly made me think about these mathematical based systems.

Keep it up.

 

[cube]

IK

I agree, you should keep to the system rules and post whatever difference targets are calculated. If the trade fails, then so be it.. that's the rules.!

It's up to us to decide whether to trade or not, you should bear no responsibility for our loss, if any. Anyway with a 84% success rate, we should see plenty of good trades.

If anyone is not quite sure about following you, they should paper trade first, or at least do what I am doing and use very low stakes. I'm only using 20p a point on Finspread and hopefully the stake will grow with the bank. So do not let the above posts deter you from posting. your doing fine.. I'm right behind you mate..

Cheers Snip

Snip
A question for you, I am a user of Finspreads, where do you find Rolling daily cash DOW & FTSE bets on the site? or do you use the telephone to trade these instruments?
Thanks cube

 

[oatman]

Wideboy, Nice one. Early on in this thread, this is exactly what I implied people should look at.

 

[snip]

Cube

You cannot do rolling cash on the Finspread site, but you can roll over future positions using email or the telephone when the expiration date is near.

For IK's system I have been using the October future, I can't really see much difference between that and cash. OK futures do not reflect the cash exactly, but they do follow the cash even if they lag or lead slightly.

Cheers Snip

 

[frankflintstone]

Wideboy,

Have you done the comparison over a longer period?

 

[Grey1]

There are many ways of pair trading ..


1) Convergent pair trading
2) Divergent pair trading

In convergent pair trading you pair trade two highly correlated stocks which for some reason ( News , Upgrade, down grade, accounting and the rest ..) pull away from each other..

A trader is betting on RATE of fall/Rise by creating a market neutral position to start with , and closing one position once the market has broken out ..

In divergent pair trading you trade two totally different stock /sector such as Gold stocks against semi conductor stocks..

The art of pair trading is to be able to find

a) Correct stocks
b) Correct number of stocks to hedge one against the other ( No good to hedge the same NUMBER of Stock X with low volitality against a SIMILAR NUMBER of fast moving stock Y...


The whole idea of pair trading is to REDUCE portfolio RISK due to incorrect market direction..

 

[indexking]

Hello
If anyone's interested a trade has been triggered on Dow/Dax pair
Buy Dax/Sell Dow @ target difference today of 5884.
As I post futures look promising !

Regards
IK

 

[Wideboy]

Sorry Mr Flintstone I have only gone back to the start of this year.
May test further if I get time...

 

[indexking]

Quick Update

Anyone doing the Dow/Dax one should now change tack and Sell Dax/Buy Dow tomorrow at a difference of 5893. Today lost 10 points on this but the exit and reverse has been triggered so I'm going with it !
Ironically the last Ftse/Dow bet looks like coming good as if you were still doing it would still be saying to Sell Ftse/Buy Dow !
My judgement got a bit knocked as I broke my rule of not listening to news. Hence I doubted my system !
Anyway see how it goes tomorrow

Reagrds
IK

 

[snip]

IK

I waited for DOW to close last night before getting out, so I was not burnt to much. Maybe I should have stopped with it for today, I just got a little worried because you had said you had already got out.

Cheers Snip

 

[indexking]

Hey Snip

Yes that lst Dow/Ftse was a bit of a cockup on my part. The trade is still valid but I wouldn't bother with it now.
This latest one Sell Dax/Buy Dow looks ok so far despite the initial Wall Street panic. If you can get the difference I said yesterday on it then jump in.

Regards
IK

 

[Grey1]

Pair trade today produced a profit of $912 in 2.5 hours.. ..

1000 short MEDI and 3000 long JNPR just before the cosolidation .. I had a neutral position for a while even though DOW was jerking +,- 10 points.. Both positions closed ..

PS-- if I was you I would not rubbish IK 's system in general but perhaps it needs a little more study in picking the right stocks /indecies and some kind of stoploss system..

The divergence of MEDI and JNPR prodcuced an unusual trade differential to converge pair trade for profit