Do you do this based on a pure monetary value of the 2 instruments or do you look at the ATRs as well?
For example, why did you pick £5 for the DOW trade?
FTSE moves about 80pts a day but you have to be careful as DOW moves about 170-180pts a day.
Do you do this based on a pure monetary value of the 2 instruments or do you look at the ATRs as well?
For example, why did you pick £5 for the DOW trade?
FTSE moves about 80pts a day but you have to be careful as DOW moves about 170-180pts a day.
I can't do that. It is hedging and is against my style, although it may be a perfectly businesslike way of do it. For the reasons that you express I am reluctant to trade the Dow against FT. It may not keep that proportion of movement.
On the other hand, I'll never be rich like Jon!
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barjon
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SM
Because 1 ftse point (ftse stands around 5300) is equivalent to 2 dow points (down stands around 10600). So, £10 ftse, £5 dow - £10 x1 = £10, £5 x 2 = £10
Demonstrated by your concluding sentence - ftse moves 80 so dow should move 160. In fact it's really the other way round since dow pulls ftse along - sometimes ftse trades strong relative to dow (better than 1 point for 2 on up moves and/or less than 2 point for 2 on down moves) sometimes weak.
jon
edit: whoops transposed figures, alright now
Ok - thanks. I meant with the ATR, FTSE shows a value of 80, DOW 160.
Dow could very well be priced at only 1.5 times yet move twice as much couldn't it depending on how theprice moves. Obviously, not with such highly correlated instruments.
For example, say you wanted to trade oil but hedge with gold (not necessarily a good idea but just for example purposes), you couldn't simply say £1 on oil is 80 and £1 on gold is £1,200 therefore we should trade £15 per point on oil and £1 on gold - that's going to get you in a lot of trouble. Better to look at how much they move per day and work out the ratio on that. Oil moves about 200 pips a day and so does gold, so ratio would be 1:1?
No, I appreciate that but as an example, some of us were talking about the carry trade here:
http://www.trade2win.com/boards/general-trading-chat/100250-carry-trade-calculations.html
I know some people who used to do bet pairs on oil and the EU or oil and USD/CAD, for those it's a bit harder to work out the values.
neil
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barjon
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neil
not an unusual occurence. SBs' ftse quotes follow the dow and us futures after hours and often make a gradual adjustment towards the likely opening in the morning. It's not an exact science for them and probably one of the reasons many go "phone only" for a minute or two before and after the open.
jon
not an unusual occurence. SBs' ftse quotes follow the dow and us futures after hours and often make a gradual adjustment towards the likely opening in the morning. It's not an exact science for them and probably one of the reasons many go "phone only" for a minute or two before and after the open.
jon
neil
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kingfisher3210
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Yes. I agree. Jon Boss is expert in structure of markets
Frankly i would have loved to trade US S&P 500- No clones, nothing. Since FTSE 100 is a clone of DJ in last 2 hours, FTSE day traders need to have good knowledge of Dow Opening movements as well.
I cant trade S&P 500 because i have shifted to Dubai and S&P starts at 5:30-6:30 P.M evening time (Dubai) which is a headache trading after stress ful work day.
I can trade India Nifty Future - my home market and i am good at it and time zones allow it as well. But the same problem-
India Nifty Future follow FTSE 100 in last 3 hours during summer time and in last 2 hours during winter time. So, i have to have the mindset of Nifty Future as well anticipate what FTSE is going to do. It is not exactly the duplicate tick by tick since Indian traders have their own mindset as well (regarding what it high and what is low) but it do follow FTSE in general direction.
There is no escape to market interconnectedness. Nikkei or most other asian markets except India escapes it since they are closed by the time europe opens.
It is actually a double hardwork- I am learning Nifty Mindset, learning FTSE collective mindset and then integrating both of them.
Sorry for late reply Tom.
Here is the chart ( ignore my markings)
Company results out @ 7'ish (or that's when I started seeing the headlines)
Swiss Re , Barc , Shroders , Commerzbank , Rio, Unilever and a few others , so could be some adjustments going on as a result.
Also some $ and Y (in terms of £ , E) strength around that time (havent looked @ the debt markets).
so all would play their part. (may be a news item in the press/on the wires , nothing stood out , but cant say I looked that hard , I'm a lazy git that early in the morning
) . ask someone with a bloomberg terminal.kingfisher3210
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Company results out @ 7'ish (or that's when I started seeing the headlines)
Swiss Re , Barc , Shroders , Commerzbank , Rio, Unilever and a few others , so could be some adjustments going on as a result.
Also some $ and Y (in terms of £ , E) strength around that time (havent looked @ the debt markets).
so all would play their part. (may be a news item in the press/on the wires , nothing stood out , but cant say I looked that hard , I'm a lazy git that early in the morning
I think we try to rationalize every movement market makes but we have no idea how traders behind the screen or on what basis are they buying and selling. You see, every traders has its own support, resistance points and every one has a different theory what work and what not that a full encyclopedia can be written on trading.
I really like what Livermore said - " There is no bull side nor bear side to the markets. There is only right side.
So true. Day in day out, this statement works on every market. In this pattern recognition numbers game, i am sure experienced traders whose left brain (analysis) and right brain (intuition) are developed, for them it is easy to enter and exit trades because they know really know the 'collective mindset of markets'.
Just 2 weeks back i was watching 9:30 a.m BST data release- Net lending to individual decreased, Mortgage application decreased and as crazy as it sounds FTSE increased 10 points from 9:30- 9:45 a.m. 10 points is big thing in a day trade.
From 9:45 a.m, then FTSE decreased 17 points till 10:45 a.m. But it does not seem that FTSE traders will express a delayed reaction.
At 9:30 a.m, I have no information-
1) How many traders are long in the market?
2) How many traders are short in the market?
3) How many traders who are currently in the market are planning to exit?
4) Potential force- How many traders who are watching the market are planning to enter the markets?
What a game full of uncertainty, paradoxes and contradiction. Worlds most toughest and challenging puzzle for brain- Trading.
barjon
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hi, king
FTSE may be a clone in terms of direction, but not necessarily in terms of relative strength. It will often trade strong (better than 1 point for 2 dow points on up moves and/or less than 1 point for 2 dow points on down moves) or weak against the DOW, particularly when it has been over pessimistic or too full of enthusiasm in the morning.
There are good clues to be had in this.
jon
kingfisher3210
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Right Boss. I agree. Clone in terms of direction but not Relative strength as FTSE traders have their own opinion whats high and low.
barjon
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gamble
GAMBLE . No-one on here gambles, OT. We gain our profit or take our losses with an elegance born from a finely honed appreciation of the market's music and the style to take the floor gracefully as we dance to it.gamble, forsooth, perish the thought
jon
Negative price action Friday makes 05/08 possible swing high, though slightly higher than the previous.
Price fall through 5353 confirms short hikkake signal originating from inside day Tuesday (though I missed the chance to enter yesterday as this happened).
Price failed all week to breach the 61.8% retracement level 5434 from the July low towards the April high.
RSI is high and stochastic is overbought, also showing negative divergence with price.
The weekly chart resembles a bearish pin bar pattern, suggesting weakening buying pressure.
The US printed a high hammer, suggesting weakening buying pressure.
This all reads bearish to me.
Incidentally, I notice the FTSE SB tick chart more resembles the US candlestick yesterday than the FTSE's own. This puts the current FTSE quote in the upper part of Friday's range, whereas it rests in the lower regions of the range on the underlying market chart. I am supposing this suggests an early bounce on Monday morning and the opportunity to take a short well above Friday's late prices and close.
Price fall through 5353 confirms short hikkake signal originating from inside day Tuesday (though I missed the chance to enter yesterday as this happened).
Price failed all week to breach the 61.8% retracement level 5434 from the July low towards the April high.
RSI is high and stochastic is overbought, also showing negative divergence with price.
The weekly chart resembles a bearish pin bar pattern, suggesting weakening buying pressure.
The US printed a high hammer, suggesting weakening buying pressure.
This all reads bearish to me.
Incidentally, I notice the FTSE SB tick chart more resembles the US candlestick yesterday than the FTSE's own. This puts the current FTSE quote in the upper part of Friday's range, whereas it rests in the lower regions of the range on the underlying market chart. I am supposing this suggests an early bounce on Monday morning and the opportunity to take a short well above Friday's late prices and close.
