The Dow - May 23-27 2005

[peterpr]

rather than gambling on a gap fill which at the moment would equate to about 20 pips (not much reward)...

Leesh. I've done it dozens of times and don't see it as a gamble any more than I see any other trade as a gamble. If there is no clear news influence - and today is classic in that regard - then I watch the futures from the Euroean open. They rarely move one way though to the US open. There is usually a trend which reverses 20% or so 30-60 minutes before the open (no such reversal today - yet - which is ominous ). I try to pick the extreme point in a sluggish market then set a tight stop.

20 points is plenty of reward thanks. It's 25% of my weekly target and involves less risk than some of my other set ups.

 

[leeshindig]

I didnt mean that as a pop at your system if its part of a larger plan then fine...all I was indicating is that most gap fill plays are based on statistics....combining them with other high statistic plays will increase your success rate..

so maybe look to play the gaps that occur near former supports and resistance or a pivot...and the ones that gap into no mans land? (a la today)...then maybe wait for it to settle...

just my experience of course............

 

[leeshindig]

pivot is high+low+close/3

 

[peterpr]

I didnt mean that as a pop at your system if its part of a larger plan then fine...all I was indicating is that most gap fill plays are based on statistics....combining them with other high statistic plays will increase your success rate..

so maybe look to play the gaps that occur near former supports and resistance or a pivot...and the ones that gap into no mans land? (a la today)...then maybe wait for it to settle...

just my experience of course............

That's OK Leesh. I closed that one manually on the first bounce off 5000 for a loss of 4. There have now been no fewer than 5 x 3 minute candles bouncing off Daily S1 at 10,482 - Could be a turn but I'll be surprised if it holds much longer. Beginning to look like that gap could sit there for a while

 

[leeshindig]

it might just faff about until FOMC also..before dropping further or maybe a gifted run up to todays pivot at 518 to short?...

 

[leeshindig]

and here we go..if it hits the piv im tempted

 

[kevinmcm]

it might just faff about until FOMC also..before dropping further or maybe a gifted run up to todays pivot at 518 to short?...

3 day pivot is around 485 and so far doing what its supposed to do, being pivotal

I've had a bearsih view on indices for a couple of days. If DOW closed around 485 or inder it would confirm the short term outlook (I look at 3-5 day periods) is likley to be down. FTSE & DAX confirmed a slip was a high % play today, maybe US will follow but need FOMC out of the way first though!

 

[TheBramble]

Back a little earlier than expected - needn't have rushed....

Quickly dropped after today's open to where I thought it might end up yesterday (480/85) and seems to want to play the range game again.

I play ranges myself (on stocks) but this is too narrow for my style.

I have NO IDEA which way it's likely to go - if at all - but my intuition is still biased toward it falling rather than rising.

 

[peterpr]

it might just faff about until FOMC also..before dropping further or maybe a gifted run up to todays pivot at 518 to short?...

I have the low point today so far as pointing to a bit of an overbalancing of previous corrections during the run up from 10073. That's telling me that we're likely into topping action for the current bull run. Could run up to the 62% retrace at about 10,600 during the process but I'll be watching for good shorting opps.

It just clipped your 10518 and turned back too, but I have the pivot at 10523 - automated calcs but I must check them..

 

[kevinmcm]

It just clipped your 10518 and turned back too, but I have the pivot at 10523 - automated calcs but I must check them..

A touch under 517 is what I have.

 

[peterpr]

A touch under 517 is what I have.

Plenty of volume keeping it above S1 again (my S1 at 10482 anyway).

I've checked the calcs. My numbers are from the YM and look OK to me. Small differences accounted for by having chart template set to main market close at 1600 or to include the auction at 1615. Must watch that one - hadn't really occurred to me before. I believe the floor traders norm is to use the official market close price whch does include the auction. Anyone able shed light on this ?

 

[peterpr]

That last post of mine wasn't too clear (the pivots bit I mean) and got me thinking.

It's pretty obvious that the main point of reference has to be the official close price of the index proper so, it's the YM price at 1615 that should be used to calculate the YM pivots since it takes full acount of the official index closing price. It's a good illustration of why you can't be too damned precise about these levels though since there are bound to be slight variations among traders in arriving at them.

 

[leeshindig]

it hasnt clipped 18 at all?...what data feed are you using?....

I have the spike high after the opening drop at 10508?

 

[CZON]

That last post of mine wasn't too clear (the pivots bit I mean) and got me thinking.

It's pretty obvious that the main point of reference has to be the official close price of the index proper so, it's the YM price at 1615 that should be used to calculate the YM pivots since it takes full acount of the official index closing price. It's a good illustration of why you can't be too damned precise about these levels though since there are bound to be slight variations among traders in arriving at them.

What instrument are you trading? On spread betting daily cash, the closing price is as of 1600 market close. Incidentally does anybody have a better deal than spread betters in the UK? They are market makers and I have been ripped off L-R and C by them sharks.

 

[leeshindig]

try interactive brokers

 

[stellarog]

it hasnt clipped 18 at all?...what data feed are you using?....

I have the spike high after the opening drop at 10508?

YM June futures hit 10518 around 16.15

 

[peterpr]

it hasnt clipped 18 at all?...what data feed are you using?....

I have the spike high after the opening drop at 10508?

I think we're talking at cross purposes here. There was a spike at 16:18 UK time on the DOW index which just touched 10510. The corresponding spike on the YM mini Dow futures contract (which I was referring to) was also at 16:18 and touched 10518. The figures are the same for both the IB and ESignal feeds (I use both)

 

[peterpr]

What instrument are you trading? On spread betting daily cash, the closing price is as of 1600 market close. Incidentally does anybody have a better deal than spread betters in the UK? They are market makers and I have been ripped off L-R and C by them sharks.

Whatever SB firm you use, you are not trading the DOW index proper, or its futures derivatives. You are trading the particular firm's derivative of the index. The price of that derivative is in turn dictated by the firm's proprietory calculations and it's hedging activities in the futures market.

The biggest problems with SB trading is that you are not trading in a regulated market and your quote privider has a clear financial incentive to trade against you. Whether or not they do so (even just occasionally - tongue-in-cheek smilie needed here Sharky) is a very moot point indeed. They are regulated by the FSA but - and its a very BIG BUT, their products are not themselves traded in a market - their prices are simply quotations which you can take or leave.

 

[TheBramble]

Tight as a Coiled Spring OR as dead as a Dodo?

Volume decreasing during lunch (nothing surprising there), but it's narrow even by my reckoning.

Well worth watching. Descending Triangle, Fibs lining up and you can almost 'sense' the impatience building. There a lot of traders everywhere just ITCHING to get some action...

Whichever way it goes - the first definitive move is likely to attract a big following, but if the initial spurt is up it's more likely to be the tail wagging the dog.

If it goes above 550 on big volume and re-tests 550 successfully - I'll be Long.

If it goes below 400 on any volume, I'll wont be waiting for a re-test of 425 - I'll simply be Short.

 

[CZON]

Whatever SB firm you use, you are not trading the DOW index proper, or its futures derivatives. You are trading the particular firm's derivative of the index. The price of that derivative is in turn dictated by the firm's proprietory calculations and it's hedging activities in the futures market.

The biggest problems with SB trading is that you are not trading in a regulated market and your quote privider has a clear financial incentive to trade against you. Whether or not they do so (even just occasionally - tongue-in-cheek smilie needed here Sharky) is a very moot point indeed. They are regulated by the FSA but - and its a very BIG BUT, their products are not themselves traded in a market - their prices are simply quotations which you can take or leave.

Vacillating for the last few hours between 10480 and 10500, hmmm any hints guys?. BTW I agree with your comments about SB firms, I have to part with some moeny to learn from experience. Can you recommend some real DOW index proper trading firms, or its futures?