Trading Indices

[Shooza]

Does anyone ever win trading indices?

Seems like i only ever lose big when it comes to indices.

I can make a comfortable 3k/month trading equities alone, but in the past I've had big losses on index trades, the biggest of which occurred last year at 20k+.

I guess the system that I use to trade equities doesn't work so well for indices.

Is there any reading that someone can recommend for understanding indices better?

 

[Tryion]

If you can make a comfortable 3k+ a month trading equities, why would you want to trade indices- especially with your track record?

if you wish to make more then 3k a month- can you not just increase the volume or value of your equity trades? Or would this not work in your system?

 

[Shooza]

That seems like the logical solution, why bother with it in the first place?

But i'm just not comfortable with giving up. I don't like to leave something knowing that I've "lost" with it. I guess I just have a stubborn nature and feel that I have to win at it rather than just walk away.

Equities are easier as they follow certain rules and patterns..............but indices don't seem to follow anything and are completely random to me.

BTW just to give a little background, I trade as a part time thing, I work full-time so don't require profits from trading to pay the bills etc.

 

[Jessiee]

These Forex indices are in fact the indicators of market and tell us about the current market situation. We can make a decision based on the indices. If the source of theses indices is not verifiable then there is high chances that theses don't present the actual state of the business and hence a wrong decision results.

 

[Dinos]

Does anyone ever win trading indices?

Seems like i only ever lose big when it comes to indices.

I can make a comfortable 3k/month trading equities alone, but in the past I've had big losses on index trades, the biggest of which occurred last year at 20k+.

I guess the system that I use to trade equities doesn't work so well for indices.

Is there any reading that someone can recommend for understanding indices better?

I trade FX and indices for my daily bread and butter, I found the setup I use for FX doesn't work on the indexes, the answer to your question is yes, it is possible to make a good return from trading the indices. I had little success when trading time based charts, and when I used tick based charts, the results improved tremendously, you, have a look, it might be what you need.

 

[NVP]

indices and Forex are Chalk and Cheese

I fuse them together in what I do for forex but they trade entirely differently

most forms of tick trading are indeed a good indicator for assisting in indice trading reacting to the overbought/sold levels

but the lack of continuous and liquid markets frustrates the hell out of me........if I did trade anyof them it would be the mightly Dow

N

 

[Liquid validity]

That seems like the logical solution, why bother with it in the first place?

But i'm just not comfortable with giving up. I don't like to leave something knowing that I've "lost" with it. I guess I just have a stubborn nature and feel that I have to win at it rather than just walk away.

Equities are easier as they follow certain rules and patterns..............but indices don't seem to follow anything and are completely random to me.

BTW just to give a little background, I trade as a part time thing, I work full-time so don't require profits from trading to pay the bills etc.

That's just pride TBH.
Bottom line you make a profit in equities, stick with it.
The edge, the instrument, the risk management, the strategy, all leads to one place - profit or loss.
Stick to whatever works for you.

 

[timsk]

Hi Shooza,
Welcome to T2W.

Can you outline your methodology when you've been trying to trade indices? If we knew what you are / aren't doing, we might be able to offer more insightful comment. Note: I did say 'might'!
:cheesy:
Tim.

 

[Pazienza]

Does anyone ever win trading indices?

Seems like i only ever lose big when it comes to indices.

I can make a comfortable 3k/month trading equities alone, but in the past I've had big losses on index trades, the biggest of which occurred last year at 20k+.

I guess the system that I use to trade equities doesn't work so well for indices.

Is there any reading that someone can recommend for understanding indices better?

I love the US Index futures.

Top hole, obvious PA at good locations (be very patient, I often only take 2 or 3 trades a week), trail stops to let the winners run a bit or cut losers short.

It's simple, having the patience to execute the strategy is the only hard part about it.

 

[new_trader]

Does anyone ever win trading indices?

Seems like i only ever lose big when it comes to indices.

I can make a comfortable 3k/month trading equities alone, but in the past I've had big losses on index trades, the biggest of which occurred last year at 20k+.

I guess the system that I use to trade equities doesn't work so well for indices.

Is there any reading that someone can recommend for understanding indices better?

I would guess it is due to leverage more than anything else. There is no reason why the indices should be any different to stocks since they are derived from stocks. If you can successfully trade stocks, try trading ETF's like SPDR trust - (SPY) or iShares - (ISF). They are basically just stocks but track the indices.

 

[Shooza]

Thanks for all of the replies, much appreciated.

The system I use is based on using supports and resistances to enter and exit a trade, and to go long when the equity is oversold and to go short when it's overbought.

I also have several trades each day, and even tho there are occasional losers (it's obviously not fool-proof), the winners more than make up for the loss i take .

I also look for a particular "trading range" for each equity and work within that.

With indices, i can't ever tell what the range is or rely on the overbought/oversold indicators............plus "new trader" hit the nail on the head with the part about leverage.

I tend to go in with too much leverage with indices.

 

[Pazienza]

Thanks for all of the replies, much appreciated.

The system I use is based on using supports and resistances to enter and exit a trade, and to go long when the equity is oversold and to go short when it's overbought.

I also have several trades each day, and even tho there are occasional losers (it's obviously not fool-proof), the winners more than make up for the loss i take .

I also look for a particular "trading range" for each equity and work within that.

With indices, i can't ever tell what the range is or rely on the overbought/oversold indicators............plus "new trader" hit the nail on the head with the part about leverage.

I tend to go in with too much leverage with indices.

Have you tried dumping the indicators? Try combining your S/R (and especially S/R flips) with price action triggers, and see how you get on.

 

[amit1986]

Indices are full of noise...I watch the ES and NQ everyday to establish direction for my equity trades - I never trade them outright. With stocks, they are more prone to movements in fundamental/technical changes. Indices are traded for a lot of reasons - fundamental economic indicators, technical levels, hedging, etc...

In other words, there are too many people on both sides of a trade when you trade a futures contracts on an index. These people trade for various reasons (as stated above). Stocks are more likely to be traded by 'one-sided' traders.

Take a look at CREE, for example. The company issued downside guidance prior to open. What was the result? Its been selling off all day today, currently down 12% and still falling.

There are simply too many people investing/trading futures. Thus, the nature of a futures contract differs from that of stocks and therefore, systems used on equities should not be expected to work as well on a futures contract.

 

[Pazienza]

Hi Amit,

I appreciate the points you make, but honestly I find the experience to be pretty much exactly the opposite. I suppose it just goes to show how personal trading is.

Indices are full of noise...I watch the ES and NQ everyday to establish direction for my equity trades - I never trade them outright. With stocks, they are more prone to movements in fundamental/technical changes. Indices are traded for a lot of reasons - fundamental economic indicators, technical levels, hedging, etc...

In other words, there are too many people on both sides of a trade when you trade a futures contracts on an index. These people trade for various reasons (as stated above). Stocks are more likely to be traded by 'one-sided' traders.

Take a look at CREE, for example. The company issued downside guidance prior to open. What was the result? Its been selling off all day today, currently down 12% and still falling.

There are simply too many people investing/trading futures. Thus, the nature of a futures contract differs from that of stocks and therefore, systems used on equities should not be expected to work as well on a futures contract.

 

[amit1986]

Hi Amit,

I appreciate the points you make, but honestly I find the experience to be pretty much exactly the opposite. I suppose it just goes to show how personal trading is.

True.

Note: I did not say you cannot make any money trading futures - I'm sure there are many people who make a good living trading futures. Like you say though, personally, it doesn't work for me.