Why Trade the FTSE ?

[harryc]

FTSE futures only for me now .

Traded the DAX , Spu and Dow over the years . The only one I ever really got on with was the S&P . The DAX was great when u got it right - big moves , quick money , but you had to be out quick and have your wits about you if it went against you .

FTSE hours suit me down to the ground too , so that prolly makes a big - diff as well for me

 

[Charlemagne]

I've traded FTSE binaries profitably for two years now, and to me it seems that the British market has this 'rubber-band' tendency to go one way, and then gradually return back where it came from. When the index whipsaws around yesterday's close, it is very bad for my business...

So my question is, does DAX have this tendency? (of course all markets have, but some have it more and some less).

 

[Hooya]

my point was that the ftse is bashed around by the American indices & therefore is not tradeable for TA reasons. All my TA work is useless on the FTSE - on the S&P it's a different matter.

the I guess you wont believe that the FTSE some time actually leads the US

I would how ever be interested in which TA doesnt work on the FTSE comapred to the SPX?

 

[FetteredChinos]

how about breakouts, Hooya? they dont often follow through into the next day like they do over in the US.

 

[Hooya]

do you have an eample? not sure what TA requires breakouts to follow through the next day?

 

[FetteredChinos]

sorry, i was referring to follow through.

most of the old-skool trading suggestions are that you buy breakouts and hold them as they go stratospheric over the next few days/weeks etc.

on the contrary, the FTSE seems to reject breakouts a lot more than it accepts them.

the Dow for example tends to follow through. not a lot more, but enough to make my fading strategies on that index fail.

FC

 

[Hooya]

haven't really read that in reference to indices but have with indicvidual stocks. you do have to realise that TA is a general science but each indice has it's own quirks. The two indices are calculated complete differently for a start. The FTSE fills its opening gap 70% of the time but I doubt you will find that with the US.

 

[FetteredChinos]

i thought you worked it out as 69%

i agree about quirks though. it is just a case of getting them to work in your favour.....

 

[Hooya]

I think the problem comes when traders try to trade them both on one TA. i.e going long just because you have long signalled on the dow and then in the morning the FTSE doesnt gap up as much as one would expect. I think the have to be treated as two different markets for TA.

 

[Mornington Crescent]

try a short on ftse right now while the dow is up about +40 ?

 

[Hooya]

why would I want to go short on the FTSE at 26?

 

[Hooya]

but heres a chart that was included in the newsletter weeks ago as an example of the FTSE leading

 

[Mornington Crescent]

LOL
now 22/24

 

[Hooya]

did you see that today, dow rose 60+ points after open and FTSE failed to break up. Leading again. So long on dow signal and short on FTSE seemed odd but correct

 

[LION63]

Trading the FTSE is no different from any other index, it very much depends on the strategy that is applied. There are those that believe that because the FTSE is relatively more stable than the other indices, there is a better chance of having a high strike rate. The beauty of the Index is the fact that it is made up of a very diverse group of companies and over a period the share prices of the constituents tend to diverge. Unfortunately, if an individual only relies on technical analysis this is of no use or benefit to him and it would be more difficult to benefit from the divergence or of no interest whatsoever.

The reason it is hardly worth trading the CAC40 for instance is simply based on the fact that Total makes up 16% of the index and where it goes, the index follows. The DAX tends to mirror the Nasdaq much more than the DOW and that is part of the reason for the high level of volatility.

 

[Hooya]

but maybe thats also the beauty of TA...you don't need to know what total, BP or any other share is doing. Your signals get you in and out as the price rises and fall etc.

how about this school of thought to spark of a discussion:- The majority of time the index is led by the futures!

 

[LION63]

Why are the cash markets led by the futures, why is it not the other way round?

 

[rossored]

Why are the cash markets led by the futures, why is it not the other way round?

There are no "cash" markets. There are only the futures. All the "cash" markets are markets "made" by whatever broker/SB company you happen to be using. Hence, broker derives "cash" price from futures - thats why the futures lead.

 

[LION63]

But is it not the case that an index is made up of the constituent companies? Surely we have to buy the shares before the index goes up, that should then reflect in the futures as opposed to the other way round.

 

[Hooya]

obviously the FTSE 100 index isnt' a tradeable index but the real question is does the rise in individual stocks of the 100 lead to a rise in the futures price or do the index futures rise cause the individual stocks to rise? Personally I believe that futures hold the key most of the time.