Help in trading the Aussie 200!

[Prova]

Hi guys
I have just started trading indicies to a bad start. I thought the aussie 200 is a direct reflection of the asx 200? Today the 25th of August I saw all the overnight markets were significantly down so I thought the it would follow on here in australia, so i opened a short position on the aussie 200. Next I was shocked to see the asx 200 in free fall, and the aussie 200 RISING !!!! Please help me to understand WHAT IS GOING ON???

 

[tech/a]

The ASX 200 is a reflection of the price action of the top 200 ASX stocks.
The Traded Index is traded like any other commodity and is influenced by supply and demand.
Over supply and it drops---more sellers.
Under supply and it rises---more buyers.

Seems more felt that the index was over sold.
At the end of the day they were proven right!

 

[Prova]

Thanks tech
I mean the aussie 200 through cmc not the asx200. Also how do i know if an index has been "over sold"?

 

[tech/a]

Hi guys
I have just started trading indicies to a bad start. I thought the aussie 200 is a direct reflection of the asx 200?

No its a way of trading the ASX200 Both different in their make up.

Also how do i know if an index has been "over sold"?

Traders use many different tools to determine oversold.(Normally Oscillators and or Support) Short term traders who hold only for a day or 2 would have access to tick data and would probably use a combination of 5 min to 60 min bars.

Longer term traders may use EOD data.
If your longterm bearish you may well still be in a trade with potential.
If you were looking for immediate movement in your favor and intend to trade very short term---my personal opinion is that you will need tools that will allow that.


Hey Richkid---the old dog just learnt that trick youve been trying to teach me for a year now!!

 

[mit]

Hi guys
I have just started trading indicies to a bad start. I thought the aussie 200 is a direct reflection of the asx 200? Today the 25th of August I saw all the overnight markets were significantly down so I thought the it would follow on here in australia, so i opened a short position on the aussie 200. Next I was shocked to see the asx 200 in free fall, and the aussie 200 RISING !!!! Please help me to understand WHAT IS GOING ON???

Prova,

What you would have found was that the drop in overseas market was already priced into the aussie200. The aussie200 is a mixture of the asx200 and the spi futures contract with a bit of discretion thrown in by CMC.

So at 9:50 when it opens it uses the spi which has priced in it what the market expects the asx200 will get to (For the pedantic I know that the spi also takes into account interest payments and dividends so does not match the asx200) which is usually dependant on the overseas markets.

What happens quite a bit is that the spi and thus the aussie200 overreacts so the asx200 will go one direction and the aussie200 will go the other until they meet.

MIT

 

[RichKid]

Hey Richkid---the old dog just learnt that trick youve been trying to teach me for a year now!!

Tech,
That's an A+++ for you son, straight to the head of the class.
Not so bad once you figure it out but can be a nightmare learning, keep it up and it'll be like second nature before long. Some other little coding tricks too in the FAQ link in the toolbar. Just don't get carried away or you'll spend more time formatting than anything else.

Back to thread- the SPI and XJO threads may also be of help to you Prova so have a look at those in the Derivatives forum. Please be aware that no one here can give you financial adivice without a licence but people like tech are always happy to help by sharing their knowledge, what you do with it is upto you. From memory, if you call CMC they may even be able to give you some info on how their Aussie200 works but Mit appears to have given a good overview.

Safe trading to you!

 

[Prova]

Thanks very much for all of the great responses. Does anybody know where to trade the actual asx200 as i feel it is easier to predict? Is it availible through any cfd providers?

 

[tech/a]

Trade the SPI

 

[money tree]

The Traded Index is traded like any other commodity and is influenced by supply and demand.

Incorrect. The index does not have its own supply/demand medium. The only way to move the index is by moving the stocks it contains. The SPI however is subject to supply/demand as this is based on sentiment only.

mit was spot on

 

[tech/a]

I actually meant Trade the SPI .

If there was an ASX 200 Index to trade the ASX 200 is subject to exactly the same as the SPI its an index not a commodity.

I know what he wants but this is as close as he can get.

I could be mistaken but I thought I pointed out this in my original post.

Quick to judge----Tree-----slow to get up to speed on the discussion.

 

[tech/a]

Incorrect. The index does not have its own supply/demand medium. The only way to move the index is by moving the stocks it contains. The SPI however is subject to supply/demand as this is based on sentiment only.

mit was spot on

Well I dont agree.
They are 2 totally different things.
Taking the Index itself you are correct.
Trading something like a Warrent on the Ords or something similar
or a futures contract on any index as seperate the Trading the moves of an index or as an example a futures contract on a stock---done in the US-- it has a character of its own bought on by supply and demand in its own right.

Yes mit was spot on in the context that he was referring to.

 

[Prova]

Thanks guys, i just wont to know were can i trade the actual asx200?

 

[RLN]

Prova, take a deep breath. Now relax. Do this each day for the next 6-months. Whilst you do this do some research YOURSELF. Go to the ASX. Look at the ASX index. Look at ASX 200 warrants. Look at the SPI. Get some price data and watch. Learn. Breathe. No hurry.

The SPI and the Index are the same. Neither is easier than the other, although the SPI is open almost 24-hrs so can provide some safety. Neither are any easier/harder to trade than any other instrument listed on the planet. Don't be in a rush. And remember, just breathe and be patient.