The transition to Futures trading

[Lone Wolf]

FTSE opens 1 hour earlier tonight with UK D/L savings.
Next week it opens another hour earlier with AUS D/L savings.

Boo. I missed the open thanks to this. Glad I'm in QLD, it'll already be a struggle to get home by 5:00pm each day.

 

[Newt]

Boo. I missed the open thanks to this. Glad I'm in QLD, it'll already be a struggle to get home by 5:00pm each day.

Yeah, what a PITA. There's often a lot of action from 8am UK time and getting home at 5 is a challenge for me too

 

[Newt]

Hi Newt,

Congrats on the start of your winning streak. What's your style based on? Price action, VSA, reading the DOM...?

If you haven't already, I suggest setting up a paper account with IB and testing everything on that. I've been caught a couple times with technical mistakes that I'm glad I found on demo. Such as the close position button not actually closing out my position immediately like it does with ninjatrader.

Thanks LW. I know what you mean about TWS. I was a bit surprised at the extra steps closing out too. I've been on the paper a/c for a while with IB. BracketTrader has made TWS easier to handle for what I try to do.

Honestly, there's no reason for anyone to aspire after what I'm trying to do/learn, but currently that is only 2 plays in the first hour or two for the FTSE:

1. Reversals
2. B/O (less frequently, especially in my current conservative state of mind)

Reasonably sure I could have landed 10-20 points today in the first hr after 8am if I hadn't still been at work

 

[pavilion103]

There was an obvious tipping and retest setup.
I'm still in. Stop BE at 95

 

[Newt]

There was an obvious tipping and retest setup.
I'm still in. Stop BE at 95

Did you mean shorting down off the resistance around 6588?

 

[pavilion103]

Did you mean shorting down off the resistance around 6588?

6595 I took

 

[CanOz]

Another nice news trade off the 6E futures...just trade the opposite to the first thrust on a 5 min chart and take advantage of all those trapped traders....

I don't trade it but it seems to be a decent play...

 

[pavilion103]

Took 25 points.

Tempted to let it run because I didn't see any supply but it's broken a pivot high.

Not looking for huge ranges in this consolidation.

Happy to take it even though I think it could push lower.

 

[pavilion103]

Dammit went to take a long at 73. Didn't fill. Looks like it's taking off!

 

[pavilion103]

My 40 point drawdown is gone.
Back to an equity high.

Because I was going out tonight I didn't take 2 contracts. 50 would have been handy.

Good luck trading everyone. I'm off to bed.

 

[pavilion103]

Yesterday's setup.

Will look for one tonight around the similar spot.

 

[pavilion103]

Aggressive short @68 near open

 

[CanOz]

Nice trade, i got two cracks at the dax and both times got the first lots off then stopped at BE. The FTSE seems weaker than the dax and i'm looking at the gap to fill then see what longs feel like....

 

[VSntchr]

Aggressive short @68 near open

Hope you guys don't mind an outsider popping in to ask some silly questions..

Pav I notice that your trades (particularly when you call your entries) do not correlate with my FTSE100 index quote - why is this? Is this something specific to futures, or is it that you are trading a different underlying instrument than the FTSE100?

Also, when charts from IB are posted, what do the yellow bars indicate?

Cheers

 

[payday]

Hope you guys don't mind an outsider popping in to ask some silly questions..

Pav I notice that your trades (particularly when you call your entries) do not correlate with my FTSE100 index quote - why is this? Is this something specific to futures, or is it that you are trading a different underlying instrument than the FTSE100?

Also, when charts from IB are posted, what do the yellow bars indicate?

Cheers

I'm not Pav but from what I know, futures quotes for the indices will always be different to the cash quote - don't ask me why. The yellow bars are when the open and close are the same price

 

[CanOz]

Index and the futures contracts, while very correlated seldom trade at the same level...The index isn't actually being traded, just averaged/calculated based on the price of the constituents...the futures are being used for the hedging so lots of big traders moving the market around...

Thats my view anyway, I'm sure SKC or TH could give you a more technical reason...

 

[VSntchr]

Cool, thanks guys.

I may not post here often but I do watch the thread with interest while I listen to podcasts and webinars at night time.

 

[pavilion103]

Out 64

 

[Trembling Hand]

Index and the futures contracts, while very correlated seldom trade at the same level...The index isn't actually being traded, just averaged/calculated based on the price of the constituents...the futures are being used for the hedging so lots of big traders moving the market around...

Thats my view anyway, I'm sure SKC or TH could give you a more technical reason...

Its only ever the same at the moment of expiry. Due mostly to Dividends and other stuff...

The index futures price must equal the underlying index value only at expiration. At any other time, the futures contract has a fair value relative to the index, which reflects the expected dividends forgone (a deduction from the index value) and the financing cost for the difference between the initial margin and the principal amount of the contract (an addition) between the trade date and expiration. When interest rates are low, the dividend adjustment outweighs the financing cost, so fair value for index futures is typically lower than the index value.

http://www.investopedia.com/articles/active-trading/070113/using-index-futures-predict-future.asp

 

[barney]

Its only ever the same at the moment of expiry. Due mostly to Dividends and other stuff...

TH, In your experience, can an edge be gained by trading against (scaling into a position perhaps?) against a wider than "normal" deviation as it gets very close to expiry ... or is that being a bit unrealistic?