The transition to Futures trading

[skyQuake]

In that second spot I didn't mind whacking on a bigger risk than usual with the intention of letting it go overnight. Given that it had tested that area, I felt it unlikely it would go lower. If it did, I lost 20 points, no biggie.

My general rule is my low-risk setups, but I have nothing against, in certain spots, getting in with a wide stop if I think the context is good and there is big upside potential. I wouldn't recommend that for those who aren't familiar with the markets. Once it ran, I thought I'd take it. I was content. The plan would have been to leave it overnight and then see if it takes off Monday night.

With taking larger than usual risks I believe it all has to be relative. The reward needs to be large. And the risk can't be a large portion of your average weekly profit.


One thing I really wanted to do was to get in in the pre-market on Friday and just have a wide stop right to the bottom. It would have been enormous risk (130 points), so I couldn't justify doing it, but I was very confident that we had made a new low and to get in that close to the bottom would have been gold for a position trade. By the end of Friday I think price had moved up 150 points from that level, stop could have already been to BE and holding 150 points in the black with little chance of being stopped on a re-test to the low.

If my weekly average profit was 200 points, I may have done it. I believe that there are some spots where this is warranted and if it represents half a week's profits then it is worth the risk for such large upside potential.

Some may disagree with me, but I felt the night before was a big stopping bar on huge volume.

If I was only making 20 or 30 points a week then I wouldn't risk over a month's profit on such a move. But if it was half a week's profit then probably.

Was in a similar (but much nicer) dilemma - was lucky enough to be still holding from thurs but wanted to take some off the table while persevering with the bullishness.
In the end cut out the longs and switched to some Nov calls - in case there's one more leg down towards the end of oct :S

 

[pavilion103]

By the way....

Does anyone trade any commodities or currencies which would also suit my style of trading? I haven't looked into this yet.

I'd be interested to know what is out there and how many dollars per pip/tick?

I'm guessing oil is a popular one?
What are market open times and when are they most active.

I know it's a general question but I'm just curious!

 

[CanOz]

By the way....

Does anyone trade any commodities or currencies which would also suit my style of trading? I haven't looked into this yet.

I'd be interested to know what is out there and how many dollars per pip/tick?

I'm guessing oil is a popular one?
What are market open times and when are they most active.

I know it's a general question but I'm just curious!

I've had a pretty good go at metals and energy over the last four years. For whats its worth some of the price action might suit your style of trading during the European session when the contracts are trading with a little more liquidity than in the Asian session. Start out with the mini contracts though, until you get some screen time under your belt. There are quite a few stock standard patterns on 1-4 hour time frames that i think you could take advantage of, as you have with the FTSE. I would just go into it with a little less risk and seek out the mini contracts first, being mindful that they are less liquid than the full size contracts during the European session....

There is the crude oil mini QM, Natural gas mini QG, the gold mini YM, Copper mini QC,

AMP lists them here but a search on IB will give you similar...

The grain complex offers some interesting markets as well, but i would not want to hold over night and make sure with all these markets you get a handle on the news before it comes out, limit up or down is not on my bucket list...

Get a few screens together Pav and have these markets up when you are trading the FTSE. Open book trader now and again to see how much liquidity there is and when...

Cheers,


CanOz

 

[CanOz]

The ES (S&P500 mini futures) appears to be in a short covering rally, expect a retest of 1960...if this fails to attract buyers then a further continuation could occur...

 

[CanOz]

Its quite possible the Russel2000 small cap index futures mini might see some short covering up to test 1130 this week. Again, if this runs out of steam and no new buyers are found there, then we can expect the decline to continue and test the recent low at 1040, in my view.

 

[CanOz]

I reckon we might see the HSI test 22000 again soon, but 23500 needs to cap prices for now...If we get back into the bracket between 22500 and 22000 then we'll need to find buyers to stay bullish in the current channel. Bearish below 22000.

 

[avion]

...protect yourself from being wrong because you haven't got stops (think about that for a while its important)and take entries and exits when people are spewing orders because that is where the volume is...

TH, no one appears to have picked up on or questioned this one (underlined) yet.

Yeah, i do not understand this either, to protect oneself you use stops but you seem to be indicating protect yourself by NOT having stops (maybe i am just reading this wrong... should it read: protect yourself by using stops...)

 

[tech/a]

Yeah, i do not understand this either, to protect oneself you use stops but you seem to be indicating protect yourself by NOT having stops (maybe i am just reading this wrong... should it read: protect yourself by using stops...)

One of the genitive of being big.
Imaging you have enough capital to absorb selling which pushes your position against you.
Once that's absorbed there is no resistance to buyers. Price continues in your favor.
Unless you can do this it's wise to have stops.

When your trading size you trade very differently to us mortals.

 

[avion]

When your trading size you trade very differently to us mortals.

Thanks Tech, yes i am aware there are guys big enough to trade without using stops (including TH) but i thought this advice and board in general is geared more towards small guys that do trade with stops in place. Besides i recall TH scatter charts and he seem to always get out in time ie use stops...

 

[CanOz]

Thanks Tech, yes i am aware there are guys big enough to trade without using stops (including TH) but i thought this advice and board in general is geared more towards small guys that do trade with stops in place. Besides i recall TH scatter charts and he seem to always get out in time ie use stops...

I'm guessing he doesnt use hard stops, he gets out when he knows hes wrong but either hitting at market or getting a limit order in on the Dom....if he is in with size then he's going to try and unwind it a bit but since he scales in hes not likely under pressure with size in an area where he could be wrong....that often.

 

[keithj]

........ If you are a 500 lot trader you don't just hit the buy button and smash out for 500 lots into the market then do the opposite to get out. If you move size you have to go for large moves simply because it takes time to get in and get out. Now given that - you have to do a few things. Use that size to maximum advantage, protect yourself from being wrong because you haven't got stops (think about that for a while its important)and take entries and exits when people are spewing orders because that is where the volume is. See the chart that I used the other day for what is happening.

TH is talking about the big boys who move markets & can't/don't use stops... it's an invaluable illustration of how us lesser mortals need to be thinking when we enter, exit & place our stops.

 

[avion]

I agree, that was my understanding on how TH trades or any big guy with size to match but how do we incorporate this advice for one or two contracts. I think the answer may be in when the small guys (me) are spewing orders, anyway let's wait for his input... You up yet TH?:bananasmi

 

[lesm]

Yeah, i do not understand this either, to protect oneself you use stops but you seem to be indicating protect yourself by NOT having stops (maybe i am just reading this wrong... should it read: protect yourself by using stops...)

The original quote is correct. You are not misreading it.

I quoted it separately and deliberately to see what kind of questions or discussions it raised.

 

[tech/a]

how do we incorporate this advice for one or two contracts

Understand what the big guys are likely to be doing (How they will be trading) and trade accordingly with our 1 or more lots.

Often (and I was one of those) we get caught thinking small while the bigger picture is one with our direction.

The big volume and range needs an answer to the question---what is it doing---is it strength or weakness ----is it sustained selling or sustained buying---is it adjusting position size or more buying or exiting?

 

[avion]

The Vid is cryptic!

You obviously haven't seen breaking bad?!

In Breaking Bad the gangsters thought the small piece seen being thrown was drug (ice) and similar in appearance, when in fact was explosive. So the point is: It's not what it seems or appears to be...

 

[avion]

Understand what the big guys are likely to be doing (How they will be trading) and trade accordingly with our 1 or more lots.

Often (and I was one of those) we get caught thinking small while the bigger picture is one with our direction.

The big volume and range needs an answer to the question---what is it doing---is it strength or weakness ----is it sustained selling or sustained buying---is it adjusting position size or more buying or exiting?

 

[tech/a]

In Breaking Bad the gangsters thought the small piece seen being thrown was drug (ice) and similar in appearance, when in fact was explosive. So the point is: It's not what it seems or appears to be...

Thanks.
Life tends to be like that!

 

[Trembling Hand]

Thanks Tech, yes i am aware there are guys big enough to trade without using stops (including TH) but i thought this advice and board in general is geared more towards small guys that do trade with stops in place. Besides i recall TH scatter charts and he seem to always get out in time ie use stops...

Arrrh!I wasn't say don't trade with stops I was just trying to illustrate how those that have more ammo than the USS Enterprise trade and therefore move the market. If you are holding 500 lots and it breaks against you 10 ticks what are you going to do? Spew the order up like a scared Muppet and smash the market against yourself another 50 ticks? No F'n way. Or are you going to wait until its stretched and throw another 50-100 lot against the latest move and push it back into the range? Thats why breaks on volume are not always what they seem.

That is why there is volume at the edge of ranges, some are spewing orders for a loss, some are entering on momentum in the same direction and late, others are using that to absorb the move against them and we the little guys should be following them.

 

[avion]

Don't be upset TH, sometimes it takes time to digest what are you trying to communicate... Not everybody has your IQ.

So, what's in store today... are you feeling bullish?

 

[Trembling Hand]

Don't be upset TH, sometimes it takes time to digest what are you trying to communicate... Not everybody has your IQ.

So, what's in store today... are you feeling bullish?

I haven't got much of an idea yet. Not really bullish though. And tomorrow is a big news day for China so no doubt what ever it does today is a trap for tomorrow.