The transition to Futures trading

[fiftyeight]

Hmmm, pretty happy I dont trade yet.

Is that not the reverse of what I said then. The shorts by absorbing on the way up are getting on the wrong side, then selling what they absorbed on the way up plus their initial position?

Haha I think I am confusing myself now. At some stage was somebody going long or short at a worse price than what they wanted to so at a later stage they could unwind an initial position?

 

[Trembling Hand]

Now I'm confused!

 

[fiftyeight]

Welcome to the club.

Was writing something else when I think I figured out my own question, well part of it. Ill ponder on it some more.

 

[barney]

Hmmm, pretty happy I dont trade yet.

Is that not the reverse of what I said then. The shorts by absorbing on the way up are getting on the wrong side, then selling what they absorbed on the way up plus their initial position?

Haha I think I am confusing myself now. At some stage was somebody going long or short at a worse price than what they wanted to so at a later stage they could unwind an initial position?

58,

The Sellers/Shorters doing the absorbing on the way up become the Buyers on the way down.

Once the Sellers get the market to turn down, the Longs that bought into the gap and higher have to cover their losing positions and therefore become the Sellers ....... Irony in motion

 

[fiftyeight]

Cheers Barney, thats what I was thinking.

If futures are a zero sum game and I assume there would not be enough losing retail investors to generate profit for all the big players, where do they generate profit? If some of the big players consistently profitable then there must be big consistent losers?

I realise different systems and different time scales, but eventually if futures are a zero sum game then there has to be a big loser for there to be a big winner (assuming there are not enough small players)

 

[havaiana]

Cheers Barney, thats what I was thinking.

If futures are a zero sum game and I assume there would not be enough losing retail investors to generate profit for all the big players, where do they generate profit? If some of the big players consistently profitable then there must be big consistent losers?

I realise different systems and different time scales, but eventually if futures are a zero sum game then there has to be a big loser for there to be a big winner (assuming there are not enough small players)

I might be wrong here, but I reckon the biggest losers will be the guys using the futures for what they were originally designed for, the hedgers.

A company can make a hedge on the exchange rate for example, so they don't have to worry about the risk of currency changes/fluctuations on their cost of doing business. The company can effectively lock in the exchange rate and is not trading to make money.

Kind of like like buying insurance. With house insurance for example you pay someone to take on the risk of your house burning down and whatever else the insurance covers. Obviously the insurance companies make money so we are on the end of losing trades buying insurance, but we are happy to pay someone to take on our risk that we do not want or can't afford to take.

 

[fiftyeight]

Cheers thongs.

Was just doing a little bit of reading before I went out and came across similar answers. The breakdown of big losers for a year vs the big winners would be interesting to see.

I assume its not public information but would anyone have an idea of what size and equity curves of different players are?

 

[barney]

I might be wrong here, but I reckon the biggest losers will be the guys using the futures for what they were originally designed for, the hedgers.

A company can make a hedge on the exchange rate for example, so they don't have to worry about the risk of currency changes/fluctuations on their cost of doing business. The company can effectively lock in the exchange rate and is not trading to make money.

Kind of like like buying insurance. With house insurance for example you pay someone to take on the risk of your house burning down and whatever else the insurance covers. Obviously the insurance companies make money so we are on the end of losing trades buying insurance, but we are happy to pay someone to take on our risk that we do not want or can't afford to take.

I have no idea really but that makes sense Hav ... Gives liquidity to the market irrespective of direction?? Are there any stats on the actual make up of any given Futs market? ie. Number of Hedgers(Instos), Day Traders(TH'ers lol),Retailers(losers) etc. .....

Thoughts TH ??


ps I see you asked the same question above "58" ..... My guess is it really makes little difference .... as long as the liquidity is there, it can be traded ... We should all give thanks that there are "big boys" cause there would be no market without them.

 

[kid hustlr]

Decent chunk of selling on the close in a lot of equity markets on Friday. Month end selling by the big boys?

Given how tough the last 5-6 years have been if I'm a fundy sitting well in the black for the year you better believe I'm taking some risk off the table while the markets are thick instead of relying on a volumeless xmas rally to improve my return (and bonus?)

 

[kid hustlr]

wow @ the ftse open

 

[tech/a]

wow @ the ftse open

Won't stop there either.

 

[kid hustlr]

Won't stop there either.

Agreed looks very heavy

maybe stops above 6623 but not sure it gets up there

 

[CanOz]

Agreed looks very heavy

maybe stops above 6623 but not sure it gets up there

Cruised through the VWAP at 6630 pretty easy...

 

[tech/a]

Won't stop there either.

That'll do.
Night all

 

[kid hustlr]

That'll do.
Night all

Interested as to where you entered your short trade if you get a chance? I had a short bias coming in but it ripped down so quickly initially I was unable to get a piece.

My only trade was a quick long looking for some short stops which didn't eventuate and led to a scratch.

I was looking for a sell set up when we retraced into the 6630 - 6635 area but couldn't find a low risk entry.

See chart

 

[kid hustlr]

TH penny for your thoughts.

There's about fifty thousand PMI numbers which come out of China each month. Which one do you give the most weighting to? My experience has been that no one gives a rats about the non-manufacturing PMI, but the manufacturing obviously influences aussie markets but theres the Markit, theres the HSBC, theres official. Which one is the real market mover?

All very confusing

 

[Trembling Hand]

TH penny for your thoughts.

There's about fifty thousand PMI numbers which come out of China each month. Which one do you give the most weighting to? My experience has been that no one gives a rats about the non-manufacturing PMI, but the manufacturing obviously influences aussie markets but theres the Markit, theres the HSBC, theres official. Which one is the real market mover?

All very confusing

The official has a much larger spread of enterprises (3000 I think), many more medium companies, than the HSBC (430). But it doesn't really matter the market reads it as it wants; good can be good, good can be bad. (and with China official data you can bet that everyone who matters already knows about it ) It has more to do with what type of market we are in. I said to a friend yesterday morning that I was going to have a short day. I just guessed that being 1st of Dec we would be bullish and thats the way the market would read it. So got long early and hung on till the pop.

At the start of the year the PMI was just about every time used to smash the market even when month to month the reading changed significantly. :

 

[kid hustlr]

The official has a much larger spread of enterprises (3000 I think), many more medium companies, than the HSBC (430). But it doesn't really matter the market reads it as it wants; good can be good, good can be bad. (and with China official data you can bet that everyone who matters already knows about it ) It has more to do with what type of market we are in. I said to a friend yesterday morning that I was going to have a short day. I just guessed that being 1st of Dec we would be bullish and thats the way the market would read it. So got long early and hung on till the pop.

At the start of the year the PMI was just about every time used to smash the market even when month to month the reading changed significantly. :

yeah ta mate. as always market will digest it however they please im just tired off having to pull my book every second day because theres another PMI number out of China.

 

[CanOz]

Haven't seen bergs for weeks on the DAX, then this today

 

[pavilion103]

Sitting at KL about to board the plane back to Adelaide.

Haven't checked FTSE in 2 weeks. Looks like maybe it's coming off a bit.

Will be back onto it soon!