The transition to Futures trading

[ThingyMajiggy]

100 (contracts per day) * 2(ticks) * $7 (point value)* 2 (buy and a sell) = $2800 for a day lost!!!!!

Times that by 200 trading days...... $560,000 per year for sloppy entry....... :bad:

lol....5 stars for dramatization, like you're going to keep doing it for 200 days

 

[MichaelD]

I couldn't disagree with you more. Buying up trending index futs on a short term basis, especially break out stop orders would have to be the quickest way to the poor house in short term trading ever invented.

There is no right way that covers everything but there is certainly a crap way and that is stop order entries for short term trading.

Good to hear a different viewpoint.

Your trading style is very different to mine as my edge is entirely derived from how I manage the trades and has nothing to do with the entry.

The bulk of my profits come on big white and big black candle days, and they come from aggressively pyramiding into a trend. The rest is surviving though the noise of mean reversion. It's fun trading an instrument that "always mean reverts...except when it doesn't".

There are days when I'll complete 20-30 trades. There are days when I'll complete 1-2.

 

[tech/a]

Me

Buy/Sell at market
Bracket Order Stop and Profit stop target (can be beyond expected days range)
Bed.
Not every day either.

If taking short term in an hr. or so that Ill be at the screen
At Market.

 

[ThingyMajiggy]

Good to hear a different viewpoint.

Your trading style is very different to mine as my edge is entirely derived from how I manage the trades and has nothing to do with the entry..

Interesting, you seem to trade the way that I've wondered how it would go, with not worrying about entry and just purely managing it well, are your entries basically random in that case? What actually makes you enter a trade, or do you just click....then go into management mode?

 

[Trembling Hand]

Good to hear a different viewpoint.

Your trading style is very different to mine as my edge is entirely derived from how I manage the trades and has nothing to do with the entry.

The bulk of my profits come on big white and big black candle days, and they come from aggressively pyramiding into a trend. The rest is surviving though the noise of mean reversion. It's fun trading an instrument that "always mean reverts...except when it doesn't".

There are days when I'll complete 20-30 trades. There are days when I'll complete 1-2.

Oh! I assumed you were trading longer term. What instrument are you trading?

 

[MichaelD]

...are your entries basically random in that case? What actually makes you enter a trade, or do you just click....then go into management mode?

All entries are Buy Stop or Sell Stop orders placed at levels above and below the price action, so they are entered automatically as price moves in the appropriate direction.

The edge is in the initial position sizing, pyramiding and management of the stop as the trade progresses.

Oh! I assumed you were trading longer term. What instrument are you trading?

IG Markets Australia 200 Cash

 

[cynic]

Hi Michael
In regard to your post above - is your dislike of limit entries purely to do with your directional assessment?
That is, if the market is rising then buy at market or a breakout but dont enter when the market is falling?
thanks
Lindsay

Simply put, yes.

Limit orders = buying a falling market or selling a rising market.

I exclusively enter using Stop orders, so I buy into rising markets and sell into falling ones.

"Goddamit market. I'm right & you'd better agree with me REAL SOON now or I'm giving someone else 1, 2 or 3 points."

At least you don't let yourself stay wrong for very long which is extremely important.

Do you have enough trades entered with limit orders to draw meaningful conclusions yet as to overall R:R ratio & profitability when compared with trades entered with Buy/Sell Stop entries?

Good to hear a different viewpoint.

Your trading style is very different to mine as my edge is entirely derived from how I manage the trades and has nothing to do with the entry.

The bulk of my profits come on big white and big black candle days, and they come from aggressively pyramiding into a trend. The rest is surviving though the noise of mean reversion. It's fun trading an instrument that "always mean reverts...except when it doesn't".

There are days when I'll complete 20-30 trades. There are days when I'll complete 1-2.

Michael,

It's great that you've found a way of trading that works for you.

Having said that, have you noticed that you've been contradicting yourself when debating the merits of order entry types (limit versus stop) whilst also claiming that order entry has no relevence to your edge?

 

[Trembling Hand]

IG Markets Australia 200 Cash

Arrh so you cannot use limit orders to their full use anyway. You have to cross the spread to trade.

 

[CanOz]

MichaelD, is it in your plan to move to futures?

 

[MichaelD]

Having said that, have you noticed that you've been contradicting yourself when debating the merits of order entry types (limit versus stop) whilst also claiming that order entry has no relevence to your edge?

A very good point which I will concede.

You have to cross the spread to trade.

Trading a synthetic instrument against a market maker does indeed bring some unique characteristics not representative of a real futures market. Some of the quirks work in my favour, some work against me.

However, the weekly wages drawing transaction is indeed real money.

 

[MichaelD]

MichaelD, is it in your plan to move to futures?

I have two conflicting views;

1. I have traded the Australia 200 Cash successfully for 18 months, completing 2000 or so trades. Trading capital is now 15x what I started with and I take a wage out weekly which I can comfortably live on. I have learned many things about how this particular instrument behaves and adapted my trading around its characteristics. Why mess with a good thing?

2. I am starting to occasionally hit liquidity issues which so far have not created too many issues and for which I have strategies that work OK at present. There is no market depth information as the Australia 200 is a synthetic market maker instrument. I think to take my trading to the next level of return I would need to go to real futures, not market maker. The learning curve, however, both excites and daunts me at the moment. The prospect of further automating my trading is very tempting and exciting. Learning the quirks of a yet another new instrument is very daunting.

 

[CanOz]

Hmmm, i wonder how long they'll let you make money? TH has some experience with these guys...

I also wonder if switching to something with depth that it may improve your results. But like ya say, why break something that's working good...

 

[Trembling Hand]

Learning the quirks of a yet another new instrument is very daunting.

But its tick for tick to the Futs. That is where the price comes from. You are just paying handsomely for the privilege of....... well not sure of why but you are paying.

 

[cynic]

Hmmm, i wonder how long they'll let you make money? TH has some experience with these guys...

+1
Years after I ceased trading with that mob, they still had the audacity to contact me several times enquiring as to the reason why I no longer choose to trade with them!

 

[MichaelD]

But its tick for tick to the Futs.

Is it really? This is news to me (no sarcasm). I thought it diverged after hours.

Time to do some reading.

 

[Trembling Hand]

Is it really? This is news to me (no sarcasm). I thought it diverged after hours.

Time to do some reading.

Well if you are trading outside of SPI day hours (9:50 - 4:30) that makes even less sense to trade CFDs. The Spi is now a locked up Arb machine and has a 1 point spread most of the time. Don't CFDs open their spread outside of hours?

 

[cynic]

Is it really? This is news to me (no sarcasm). I thought it diverged after hours.

Time to do some reading.

I think that after hours divergence that you're observing relates to market spread during periods where trading has substantially less liquidity.

 

[beachlife]

Its tick for tick but not $ for point

Spi futures 1 point =$25
CFD 1 point = $1

Then there's also a big difference in margins

SPI futures $5500 per contract
CFD equiv (25 cfd's) around $650.

So the ability to position size exactly and much lower margins are why many choose to pay the premium.

 

[MichaelD]

The Spi is now a locked up Arb machine and has a 1 point spread most of the time. Don't CFDs open their spread outside of hours?

Yes they do, from 1 point in hours to between 2-5 points depending on the time of day.

How does the SPI after hours behave when the FTSE or the S&P500 moves? Does it track them or is there a gap in the morning?

What about depth of market? After hours, what is the typical depth of market at the Bid/Ask?

Having a 1-2 point spread for 24 hours is immensely tempting. It certainly would do great things for my ability to risk manage open positions after hours.

Spi futures 1 point =$25
CFD 1 point = $1

Then there's also a big difference in margins

SPI futures $5500 per contract
CFD equiv (25 cfd's) around $650.

So the ability to position size exactly and much lower margins are why many choose to pay the premium.

Therein lies several reasons why I am currently using CFDs.

1. Most of my trading capital can currently safely live in an interest bearing account away from the market maker's account.
2. I have the ability to effectively position size and manage fractions of a contract below 1 SPI contract.

 

[tech/a]

You can trade the SPI out of hrs as it tracks (at times) the DJIA.
Can trade DAX and FTSE as well.
Futs