Trading The SPI (Open)

[Bronte]

So if you get filled at 29, your target is 5 points?

Yes fiftyeight,

That is correctish.

Often the SPI can open much higher.

Just Sold 34 Sycom Double Top

Now 29 Taken +4

 

[Bronte]

We will be buying 5320
On this present move.....

 

[Bronte]

We will be buying 5320
On this present move.....

Ooops
Managed to get out -1

 

[Bronte]

A Wild ride this morning on the SPI

5325 H
5315 L 10 pt move
5338 H 23 pt move
5311 L 27 pt move
5334 H 23 pt move
5310 L Now 24 pt move

7.35 am Back to bed.
Wet morning here in Perth.

 

[dlineinvestor]

Hello Bronte,

I hope you don't mind a few questions ...
Feel free to add or correct anything:

In trading the SPI open, you are placing limit orders before the market starts correct ?
What is the usual spread in premarket on IB ?
Once your limit order gets filled your down -(*) pts right away correct ? Is an 8 pt SL too tight ?
Do you watch premarket volume or ADR closes for any major stocks to assist in your decisions ?
On average how long are you at the screen each day ?
I've heard as a trading option a trader could focus more on contract size instead of taking many points, is this your approach ? EG: 5-10 contracts for 8 points or less finishing up early as opposed to 1 contract trading all day for many pts
In this case you either win or lose asap ... but avoid the languishing of a full day session

Quite a few questions I know but have wanted to post here from some time.
Cheers for your considerations.

 

[Bronte]

Hello Bronte,

I hope you don't mind a few questions ... not at all
Feel free to add or correct anything:

In trading the SPI open, you are placing limit orders before the market starts correct ? Yes
What is the usual spread in premarket on IB ? Not sure...not really interested in spread
Once your limit order gets filled your down -(*) pts right away correct ? No Is an 8 pt SL too tight ? NoDo you watch premarket volume No or ADR closes for any major stocks to assist in your decisions ? NoOn average how long are you at the screen each day ? This varies from 30 mins to a couple of hours
I've heard as a trading option a trader could focus more on contract size instead of taking many points, is this your approach ? We do both EG: 5-10 contracts for 8 points or less finishing up early as opposed to 1 contract trading all day for many pts
In this case you either win or lose asap ... but avoid the languishing of a full day session True
Quite a few questions I know but have wanted to post here from some time.
Cheers for your considerations. No Worries Happy to assist.

Friday we placed a preopen SPI Order:

Selling: 5329 Lmt If the SPI Opens at 5329 or any higher open we are filled 'On Open'
Stoploss above Sycom High Stoploss is placed on confirmation of 'Open Fill'
Target: 5325

 

[Bronte]

So if you get filled at 29, your target is 5 points?

So as fiftyeight posted: If the SPI Opens at 5329 We would expect an Open fill at 5329 S/L 5337

If the SPI had Opened above 5329.... say 5334 (Sycom High) We would be filled at 5334 S/L 5342

 

[dlineinvestor]

Friday we placed a preopen SPI Order:

Selling: 5329 Lmt If the SPI Opens at 5329 or any higher open we are filled 'On Open'
Stoploss above Sycom High Stoploss is placed on confirmation of 'Open Fill'
Target: 5325

Bronte,
Thank's for your answers.
Can you give us an indication of the typical number of contracts used (if not I understand the why)

Your orders allow you to be completely devoid of all emotions that plaque most (+1)
In fact you can even be absent from class and not get detention

 

[Bronte]

We are looking for the SPI Open to be 'overbought' or 'oversold' and quickly move back to value.

Directional Days are when the train leaves the station and keeps on moving........

If this is the case and the SPI has moved away from strong 'Support or Resistance'
then we move our stoplosses to 'Breakeven' sometimes taking some profit and reducing our contracts.

How many contracts do we Buy or Sell ?? This depends on the trade and level of: Risk:Reward
Time is very important in our analysis. We also consider Gaps, Double Top/Bottoms etc etc etc

 

[Bronte]

It is often quoted that the SPI is "Opened by amateurs, closed by professionals"

We feel that it is important to mention here that the SPI is very difficult to trade for 'amateurs'

It is said that the Open even more so..........

It is often quoted that the SPI "Will do whatever it takes to ensure that the majority of traders get it wrong"

90 per cent of active futures traders will lose their risk capital within 90 days. So they say.

 

[tech/a]

http://www.travismorien.com/FAQ/trading/futradersuccess.htm

Worth a read

 

[Wysiwyg]

We feel that it is important to mention here that the SPI is very difficult to trade for 'amateurs'

Hello Bronte . Assuming all non amateurs are professional, what would a professional do on Monday with the present data and with a "Trade the SPI open" approach?

1) SPI opens higher then reverses
2) SPI opens higher and continues higher
3) SPI opens higher and continues higher marginally then reverses
4) SPI opens higher then reverses then continues higher
5) SPI opens lower then reverses higher

It's a tough Q.

 

[dlineinvestor]

Friday we placed a preopen SPI Order:

Selling: 5329 Lmt If the SPI Opens at 5329 or any higher open we are filled 'On Open'
Stoploss above Sycom High Stoploss is placed on confirmation of 'Open Fill'
Target: 5325

Looks like you'll be filled around 5360 ish (sycom close)
Just out of interest if fair value is quite a ways down will you increase your target.

There is a calculation for fair value. I think in the case of an index dividends are not a consideration
Mind if I ask how your calculating it ?

 

[dlineinvestor]

We feel that it is important to mention here that the SPI is very difficult to trade for 'amateurs'

It is said that the Open even more so..........

It is often quoted that the SPI "Will do whatever it takes to ensure that the majority of traders get it wrong"

90 per cent of active futures traders will lose their risk capital within 90 days. So they say.

Placing orders pre-market with only an 8 point SL. This would require a degree of precision imo
I find it very interesting that you trade this way. If over time it makes you money then your beating institutions robots programs and all the other smart mechanisms designed to fool us. +1
My approach has been to wait after the open with levels marked on my screen and using OPEN CLOSE relationships, sycom trendlines , forming patterns then to trade accordingly price action around those items. This is not the full strategy or in order / detail but for this post close enough.
There are time when it does moves too quick and you wish you had orders set. The difficulty lies in the speed at which the information needs to be processed. This is why I can see the positives in your setting orders approach. I understand fully well that the SPI will do what ever it takes to ensure most get it wrong

 

[Bronte]

Try to hide stoplosses above Resistance and below Support.

Keeping losses small and manageable. (-8 or even less)

Wins larger than losses (Let some contracts run >>>>>>>>>>>>>)

 

[Bronte]

Hello Bronte . Assuming all non amateurs are professional, what would a professional do on Monday with the present data and with a "Trade the SPI open" approach?

1) SPI opens higher then reverses
2) SPI opens higher and continues higher
3) SPI opens higher and continues higher marginally then reverses
4) SPI opens higher then reverses then continues higher
5) SPI opens lower then reverses higher

It's a tough Q.

We have a timeframe this weekend, so we feel Monday will be even more difficult.
Interesting that China has cut its interest rates and world markets shoot upwards.

We will have a good think about your Q and post either tomorrow or early Monday morning.
If that is alright with you Wysiwyg ? What are your thoughts on the SPI closing the presumed 'Gap'?

 

[Wysiwyg]

What are your thoughts on the SPI closing the presumed 'Gap'?

I dare not think. With all the gloom about short - medium term outlook in Australia such as Gov. cuts and export revenues down and company forecasts negative it is all a bit much to remain positive at least in the near term. SPI movement after open? Well the above facts haven't evaporated overnight so I think further downside after open. Put these thoughts out there though and the smart ass market movers do the opposite.

No. 3

 

[tech/a]

China is stimulating it's massive economy ----- Australia has just brokered a free trade agreement with it's biggest customer.

Only one direction.

 

[dlineinvestor]

Bronte, how are you calculating fair value
Thank's

 

[dlineinvestor]

We are looking for the SPI Open to be 'overbought' or 'oversold' and quickly move back to value.

Directional Days are when the train leaves the station and keeps on moving........

If this is the case and the SPI has moved away from strong 'Support or Resistance'
then we move our stoplosses to 'Breakeven' sometimes taking some profit and reducing our contracts.

How many contracts do we Buy or Sell ?? This depends on the trade and level of: Risk:Reward
Time is very important in our analysis. We also consider Gaps, Double Top/Bottoms etc etc etc

Bronte, how are you calculating fair value
Thank's

Correction : what determines value or did you mean fair value. Either way are you using a calculation for this figure
cheers