This is a mobile optimized page that loads fast, if you want to load the real page, click this text.

Trading the XJO with CFDs

Jump to new

Easy CBC, I was just making the point that its best to seriosuly research these things yourself.

There's also several very good posts in these forums about this very topic.

SKC summed it up well.

The point I was making was that you need to recognise the linkages between the various products and then decide which product you are best trading.

The ASX 200 cash index and the underlying futures contract are heavily linked. Whilst the cash index is open any mispricings will be quickly 'arbed out' to ensure no riskless free profit. You will notice that as the futures contract reaches expiry the 'gap' between the ASX 200 cash index and the underlying futures contract (SPI) reduces. This reflect the cost of carry.

When the cash index is closed as CanOz said the futures market continues to trade, it will siwng around with the overnight markets based on demand and supply. Often you will see the cash index open substantially differnet to how it closed the session before due to the overnight swings which have in the futures market.

CFD dealers are their to make money. Rest assured the price they are quoting you to buy/sell is in someway benefical to them. Usally you pay a larger 'spread' or perhaps high commision rates etc. Ultimately any CFD product will track closely the underlying index however as any major difference in price would allow for arbitrage opportunites.

Random aside: interesitng article about the strucutre of future contracts:

http://www.investopedia.com/articles/07/contango_backwardation.asp#axzz2GPCCbEQA
 
Thanks for that info Kid,

I think I'l give CFD trading a miss. Just stick with the overnighters. I had seen the overnighters on the ASX website however I thought that there wasn't much traffic and gave them a miss. That was until I read up on them. PPPWTTTT. I've decided to jump in.

I didn't realize that the SPI overnighters influenced the start of trading on the sharemarket. I just thought that if
US was say down 1% then everyone would just dump shares in the first hour of trading. If the SPI futures and the cash index are closely linked then there must be some interesting trading leading up to the open of the cash index.
I had trouble finding a graph of the SPI except for www.sfe.com.au.

Thanks for that info,

These 24 hour futures look like fun, I can't wait to book a hotel room and pull a 24 hour trading session.
 
The XJO probes higher highs while the DOW corrects about 1/4 of the rally. Glad to be proven wrong but over exuberance is manifesting on this market.
 
futes popped
break-away gaps, or gap-n-go gaps, do not need to get filled when theyre micro size
 
great trade session, not so great signal for bulls

when these (box) ratio appear they tend to support the one-larger swing (down) ...suggesting we need to go retest sub 5760's
in the second chart is the all-hours cfd with a simple up-down-up sequence also a 1:1 ratio and the day failed to hold above the 50% swing of the cash session creating two long tail cash days

 
wrong about that ....which is nice .....bulls racing...retail currently 61% sold side
 
either i'm trapped or 67% retail shorts are going to have one of those shouldeye shouldnteye days
 
psychology of sell the peaks appears to be entrenched - this appears normal disposition from previous xjo rises that have lasted several weeks/months

rise above 161.8 ratio will be confirmation the bias to be long outweighs the sell side
 
J,

you're obviously looking shorter term however my take below. I'm not seeing the underlying strength to push this market higher

 
kid hustlr said:
J,

you're obviously looking shorter term however my take below. I'm not seeing the underlying strength to push this market higher

View attachment 87075
Click to expand...

fair points and i do have to be ready to bail
counter to those ideas, consider, most walls of worry are climbed from a scene of weakness, hence, retail cfd players are net short today (net means consistently sell to open as a % during the whole session, so we're not talking a hedge but an absolute directional bet, shorts are being ground out, slow enough they wont flip till its too late)
keep in mind we all see the same numbers but choose to interpret them thru a bias lens
the aus markets tend to keep step or often lead in heavy sell/buy periods and i think anecdotally this is an important key for trend, is the external markets look like they should be selling, the question has to be asked why is the local market making higher highs when the smart money would surely press the pedal in sell mode if they perceived a strong decline coming, could it be that the struggle is because the main money to enter locally is already in and theyre in no hurry to press the bid, that means, they soak weak supply and do not need to chase so price drifts higher rather than races higher and price "looks" weak
which the difference between

when something looks heavy you need to take apart what that heaviness is and get upto speed with dissecting and ask; is there value of the interpretation within the data, or, your propensity to view that data with an emotive logic ....so the faster you dissect and apply cognitive logic will determin the speed at which you shake off or stop applying emotive logic to the numbers you see, think (as an extreme) how numbers looked in 1932 or 1974 or 2009 ......nice lows, huh....

on balance, is the logic youre applying to the chart inline with how the people who are buying what is being sold are viewing the market or is the logic youre applying to the chart inline with the people who are selling what other people are buying ......someones buying all that scared energy, scared value
are all the people buying thinking prices wont get any cheaper?

you also have to ask; if i wait til i see the "evidence" that this market has the strength to get higher (whatever that height is) then will it be too late to get in then when price has reached that height?
(you cannot trade hindsight)?

is a series of higher highs and higher lows enough to engage ? if so what size is that series (how is it constructed) and if that series begins to expand (price lengths get wider) is that sufficient enough for me to postulate we are trending? if the series i engage in does not require trend postulation then can i simply engage within the confines of the series of bars i see being printed?
if the absolute dollar risk i put down does not change regardless the narrative i place on price action and if the reward does not change based on the narrative i give to price action then what is the reason for not engaging with the auction?
 
Appear to have got it right J, atleast for now.

With the cash being closed it would have been a bumpy ride so I am unsure how the trade(s) would have been managed on your end.
 
kid hustlr said:
Appear to have got it right J, atleast for now.

With the cash being closed it would have been a bumpy ride so I am unsure how the trade(s) would have been managed on your end.
Click to expand...

public hols tend to skew the gig, spent a lot of time scaling, prefer to be with the bid
 
bought the close


if you look further out, nearest but widest operable level, the general drift is up, HH's and HL's hence the idea "dont sell just cos it's easy or just cos it relieves the pressure valve"
having said that, it's way easier to scale or cull longs bag the smaller coin near the close of sesh, than have to sit thru self wind-bagging slumps
 
uptrendy type action ....after the open sales/purchases, a slump, u-shape type thing, compression, yazz, that's the way



 
break away, market to market



this also applies to the $SML (US high beta)
bids are in
 
You must log in or register to reply here.

Similar threads

XJO Trading System
Replies
7
Views
6K
volatility
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more...