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Beginner's Trading Blog

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Interesting to see BHP turned around so quickly at resistance. $38 has been a line in the sand for a while now.

BHP 5212.png

All indexes and sub-indexes still looking relatively healthy overall though so I don't think it's time to panic just yet.

Also a little bit of buying support through out the day today with the Australia Day gap continuing to be well defended.

SPI 05212.png
 
So I want to have a look at the depth on some future's contracts.

I've got an account with IB and the Sydney Future's exchange is free so the SPI is ok (and I have that working.

I'm a little confused as to what contracts trade on what exchanges though. Some help here would be appreciated.

http://individuals.interactivebrokers.com/en/index.php?f=marketData&p=mdata#asia
That's the link for the market data costs with IB.

Am I reading that correctly that I could sign up for SGX data for only $1 and that would allow me to trade both the Nikkie and the Taiwan Index Future?

Just confused as to what contracts trade with what exchanges.
 

Think I've got this sorted, looks like a lot of contracts trade on more than one exchange.
 
Had some time this morning so decided to see if I could predict the future.

We are going to open right at the highs after a strong session overnight. I tend to favor a a fall back from the open in typical 'fill the gap' style and then from there who knows. It's pretty rare from a gap up that you keep going into further highs and I still think this market will 'catch its breath' for a little bit longer before taking the next step up.

Guess Work 12213.jpg

Also interesting to see the AUD come away over the recent weeks. I guess this will continue to provide support for our market.
 

So how do you think you went???
 
Found this video really interesting.

https://www.youtube.com/watch?v=vcsMaS78QRE

Apologies I don't know how to embed.

The concept of 'fair value' is one which has always interested me and it was interesting to see someone make some money from the idea. I remember in the International Banter thread a couple of weeks ago there was some discussion about how the HSI Index had gotten away from the Futures and I was shocked that this could happen.

I always figured that whenever the spread between the two became too wide/narrow bot's would just step in and buy the index/sell the future or vica versa and make the arbitrage money. I guess in a thin a market like the HSI this is easier said than done.

In regards to the SPI and the and the ASX200 I assume it keeps pretty much in line as both markets are pretty liquid and there seems to be bots everywhere to take advantage of any 'price gaps'.

From a practical trading perspective, even if the spread widens/narrows beyond what it should, that doesn't necessarily give a trade opportunity as your average retail trader doesn't have access to both buy the entire index of stocks and sell the future, it may however provide another 'clue' as to what may happen next.

I think what makes this example so 'riskless' is that the stock market has closed but has not settled.

The only risks I can see to a trade like that is:

1. The closing auction for stocks is greatly different to what the last traded prices were - this is pretty unlikely
2. For some unknown reason the spread between future's and the index doesn't return to fair value - something which I also think is pretty unlikely.

If I've missed the point completely I'd love someone to step in and let me know but I think I have a pretty good handle on it.
 

Here's a thread showing the results of my 3 month arbitrage game with 2 CFD providers... unfortunately the way they price the instruments has changed and so this is no longer possible.

https://www.aussiestockforums.com/forums/showthread.php?t=14588

I like your thinking and the fact that you crsytalised and structured your thoughts by writing them all down. Sometimes the market can be cracked simply with good application of creative thinking and logic.
 

Nice to know you're reading SKC.

Whenever I read something like that link (nice work by the way) I always think of Reminiscences where he used to call the exchange and sell a stock, then buy the stock at 5 different bucket shops and then finally buy the stock back at the exchange later in the day to take the shops for a ride.
 
Really interesting action in the SPI just before, will write it up tonight as I think it's a good lesson
 
kid hustlr said:
Really interesting action in the SPI just before, will write it up tonight as I think it's a good lesson
Click to expand...

Just on this.

I know supply and demand are not static and that overtime area's move. That being said various areas can definitely be used to provide context.

Below is the 30 min chart for the SPI. Noting that we've had an upward bias in the market, its important to note where the major areas of decision are. Quite often these areas aren't 'clean or obvious' but we can look at how often the resistance has been tested in order to get a feel. In each important area of the chart the resistance has been tested multiple times. It's not just some random area or random high but rather an area of indecision which has has been attacked and defended more than once. When/If it cracks it figures to have some upside potential.



Now we have the 5 min chart from today. Once again note the context:

-CBA announces strong profits and opens up 3%
- We are in earning season
- 4960 in the SPI contract equates to roughly 5000 in the XJO
- The market is in an uptrend
- We had had 2 tight range days. High volatility follows low volatility.

After the initial push at the open we made a run for 4960 (5000 on the index). After the initial touch at about 10.45 we faded back however the bulls were always in control. I only got to see the depth for about 20 minutes (And this is what really does matter) but just after 10.45 but I remember thinking that I thought any push down was getting quickly eaten by the bulls. Whenever the Ask pushed down it just kept getting gobbled up. No surprise that we tested the high again and the cross over the magic line will generally provide some upside.





Maybe I'm looking too much into this or over analyzing. After all from what I gather not many locals trade the SPI and it's generally a slow moving, computer based market but some techniques definitely work in this market and much can be learned.

At least I think that's what I'm doing
 
Still lost on why the volume data I get from Interactive Brokers is so different to that of what the ASX spits out in their trading report. If by miracle someone can answer this, please do!



Why is it different??!!
 
Open 15/2/13

Not expecting a whole lot of action today.

Context:
-It was quiet overnight
-We've had two strong days in a row, perhaps time for some gentle rotation.
-Not really any news coming out although RIO did report after the close y/d so perhaps that will move the market a little.

The night session closed down 7 points or so. Given I'm not expecting a whole lot I'm leaning towards a leak towards the 4970 mark, if not maybe we test yesterdays highs. In the end the tape will tellthe story.

Chart below shows a couple of support and resistance levels, also note the ASX200 index at 5000 = the SPI Futures at around the 4955-4960 mark, I wouldn't be surprised if that level provides some support in the coming days/months/whenever. Then again maybe it won't.



Anyone else view the idea of BHP/RIO increasing their dividend as a bad thing? I mean these big miners are supposed to use their excess cashflow to go out and seek and develop more projects and actually provide a strong return. To me these guys paying a higher dividend is saying 'we can't find anything to spend our capital on so we are just going to give it back to the shareholder'
 
Monday:

Still no word from Interactive Brokers about the volume issue for the SPI.

So we closed at 4995 on Friday afternoon got up to 5016 in overnight trading then closed at 5008.

Both CBA and TLS go ex-div today. My understanding of this is that the SPI/Cash fair value was about 42 points all through Friday, given the dividends coming out of the cash I'd say this spread will narrow to about 30 (rough calc's). What this means is even though the SPI was +13 from the close on Friday afternoon I think the cash market will open little changed. This is my understanding of how it will work but will keep a close eye this morning to verify.

Unsure what to make of the open, 4980-4985 are the levels I'd be expecting some buying to come in. I noted to myself on Friday that these areas had the most traded volume. Everything still points to buy the dips at this stage.

I do note that on Friday though the high was just above 5000 and it printed a pretty strong reversal on the 30 min chart. This also co-incided with a slightly lower high when compared to Thursdays price action. I'm not reading too much into it at this stage though.

Will be doing my best to follow the depth!
 
Feeling good today. I feel organised.

Effectively in this game I want to acheive two things:

1. Make a lot of money.

2. Manage that money well.

In regards to 1, making a lot of money for me either comes from getting a job and working hard, or learning to intraday trade and be successful that way. At this stage I'm hoping I can prove myself to become a strong enough trader that it can be my 'job'. Only time will tell on this front and whilst I have several avenues on how this can be achieved, they all involve watching the screen a great deal and learning what works. Some luck along the way wouldn't hurt either to be honest.

I've now got the ES, NQ, NKD and AP all set up with Interactive brokers so I can watch several markets at various times of the day and attempt to learn what works. I think this is a good base.

I'm also going to be backtesting some ideas on the above instruments through Ninjatrader. Once again, I'm trying to find what works or atleast give myself some type of an edge.

With regards to part 2, managing the money. I think this where the portfolio management/nick radge/learn to code in amibroker comes into play. Obviously this is a long enough road itself and trying to both at the same time isn't easy although if I'm ever going to have time to do both its now. So improve on this front I need to d/l amibroker, learn how to use it, then learn to VALIDATE some of Nick's systems as well as perhaps come up with some concepts of my own. As I said, its a long road and I'm jealous of those who have already done it.

If I get enough money from (1) then maybe I'll just join the growth portfolio haha.

Well all that sounds pretty easy when you write it down. Now its just a time thing.
 
No its a MONEY THING

Then its a time thing

To make lots of money youll need to trade lots of Contracts
So youll need lots of margin
So youll need lots of cash to provide that margin particularly if trading
lots of instruments.
Around $100k would be the minimum if you want good return.
Twice that for a chance at serious money.
 
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