Trading the Nikkei

CanOz · 20 January 2013

Since I've been away from the markets for a while now, I've had the time to look for a reliable data provider that does indeed provide good bid/ask data for Asian markets. I've now got my AMP Clearing account setup and I've had an opportunity to watch some of the new markets that they cover.

Things that I'm looking for are:

-Margin - I don't want to have to carry 100k in my AMP account, but i want to trade 3 or 4 contracts
-Market hours - This needs to fit in with my schedule
-Daily Range - in order to provide ample trades that meet the R:R critieria
-Multiplier - Something not to large, so i can trade my size and still risk 1% or less on each trade
-Thickness and liquidity - I really prefer a market as thick or thicker than the DAX or CL. The HSI is just too thin for my liking...maybe I'm getting old.
Relevance - The Japanese economy is still a very large economy in the region and its markets are very relevant.

So the winner is...The Nikkei 225 contract from SGX. This contract has an Initial Margin of $2000 and a maintenance Margin of $1000. Very reasonable.

It trades from 7:45 AM my time until 14:15. That's one hour for the market to establish its initial balance area and that gives me time to plan for Europe as well.

It has a decent daily range of between 100 and 150 points or so...plenty of opportunity.

The multiplier is 500 Yen or roughly $5.25 per contract.

Commission from AMP Clearing is also "reasonable" at around $5 per RT.

Its plenty thick with 100's in the depth with tons of bergs and the daily average volume is over 70,000.

So for the next month or so we'll do some screen time on this market while structuring it with VP.

Cheers,

CanOz

Pager · 21 January 2013

Currently it’s a very well behaved market as well, of all the markets I trade this contract is the least prone to slippage in fact it’s the exception rather than the rule to get any no matter how volatile, a few years back though it often would have a ranges of 2%+ but slippage was common, these days though ranges are often small, today there was a good range but unfortunately days like this are now rare, it also has an Auction close so if closing positions on the close you will get the closing price.

Personally I would rather have the big ranges back and cop a bit of slippage fingers crossed they come back

kid hustlr · 23 January 2013

Looks interesting Can

$5.25 a point is really cheap

EDIT: Am i reading that right, the minimum fluctuation is 5 points? Ie you buy at 10,000 points you cant sell until 10,005 points ?

http://www.cmegroup.com/trading/equity-index/international-index/nikkei-225-dollar_contract_specifications.html

CanOz · 23 January 2013

kid hustlr said:
Looks interesting Can

$5.25 a point is really cheap

EDIT: Am i reading that right, the minimum fluctuation is 5 points? Ie you buy at 10,000 points you cant sell until 10,005 points ?

http://www.cmegroup.com/trading/equity-index/international-index/nikkei-225-dollar_contract_specifications.html

Yup, it moves in 5 point increments, so 1 tick, is 5 points. It's like the SPI for tick value, but it's much more liquid.

EDIT, i guess its not "cheap", but regardless, my risk is the same and it respects certain levels and tends to overshoot these levels less before it finds willing participants...where the HSI can just blow past a level it seems...I think this is reflected in the difference in margin too. Although the Kospi is sort of similarly behaved in terms of volatility and liquidity, its ridiculously expensive to trade, margin is massive...

CanOz

CanOz · 23 January 2013

Pager said:
Currently it’s a very well behaved market as well, of all the markets I trade this contract is the least prone to slippage in fact it’s the exception rather than the rule to get any no matter how volatile, a few years back though it often would have a ranges of 2%+ but slippage was common, these days though ranges are often small, today there was a good range but unfortunately days like this are now rare, it also has an Auction close so if closing positions on the close you will get the closing price.

Personally I would rather have the big ranges back and cop a bit of slippage fingers crossed they come back

For my MR (Discretionary) system, i like the ranges. Its the trend days that can screw me up if i'm not aware of them developing.

Cheers,

CanOz

cbc1 · 24 January 2013

Hi CanOz,

I'm just starting day trading and I shall start with Auz. Mbey the nikkei after that. So where are they taking their lead from? Us or Europe? Does the contract go around the clock?

Shall follow with interest.

CanOz · 1 February 2013

When this market is behaving i gotta love how it respects my levels....

Pullback at 38.2%, 50%, and then fail at 61.8% with a PB providing a perfect entry...back to value for now at 11175...VP traders love days like this.

CanOz

Pager · 2 February 2013

cbc1 said:
So where are they taking their lead from? Us or Europe? Does the contract go around the clock?

The SGX Nikkei has 2 trading sessions, the main day session then after hours, there’s also 2 CME contracts one is USD and the other Yen that trade almost 24 hours a day, the CME Yen Contract and the SGX are fungible I believe so if trading the SGX and you wanted to hold a position for a few days or more you could have a stoploss working around the clock if you wished, there is also the Osaka Contract in Japan which is twice the size of the SGX contract, this I think only has a day session, heard before the internet was main stream and the floor was were all the business was done that there used to be a few traders who just made there money by trading the Arbitrage between the 2 and would have open phone lines between the 2 floors for the entire session, weather such trading is still possible I don’t know but interesting all the same I thought.

What I like about the Nikkei is it seems the least influenced of all the major markets by the US and often you will see the other Asian Markets following the lead from the S&P 500 and Dow and the Nikkei will be doing the opposite, also as I said in a previous post the SGX contract is very liquid almost all the time so easy to get in and out without too much if any slippage, it also has an Auction close so if closing a position at the end of the session you will get the closing price.

There’s also 2 mini contracts, one on the SGX and one in Osaka and a similar market in the Topix and this trades very similar to the Osaka Nikkei but there is only the 1 contract based in Tokyo but like the Nikkei highly liquid, worth a look IMO.

CanOz · 2 February 2013

[SUB][/SUB]

cbc1 said:
Hi CanOz,

I'm just starting day trading and I shall start with Auz. Mbey the nikkei after that. So where are they taking their lead from? Us or Europe? Does the contract go around the clock?

Shall follow with interest.

Sorry I missed this... Thanks pager for all that info.

I asked the question about the lead in another thread and TH replied that lately its been related to the yen since Abe came in....I use the yen at the moment.

Yeah it seeme in a world of its own, that's for sure.

white_goodman · 2 February 2013

CanOz said:
When this market is behaving i gotta love how it respects my levels....

Pullback at 38.2%, 50%, and then fail at 61.8% with a PB providing a perfect entry...back to value for now at 11175...VP traders love days like this.

CanOz

live or sim?

cbc1 · 2 February 2013

CanOz thanks 4 that,

Thanks for that explanation 2 pager. It could have taken ages to find out info.

From the yen ay? I'm not the biggest fan of Fx. Although working out the lead would be simple enough I guess. Trading Fx would be a different matter.

CanOz · 2 February 2013

cbc1 said:
CanOz thanks 4 that,

Thanks for that explanation 2 pager. It could have taken ages to find out info.

From the yen ay? I'm not the biggest fan of Fx. Although working out the lead would be simple enough I guess. Trading Fx would be a different matter.

I use the 6J (the CME contract), and a volatility indicator to make sure its doing the opposite of the NK...

As i mentioned before cbc1, I'm only watching this market at the moment...I've got a dodgy inet here in Northern Butthole PRC...The timing is good for me as i intend to start trading it live in late Feb.

Cheers,

CanOz

CanOz · 2 February 2013

white_goodman said:
live or sim?

Sorry mate...missed your post, had to take you off IGNORE to reply...with what was said in the first post...

So for the next month or so we'll do some screen time on this market while structuring it with VP.

...

hmmm....Screen time

Screen time - Propex

Time. There is a direct and obvious correlation between the amount of time you spend in front of the screens and your success. We call it "screen time". One of our senior traders was recently talking with some of our in-house trainees and said something interesting. He said "If you are going to be successful, you have to be willing to give up sleep. What is more important – sleep or success?" That is spot on advice. The only way you will learn how to trade is to be prepared to put in the time.

I'm assuming from some of the other stuff I've read about you that you are some kind of 'Prop Trader'...well lucky you, to have had the benefit of

a culture of support, guidance and open communication. Everything a 'trainee trader' goes through, our senior traders and managers have also been through. At the end of the day you and you alone are responsible for your P&L. However, we encourage and support open communication between all. It would have to be the best place for a trainee to learn.

For me its been a tough transition from part time EOD trading, to trying to make a living out of this. I've got a ton of capital but I'm extremely risk averse, in a land with no real traders to talk to in person, no hope of even taking the Propex course until i move back to Aust. So I've had to go through the beginners cycle all over again ON MY OWN...thank god mostly on SIM. The last two weeks of my first attempt at intra-day trading ended profitably, by a slim margin. I will not give up though...

So good on ya Whitey...glad that you've made it:millhouse. Its just too bad that your mind numbing pompous attitude is so useless to other traders....Your kind are a scourge to those like me struggling to become a profitable INTRA-DAY trader. You provide no value AT ALL. You only interrupt now and again with a smug comment or two...usually two, after you think about it for a while and miss the edit window...

CanOz

white_goodman · 4 February 2013

haha I was honestly asking a legit question,

nerve struck

CanOz · 4 February 2013

Looking for an afternoon retest of the HOD...Could be a good fade opportunity. Hardly overly bullish action today, so barring any surprises it could be a good short on my SIM account.

CanOz

CanOz · 4 February 2013

Indeed the trade opportunity presented itself. We got two contracts off and now the runner is working...

Lots of bergs...

CanOz

CanOz · 4 February 2013

The Yen has really accelerated in its decline. Could 0.01700 be a level that supports it?

Volume on the CME contract has been increasing on the decline. A total lack of value areas on these fresh lows makes it difficult to anticipate a bounce. We are at 100% of the previous move.

This is critical to the NK, and we could see some shorting opportunities on the NK if the Yen can give it rest for a while. Shorting the NK at the highs is tricky, but its not even testing the previous days VPOC, so getting in for a trend ride means looking for a bounce off the session VWAP.

CanOz

CanOz · 4 February 2013

LOL....

2% inflation target could be reached if BoJ hikes monetary base by 22% - Source TradeTheNews.com

kid hustlr · 12 February 2013

Pager said:
The SGX Nikkei has 2 trading sessions, the main day session then after hours, there’s also 2 CME contracts one is USD and the other Yen that trade almost 24 hours a day, the CME Yen Contract and the SGX are fungible I believe so if trading the SGX and you wanted to hold a position for a few days or more you could have a stoploss working around the clock if you wished, there is also the Osaka Contract in Japan which is twice the size of the SGX contract, this I think only has a day session, heard before the internet was main stream and the floor was were all the business was done that there used to be a few traders who just made there money by trading the Arbitrage between the 2 and would have open phone lines between the 2 floors for the entire session, weather such trading is still possible I don’t know but interesting all the same I thought.

What I like about the Nikkei is it seems the least influenced of all the major markets by the US and often you will see the other Asian Markets following the lead from the S&P 500 and Dow and the Nikkei will be doing the opposite, also as I said in a previous post the SGX contract is very liquid almost all the time so easy to get in and out without too much if any slippage, it also has an Auction close so if closing a position at the end of the session you will get the closing price.

There’s also 2 mini contracts, one on the SGX and one in Osaka and a similar market in the Topix and this trades very similar to the Osaka Nikkei but there is only the 1 contract based in Tokyo but like the Nikkei highly liquid, worth a look IMO.

Pager you obviously have pretty good knowledge of this subject. I'm wondering if you could help me out.

When a contract trades on two different exchanges (as it appears this does) does that mean the book depth / level 2 information is different. ie, its effectively 2 different market places?

CHICHI · 29 February 2016

SGX contracts are at JPY 750,000/contract now for initial margin and JPY 680,000 for maintenance. Pretty steep.

I've started to look at the JPX instead.

Also, any reason why the cost has jumped so fast?

Trading the Nikkei

CanOz

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