Trading the SPI

mit · 3 August 2006

professor_frink said:
4940 seems to be the level for the week. Every major move this week has either begun or ended in this area!

Now that I've said that, watch for it to do the exact opposite today

Rather than a support or resistance it seems to be acting as an attractor. I've thought so since last Friday. I've taken profits there twice this week (Short at 5016 on Monday and Long at 4913 Yesterday afternoon).

Most of us have had the trend-following/trailing stop dogma* drilled into us but I think in this market until we break out of the range, trading to 4950 (CMC is 10 pips different from the SPI) from around 40-50 pips out from 4950 with wider stops than normal seems to be what the market is telling us. The trick is to see when the market has stopped ranging because when it breaks this 4900-5000 range there is a wider 4800 to 5100 range to break out of.

MIT

*Shouldn't say dogma because anyone who backtests knows that trend following over time gives great rewards just that the market sometimes shows that something else will work.

mit · 3 August 2006

neo said:
Hi all,
Open 4965....that seems high.
I'm short at 4966.........

Damn MarketMaker froze at the open.

Bronte · 3 August 2006

neo said:
Hi all,
Open 4965....that seems high.
I'm short at 4966.........

Great call neo....I am with you
I have taken +4 and +8 profit
Might sell again later

professor_frink · 3 August 2006

Bronte said:
Yes professor and you called this Support / Resistance yesterday
Well done! Now todays question...Do you know why????

Called it yesterday- had the number on friday. It's a weekly pivot point. Do I know why it's held so well? Not at all

ageo said:
he doesnt need to know why.

He's Professor Frink!

Damn right I am Ageo

Maybe that level has something to do with the pickle matrix :

nat · 3 August 2006

ha ha ,the pickle matrix ,thats funny

professor_frink · 3 August 2006

mit said:
Rather than a support or resistance it seems to be acting as an attractor. I've thought so since last Friday. I've taken profits there twice this week (Short at 5016 on Monday and Long at 4913 Yesterday afternoon).

Most of us have had the trend-following/trailing stop dogma* drilled into us but I think in this market until we break out of the range, trading to 4950 (CMC is 10 pips different from the SPI) from around 40-50 pips out from 4950 with wider stops than normal seems to be what the market is telling us. The trick is to see when the market has stopped ranging because when it breaks this 4900-5000 range there is a wider 4800 to 5100 range to break out of.

MIT

*Shouldn't say dogma because anyone who backtests knows that trend following over time gives great rewards just that the market sometimes shows that something else will work.

Yes trend following over time works the best for position trading, but has it been tested much on intraday trading? From what I've seen, finding levels to trade off seems to be a better way to go intraday. There doesn't seem to be much in the way of intraday trends that can be caught using trend following methods. The amount of range bound days seem to outnumber the trend days by quite a margin.What do you think mit?

Ageo · 3 August 2006

i went short @ 4981 as RSI was 98 over bought and also based on profit taking from the start.

I have moved my stop to breakeven but not sure if its going move down further.

Materials seems to be keeping it up

nat · 3 August 2006

why s it stopped ,the shorts covering?

Bronte · 3 August 2006

Bronte said:
Great call neo....I am with you
I have taken +4 and +8 profit
Might sell again later

SPI is trying to get back to 4940 level
We have seen 4946 Low:

Ageo · 3 August 2006

materials sector is surging!

mit · 3 August 2006

professor_frink said:
Yes trend following over time works the best for position trading, but has it been tested much on intraday trading? From what I've seen, finding levels to trade off seems to be a better way to go intraday. There doesn't seem to be much in the way of intraday trends that can be caught using trend following methods. The amount of range bound days seem to outnumber the trend days by quite a margin.What do you think mit?

Prof,

Yes, I agree for intraday, but I was looking at longer term of 1-2 days and basically buying or selling based on the distance from this particular pivot.

MIT

professor_frink · 3 August 2006

mit said:
Prof,

Yes, I agree for intraday, but I was looking at longer term of 1-2 days and basically buying or selling based on the distance from this particular pivot.

MIT

Using some kind of trend following method to catch those kind of moves could be a valid way to trade. Using something like a 20 period sma can work as a trailing stop. When the market gets moving, I've found it can sometimes act as S/R during the move. Haven't looked at it enough to use it all the time though

Ageo · 3 August 2006

Stopped out @ 4981.

Breakeven

Amazing its holding up, materials is hammering today.

Anywayz will wait and see if it makes a breakout over the EMA's.

mit · 3 August 2006

professor_frink said:
Using some kind of trend following method to catch those kind of moves could be a valid way to trade. Using something like a 20 period sma can work as a trailing stop. When the market gets moving, I've found it can sometimes act as S/R during the move. Haven't looked at it enough to use it all the time though

It something I have been thinking about for awhile trading the reversion to the mean (or trading the noise). Instead of getting a few big winners, a number of ordinary winners and a lot of losers, you get a lot of winners but a few large losses. The losses come when the market starts trending because you are basically trading against any trend that develops.

The hard part is to determine when you are trending again because if we break the 4900-5000 range we have a 4800-5100 range as well.

MIT

nat · 3 August 2006

hey ageo was just wondering why you rode it down then right back up agin ,as was aginst the flow to start with and you used a big trailing stop and all ind still in the positive .Not telling you how to trade ,just curious
Nathan

Ageo · 3 August 2006

nat said:
hey ageo was just wondering why you rode it down then right back up agin ,as was aginst the flow to start with and you used a big trailing stop and all ind still in the positive .Not telling you how to trade ,just curious
Nathan

the reason why i did that nat because usually on big opens it tends to reverse off the bat (i.e profit take) and so i was looking for a move down to 4945 (gravitation) and then it presents a buying opportunity for people to move back in.

Today thow it didnt want to go down. Not to worry i didnt lose anything, but there have been some days like a few days ago when the dow was up 118 points the XJO opened very high but then dropped 90 points from the word go.

Id rather wait for those moves then try to guess when its going to turn (thats what a trailing stop is for).

my stops are 10 points away (usually now) so if i lose 5 trades but then get 1 big 1 im even or infront.

make sense?

professor_frink · 3 August 2006

mit said:
It something I have been thinking about for awhile trading the reversion to the mean (or trading the noise). Instead of getting a few big winners, a number of ordinary winners and a lot of losers, you get a lot of winners but a few large losses. The losses come when the market starts trending because you are basically trading against any trend that develops.

The hard part is to determine when you are trending again because if we break the 4900-5000 range we have a 4800-5100 range as well.

MIT

So how would you go about doing that? I gather it would mainly revolve around fading gap openings with a target in mind(for example 4940 today).

And to the hard part- knowing when it's trending and when it's range bound. Well that would be getting close to the holy grail! For me, if I'm fishing for a top or bottom, then I won't be waiting around too long to find out just how wrong I am-even if it means missing the occasional move!

nat · 3 August 2006

yeh no worries,makes sense,Iwent long at 10.08 after pin bar ,or hammer formed on 2 min chart and failed to stay below 22 ema ,i took some profit on next 2 min bar then used 6ema for rest but got stopped out at break even for rest,in hindsight using the 22 ema for trailing stop woulve worked better as price didnt race ahead just meandered upNathan

Bronte · 3 August 2006

Nice to see that this thread is now very active.
Traders making and losing money.
That is all that we ever wanted.
To help others...Thank yous all

Bronte · 3 August 2006

"Trading the SPI" is NOT easy
Although it is a lot of fun

Battman & I say: "Thank you"

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