ASX Index

[Guest Zero]

Bit short on time - but there was the rally which faded then ranged into 1pm.  Weakness bought in the PM and into the close.  Very tight !! levels today to contain the SPI.  Suggestions good but my trading of them went pear-shaped due to IG's new restrictions on me.  Not happy!

Contrary to Asia where the Nikkei was just stupid, up about 600.  Dow futures stayed weaker. 

$AUD helped by RBA minutes, up about 250. 

[Guest Zero]

Another strong night on the back of nothing - commodities strong, with the $AUD keeping it's positive momentum. 

 

Today I'd expect us to give back some of those gains, then rally, fade back and range into 1pm (off lows into expiry).  Then after 1pm will be looking for a range, stabilising any weakness and probably keeping a positive bias into the close. 

 

Today the levels will be interesting again - we did a heap of work 5220ish on the cash and about 5185ish (also cash) - straddling the 5200 it seems. 

[Guest Zero]

First 45 mins or so of the day and it is tricky - as of now there is a level ("support" if you will/want) at 5202.  The algo's could call it a day already which is making me a bit undecided.  Room on the downside actually, BUT that level is in the way.  So watch that. 

The Nikkei is giving us some strength.

 

There are a few trades that would be nice now but I am bunkering down after a heavy day yesterday.  I'll wait and take some safer opps.  Watch that level.  If it goes, it might be revisted later in the day - that would be the ultimate scenario (heaps of binaries if that was going to be the day's action) but I can't stick around at the moment to trade that. 

The binaries on offer - assuming the high for the day has been put in for the XJO : +-45 cheap as, or the one-touch a bit higher 5135 I think.  About 1:2 risk:reward, or 1:1.5.

[Guest Zero]

Hmm, not too shabby.  The day evolved as suggested, with some early weakness interrupted by a 2min ridiculous spike higher (too quick to short) which came back to earth, then the selling began to the day's low.  We were struggling to fall early as the Nikkei was strong (+150 say) but right after I posted that suggested trade, we broke lower on our own, through that support level and to a new low.  I bit the bullet and bought the range (staying in between +-45 - risk reward had dropped to 1:1 by the time I had typed it up, so I gave up some pointage for the team!).   In hindsight I should have nailed it for all it was worth - but I was in the bunker.  The thing is - while the risk reward was 1:1 or better, the probability (TO ME) of it happening was 80%.  Hmm.

 

We bounced into 1pm with a range, off lows.  The Nikkei and Dow gradually weakened - I noticed that the Yen was the kicker - the leader of the move. 

Then we ranged off the lows into the close, pretty ordinary afternoon.  Selling across the whole afternoon - but the SPI held up against a strongly falling China -100 say, the Dow also lower, -50ish.  The Nikkei fell but then held up, the $AUD and USDJPY a little weaker.

Range into the close and expiry, with a positive bias as suggested.

 

I closed out that range binary at it's high - could have gotten the spread back but wanted some clear mental energy for the afternoon.  Traded the range into the close too - as suggested, expected a positive bias which was hard to trade as I could see the selling pressure.  I waited - the XJO was about +20 for the last 30mins (well 2points either side), was sure the low had been set, and so chose the 20-30 range (slightly positive v the price near the close at 4pm expiry 4:10pm) with a risk:reward of 1:1 again  

 

Now the SPI is rallying back to that particular level mentioned where the green-light was given for the short.  Things to pay attention to. 

Weakness continuing in China, Nikkei, and the DAX opening.  Might set the tone for the evening. 

[Caseynotes]

I have often meant to take the time to learn more about the direct, proportional relationship between probability and risk reward ratio. Probably less confusing to refer to risk reward ratio as simpley ratio, or R as risk will always be 1. So your stop amount is always refered to as 1 and then the reward can be expressed simply as R 1.5 for a 1.5 gain for example or minus 1 if you are stopped out.

 

For the intraday trader higher probability set-ups often have a lower reward potential but most instructors will advise you to steer clear of low ratio trades, and yet advise you to stick to high probability trades, something of a paradox.

[Guest Zero]

Thanks Caseynotes for the suggestion (risk reward) - much easier to understand.

 

I think you've hit on an interesting conundrum and the art of binaries.  Or more accurately, the power of binaries.  IF IG's pricing mechanism, which is probabilistic (simplistically - it is probably actually extremely complicated nonlinear diff. equations) is off the mark then you'll get the killer trades (contrary to the paradox above high prob and high return).  Low prob (of something not happening - or high probability it will happen.  Depends on how you place the trade) and high risk (high return).  Often in the one-touch - approaching a level - IG will have a risk of 80 meaning a high prob. it will touch.  YET there are times when it just won't.  I'll risk the 80 (sell the binary) if I am believing the prob. of it not touching is more than 50 say.  Usually 75% prob. 

Rare to see these, but often risk of 70 prob. of 75% (guessing - have no way of caculating it).  Today for example I was 90% sure, and the risk or IG's prob. was 72 (prob. of it not happening).  By the time I put it on their prob. (of it happening) increased to 50 (they were more certain). 

 

Most of the time I would say my probability is higher than the risk - but in general, with binaries, you are not only analysing the markets (the probability of a trade) but then trying to match that with the most profitable risk:reward.  When I have higher prob. I don't worry about the risk.  Yet you can often miss trades because you are trying to squeeze out  a bit more reward.  Timing the trade is trying to judge IG's probability v my own in time. 

 

The "edge" is identifying high probability structure in the day-day price that IG's (or anyone's) pricing can't program into an algo.  The reality too is that these so called high-prob. structures aren't as clear or high in real-time.  That is my "risk".   Which is why I don't use stops with CFD's.  I don't say this to be smart (yes it can backfire, and quite severely too) - but I am analysing the market (probabilistically, via intuition) - then I match a binary (or CFD) to that.  Thinking and calculating is too slow, so I have to just go with experience most of the time. 

 

 Edited for clarity.  Buying and selling means the prob. changes or becomes inverted, so to be precise - edits. 

 

[Caseynotes]

Yes, I was right. I am definitely going to have to learn a lot more about risk verses probability, and binaries for that matter too.

 

I afraid am going to have to read your last post a few more times, have a think, and a quick study before I dare to comment further. There is a lot of real interesting stuff in there and you have rather left me behind.

 

Though I do understand, as you say, analysing through intuition and the imperative to gain experience which cuts down the thinking time allowing faster decisions. Especially for intraday. Because, again as you say, these structures aren't as clear in real time. Blindingly obvious with hindsight. As you watch a candle turn into a spike you watch the urgency and the probability increase but so does the risk (if you intend to put your stop under it). I'm going to have to do more thinking.

 

Coincidently this popped up this morning and seems to be along similar lines though I haven't read it in full yet.

 

https://www.tradingtechnologies.com/blog/2016/04/19/when-is-a-long-shot-a-good-shot/

 

Cheers

[Guest Zero]

Another strong lead on the back of a denied oil rumour rally and the Kuroda/Yen.  Clowns.

 

I expect our strength to fade a little, then rally, pullback a little into 1pm (pullback then bounce so to speak).  After 1pm will look for a ranging up-trend-esque move.  Similar to yesterday it seems, yet I'm sure it will be different.   

[Guest Zero]

Hi Caseynotes 

 

It would be easier to follow with an example or two, which I will try and do sometime.

 

To add to the mix - with binaries, your R is changing in time.  Matching this variable R with a moving market is where the finesse comes in. 

Another feature of R that I find too is not the risk factor but the regret factor.  Regretting missing out on a good trade.  So if for a binary there is a risk of 10pts for a reward of 90pts, then there is a high regret factor if you let that one slide.  The counter side to that is it is a risk of 10 for a reason - IG think it is a certainty it will happen so the probability (for IG) is high. 

 

i have another idea which I might try out too - always being in the market.  With binaries you can so to speak (I know you can with conventional directional trading) - every 5 or 10pts there is a 50:50 trade minimum.  Anyway - for another day. 

 

[Caseynotes]

Hi  The evolving 'R' through a trade is an important concept. As price closes in on target your potential reward diminishes but your potential risk increases. If price is looking to pullback just before my target I am quite happy to just close out. Why sit through a full pullback cycle (which may fail) just to gain an extra few pips and risk all of the gain made so far? 

 

The 'always in' strategy is intriguing and I have read about it before but there were no specifics on judging the turning points, an interesting one to trial on a demo.

[Guest Zero]

Today was an erratic day - early surge fell right back, then steadied, bounce into 1pm.  The setup was similar to yesterday, and while the probability was lower than yesterday, IG were pricing it higher.  Weird - as if they were protecting themselves after yesterday?  Anyway - after 1pm, the bounce continued a little, faded right back to the same early support level, and then in the last 10mins surged right back with a strong move.  Ranged there into close. 

 

I couldn't do a thing right today.  All accidents - either sold when I wanted to buy, closed out when I wanted to add to my position etc.  It was weird.  So I couldn't capitalise on my suggestions.  IG seemed to have a heads-up too as they were pricing their binaries too expensively at the close as if they expected move higher.  So a bit frustrating.

 

The ASX kept its strength with strong volume.  The Nikkei was strong all day, China and the Dow up but just average. The Yen a tad weaker, the $AUD a little stronger, holding 78. 

More internal divergence today, which might kept the bid overnight. 

[Guest Zero]



 

You're right.  The thing is to compare it with a directional trade (futures say).  For that normally you'd get your R value via your stop level and your profit level.  Depending on where you get in, the probability for this is more complicated - you have to have, in time, your profit target hit before your stop, and normally that is larger than the stop.  So the prob. can be a bit tricky if you've mis-timed the move.  Yet R stays the same wherever you get in - unless you alter your stop etc. 

With binaries, the R value changes with the probability.  Plus you can get situations, where, once in, your R is still the same but the actual R changes as the probability changes and can get close to 100: the situations where the price only has to move above the expiry to get the full reward.  IF you were to generate a new R value (IG will do that by pricing the binary into expiry) it would be like 9! from an initial R of 1. 

 

The always in the market trade would be an experiment exploring the philosophical idea that with a binary you can ask the question and then if NO, don't buy say BUT that means you should sell.  So whatever the binary, whatever the price, whatever the time, you can ask - yes or no - and then buy or sell.  For ladder binaries it is easier - at any time - ladder binary above price xxxxx.  Binary priced at 45-55 (at the money).  Will it expire above this - yes, buy.  No - then not do nothing, but sell. 

Do this at every price interval - can trade a whole trend.  Or any binary is tradable.  That's where IG makes their money I reckon.  They are always in. 

 

For another day - along with an exponential profit growth strategy. 

[Caseynotes]

You jogged my memory and I found a book with a whole chapter on 'Always In' strategy but I'll need to re-read it. (Al Brooks, Trading Price Action Reversals).

 

I think IG must be always in if they are to hedge against clients open positions?

And stating the obvious "most mutual funds ... and hedge funds remain close to fully invested .." meaning always in. (Al Brooks)

The to do reading pile is building up.

 

What on earth is cable up to now, very weak retail sales figures and it's yoyoing.

 

[Guest Zero]

Today the SPI should sell off a bit on the open, rally, then fade back to 1pm (off lows).

Range down there with some weakness after 1pm to steady, consolidate.  Will look for an upward bias to the close. 

As for the ASX - tidying up after a big week, will be interesting to see what develops. 

 

[Guest Zero]

Today was a tidy up as it didn't make much sense otherwise.

We sold off early, then rallied strongly - too strong but at the time seemed legit.  To the XJO close yesterday (a touch higher) so intentional.  The fell right back, small bounce into 1pm. 

I was faked out by the market - over lunch - so missed those moves.  Hmm.

 

Afternoon was a fading of a rally down to an earlier support level.  Yet in the PM the Nikkei took off, +100 to +200 and the Yen went nuts - down 500 to over 1000 now.  We fell! on that with selling pressure, testing that support level consistently.  I went against my own recommendation and paid the price.  I told me so.  The day ended with a range-positive bias. 

Local selling pressure, and a strong Nikkei, China and Dow a little stronger. 

We might comeback tonight, yet right on the close we dropped over 10pts for no reason?? 

Long weekend here, Anzac Day.  I'll enjoy the extra day after a nutzy week.  Held the fort but...

 

[Guest Zero]

Holiday here in Australia (and NZ) - but a quick update.  Yen rallying after a ridiculous move south on Friday night.  Dow futures a touch lower and the Nikkei off a little.  SPI will be trading tonight after 5pm Sydney time = GMT+10, probably 8am London time?

 

********************************************************************************************************************

 

Just to be fair - I've sorted out my issue with IG and while they can't lift my "restrictions" it is good to know it is not personal.  Seeing as I made a point of it here on the forum, I thought it proper to set the record straight.  I won't divulge personal conversations, but they are improving their service from a technical point of view to protect us, their clients.  So another big tick or like .

 

AND - from all this I can only say you don't realise how good you've got it as a client with IG.  The liquidity they provide for guaranteeing (well 95% of the time I guess) fills for orders is priceless (from a day-trader's perspective/experience/requirements) and worth all the commission it costs!  Honestly. 

 

 

[Mercury]

Happy Anzac day Zero, gald it all worked out ok.  I think the Yen is in for a little bit of strength but this current weakness against the USD isn't over just yet.

[Guest Zero]

Today I expect a weaker start, attempt to rally fail, but then steady range into 1pm.  After 1pm, any weakness should recover a bit to range into the close.

[Guest Zero]

Day back after a holiday is always shonky on the open - we opened quite low, which was not a genuine move - then rallied to come back to "zero".  Then sold off as expected, attempted to rally again but failed quite strongly into 1pm.  That was the move of the day to short.  I was out and touch late in getting on to it, so thought I'd buy the bounce/range into 1pm (which wasn't the better idea in hindsight as the move was much larger than I thought and easily shorted.  Anyway - traded the 1pm 1-touch 5210 (sell at 50) - chose that as I could see, or, was confident there was a high prob. that the low had been set for the day (for the SPI) so that 1-touch seemed safe (it couldn't touch it otherwise would have to put in a new low) so sold it, meaning "I don't think it will touch".  Was touch-and go for a good while, but then was safe.  Still, I closed it out early to avoid any dramas (and interruptions to possibly other trades).  Actually, I got in too soon - sold a higher 1-Touch 5215 for 80 (meaning IG thought it was sure) - small risk, but that went to 100 (ie. touched so I lost my $ as I said no touch) but that loss gave me a bit more insight into the new low. 

  

After 1pm we slowly rose despite the Nikkei staying weak and going weaker.  We'd rally with it, but not fall.  China seemed to be the one to drag us lower at 12pm.  But we didn't go to far after 1pm, and fell back almost to the low, but then rallied into the close and expiry.  I expected that from my comment but saw strong selling all day, and another correlation change that was unusual and so held off.  The monkey business of the morning was enough silliness to keep me on the bench for the close.  Some good binaries to be had - but there'll be more tomorrow.

 

A bit more strength to the Yen after 1pm too, which didn't seem to influence the ASX.  Dow trying to stay positive all day too - maybe for Apple tonight?

 

Into expiry the selling kicked right back in after a totally wrong surge - punished as expected.  My holdiing off was right in why I did it - maybe not in what the outcome might be....  well if you traded the suggested range you'd be home safe. 

The ASX is making you work overtime for your trades these days! 

 

 

 

[Guest Zero]

Bit of a rocky start presumably after Apple's results.  Dow futures down about 30.

 

I expect the SPI to sell off any strength, then stabilise, and try to move higher into 1pm.  After 1pm, it should keep the bid after a breather, and then range into close, positive bias. 

[Guest Zero]

My suggestions today have been ambushed by a surprising CPI number.  While vaguely ok - the extreme moves make them unhelpful.  Amp up all the toned down talk (try to move higher, have a breather) to super-max and it might be right.  I've been out so missed it and am a little "miffed"....  Nut-s. 

 

[Guest Zero]

What a day - started as expected, with early strength selling off, stabilising and then... CPI first -ve for I don't know how long, giving hope of a RBA cut.  So off we go - massive surge, which then settled down into 1pm off highs.  Near 1pm was on the border of a binary, which I traded for the upside and it was looking good until the last minute (lock out) when it just got smacked lower taking my binary to zero.  Hmm..

Then we mucked around, selling off a bit, then rallied back - then I stepped out again - and we had dropped over 80pts!  I couldn't believe it.  No correlations had changed (the Nikkei staying avg. -50, the Dow avg. -30, China about flat) and the $AUD staying -800 to 900 pips.  A few volatile moves down at those levels - taking out some 1-touch in the last 30mins too. 

 

I decided to stick to my guns, trade my suggestion and buy the range into the close.  Like I said, despite the amped-up surge and doubly-amped fall - my suggestions still had some truth.  So over 30mins accumlated a few lots of "daily down 30-40pts" range.  Avg. price 50 R=1.  I had to do it like that a) Because of IG's limits on me and b) The market was still falling, so it was above my range when I started buying, and below my range near the close, keeping the price of my binaries about 50 yet making the prob. quite hard to judge!!

With 1min to go I was looking like I'd be staying back after school - but some totally stupid ! buying kicked in and the SPI surged almost 20pts.  That was enough to keep my binaries safe.  IG had even priced them to zero with 30sec. to go, but then to my relief, 100.  What would have been a kicker is if it surged to be above my range - totally possible.

 

Anyway - then the SPI sold off to new lows again, to close out a massive day.  Vol. high on the SPI, avg or above on the ASX. 

Today's move is likely a local move only, but with so much to factor in - tomorrow, the FED tomorrow morning, the BoJ tomorrow, and tonight's reaction to the $AUD, the CPI, and Apple's result is yet to have a full day's trading - it's hard to tell.  Yet I'd go with local only.  Tomorrow will take care of itself. 

[Guest Zero]

I expect a pullback from overnight to steady, range a bit then rally into 1pm.  From there, it should relax, then return higher, ranging there and into the close (positive bias still). 

 

A lot of data out of Japan today, including the BoJ.  I'll side-step any silly business if I trade.  Am having a half-day today. 

[Guest Zero]

Another monster-move day today thanks to Kuroda-san.  We started off civily, with a pullback from overnight , which steadied, then rallied into 1pm.  Quite a strong surge too right into 1pm, even sending a binary to a new level in the last minute with a 3pt move on the XJO - meaning the binary went from about 20 to 100!  R 4. 

I didn't intended to trade today, so left that one, and the rest of the day. 

The BoJ was meant to meet sometime in the afternoon, but suddenly about 1:05pm the Nikkei went from +200 to 0 in a second and the Yen up 2000pips.  I tried to short the pants off the SPI, but thanks to my new restrictions I just got rejected.  About 6 times.  By then the Nikkei was down over 600! - not a good idea to get caught in the whiplash - which came on cue with the SPI bouncing strongly, then falling even more strongly.  It was slow to get into gear at the start and then decided enough was enough at some random point, steadied, ranged, then moved higher even, relaxing to range into the close. 

Into the cash close or expiry, the market rallied strongly as suggested, the positive bias kicking in nicely.  After all the potential hiccups possible today, I'm pleased things went as expected despite not profiting from it. 

 

Moves like today with the Nikkei and Yen dragging the SPI down 40 pts in 20mins are nice if you get onto them, but they can negatively impact your trading psychology.  So I don't mind leaving them on the table. 

 

All PM the Nikkei stayed between -500 and -650, the Dow futures down about 110 on avg., the Yen -2200 avg. and China fell away into 4pm down 24.  Sets things up for an interesting night. 

[Mercury]

Agreed  if you are a day trader re things going how you expect but staying out to avoid the whipsaw affect.  For longer term traders such days are both good and bad: good because they bring about what you may have been forecasting and bad because you miss the turn, especially if it happens over night.  However overall they are good if they show the long term direction has changed.  Still need to confirm with a new low on stock indices but it is looking good.

[Guest Zero]

You're right  - often there is just as good a move about 1hour later (moving outside the day-trading regime) - like now.  The move is continuing - the Nikkei has moved lower 350pts more than it's low of the day (if I was to get in anywhere in its move) and the Yen about 1000pips.  Interestingly the Yen didn't have much of a whipsaw, as didn't the $AUD yesterday after the CPI smash. 

 

While I was making a point regarding the effects on trading psychology - it can have a regret factor that is also something to consider.  So there are two sides of it to consider.  Normally for my time zone they are things I have to sleep on...

[Mercury]

Regret is a killer in my view.  It is hard to do but you have to let missed opportunities go and focus on something else or they will eat you up and make you trade on emotion.  Similarly chalk failures up to experience and move on, with learnings of course.

[Guest Zero]

Today end of month, tidy up perhaps from the moves of the past days. 

I expect a tricky start to sell off, rally a touch, range then relax a bit but steady up into 1pm.  Then I'll look for some shorts which should come back a bit into the close, then range into expiry. 

 

 

[Guest Zero]

Bit of a counter-trend day today (we rallied despite the leads) which is why I suggested a tidy up day.  Annoying - well in theory annoying, as we have no reason for not falling when the Nikkei is down over 500 (again) and the Dow fell strongly last night.  The Yen also rallied again, as did the $AUD.  Gold took off a bit too around 12pm.

 

The SPI had a bit of indecision on the open, started to sell, but then rallied strongly.  That relaxed, ranged, then moved higher into 1pm.  I took a small short there into 1pm, just trading the overshoot pullback. 

I really wanted to short at 1pm, but am still getting used to my new trading "rules" and just botched it up.  So missed that - shorts were on as suggested, but not for too far (down 20) - reversed then ranged into close and expiry.  I was going to trade a higher range together with a short of the high (sell one-touch which was above the day's high) - only put on half the hedged trade then got tricked trying to wait for a higher price for the second half.  Silly - ended up missing out and then being exposed into the close.  Didn't end well, traded it back with a short short! after the expiry, but would rather not do that. 

Can't say it was a neat and tidy day - oddly.  As well, and again, divergences - and nothing really "worked" that often shows up on Friday.  Should have just gone with the basics and traded my suggested flow of the day.  A few Friday-moves were still there however.

 

We basically didn't respond to much today in the way of correlations - the Dow was up 20 then down 15, then flatish on the close, but rallied 30, along with the Nikkei (60) when the DAX opened (XJO closed).  Currencies (Yen, $AUD) also were active (higher) early, and then held their gains.  We just slowly (! boring) moved where we had to. 

 

 

 

[Guest Zero]

Back online after some technical difficulties...

 

Expect the ASX/SPI to fall on the open, steady, rally a little, fallback, then form a range from that.  Then in the PM expect a range to continue (rally, sell off a touch, rally back...).

 

I hope someone was trading on Tuesday seeing as I couldn't.  ? I don't see any commentary anywhere, yet the RBA's surprise cut sent the SPI up by 100 by the close!  That's money for jam.