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Spread betting on the Nikkei 225

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Just wondering if anyone else was playing around with betting on Asian markets using the previous day's trend/trading of the US market. Having relative success with using it as a barometer for where the Asian markets will head in the opening few hours. I am also taking into account things like futures trends, interest rate fluctuations and general news churned out in the morning before the Asia open.

Probably just getting lucky, but would like to see what others are doing when trying to best predict the movement of the Asian markets. 

Cheers. 

Edited by xr89
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I find China A50 & HangSeng often give good trends    e.g.,   

Capture HK.PNG

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I am relatively new to this but have always kept and eye on the markets. Jut wondering what software you are using. Downloaded MT4 (provided by IG, because on the actual MT site it only lets you download 5 which doesn't seem to pick up the IG servers when I add an account.) but they both Look AWFUL XD. Is yours a different program or just a re-skinned MT4/5?

 

Thanks for the reply btw

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Ah thanks :)

I am assuming you can easily add IG (real/demo) accounts in ProRealTime?

Also I tend to find China moves pretty independent of the US apart from when they have been embroiled in a trade war  (correct me if I am wrong) and tends to be very driven by government policy and announcements.  Seems the hike today has been because of it stating it would give more support to private industries. 

Edited by xr89

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Hi,

I am  also interested in Asian Markets but  I was wondering how you can best predict where the market is heading based on previous results with USA Market?

 

 

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@Clem,

A very good question.

I am looking forward to reading how the previous day's performance for US markets can help indicate the future price behaviour of Asian markets such as Nikkei 225!

🤔

If this is possible and there are any proven patterns and trends then IG Community would be an excellent place to share. 😀

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Everyone has their opinions on trading mythologies @Clem and often like to tell people why what they are doing is ill conceived but the reality is no one has it locked up, or else they would on CNBC or on an exotic beach somewhere...  The people who seem to be very successful all say that you have to find a method that works but also suits your personality and preferred trading style.  Also this changes over time.  A lot of highly successfully traders trade 24/7, following the Sun as it were (obviously they have staff, an organisation, to do it).  So clearly they find it important to see what major world markets are doing but I think (based on TV interviews with these people) this is more to do with gauging if there is anything at odds with their expectations occurring rather than seeking short term trading opportunities from pattern correlations.

What I can say from my own experience (I trade the Nikkei from time to time but it is not a main focus) is that trading is a probabilities game and not a predictions game.  Literally no one can say what the markets will or will not do or how they will react on any given day to anything, not news, nor other markets, nothing.  Many try to explain market moves for this or that reason but so what?  That is why the market already moved not what it will do next.  You very often get reactions that are "odd": good economic data produces a bearish run ("it was already priced in" or something...); bad data produces a rally ("the Fed has to act" or something...).  The Dax is following the Dow, the Nikkei is following China, everything is following the SP500 and what about Bond yields?  Personally I don't have the brain power or the computing power to analyse all of this and come up with a credible tradeable system solution and do not have sufficient insider knowledge to "know" why markets move the way they do.  That said I do believe that in big picture terms there are correlations between markets (rising bond yields is bad for stocks) but they are never permanent and you can't trade this, you can only use it to set up your overall fundamentals assessments to try to discover a turning point and/or identify a trend emerging.

I firmly do not think you can draw any conclusions that are trade worthy on the Nikkei from what happened the night before on the US markets.  You have to assess the Nikkei (and any other market) on its own merits: Fundamentals big picture and current emerging price action). But if you are still intent on looking at this then I would urge you spend some time taking a large sample of such situations from historic data, looking at various time frames and understanding the overall market condition (Bull, Bear, consolidation) at the time of you sample and testing your hypothesis that there is a trade worthy correlation.

In the final analysis the difference between a trader and a gambler is the former uses a tried and tested system or methodology (doesn't need to be a computer system) to attempt to gain an edge whereas the latter uses gut feelings and received "wisdom".

Good luck with it.

 

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@Mercury, nicely explained.

However one could argue that a professional gambler with a mathematical background and exceptional understanding of odds and probability could possibly perform better than an average trader in terms of profits earned per annum.

Just like in Blackjack or Poker the gambler does not know what the next card is going to be, in trading the trader does not know what the next (future) price movement is going to be. This is where an exceptional understanding of odds and probability which can be implemented into a trading system can be useful. It does not mean a guarantee of success and the average trader could outperform such a gambler but do not underestimate the power of professional gamblers educated with a high level in mathematics. 

Good explanation though. 

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I agree @TrendFollower about what you say about professional gamblers.  I know a few in the horse racing game but a lot of what they do is not so much picking winners and getting inside tips, although that happens, but playing the odds and laying off on the online exchanges.  Very systematic and not at all taking a bet because they have a feeling.  Don't know that much about casino games but I have heard some of the big names in trading referencing it in terms of odds and the recent Drucker interview video posted by caseynotes is an example of the use of casino gambling to illustrate the psychology of loosing traders very well.  What I really meant when I said Gambler was not a professional gambler in the way you describe it but a stock market gambler and likening that to picking a grand national winner because you like the name...

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On 19/11/2018 at 18:00, Mercury said:

Everyone has their opinions on trading mythologies @Clem and often like to tell people why what they are doing is ill conceived but the reality is no one has it locked up, or else they would on CNBC or on an exotic beach somewhere...  The people who seem to be very successful all say that you have to find a method that works but also suits your personality and preferred trading style.  Also this changes over time.  A lot of highly successfully traders trade 24/7, following the Sun as it were (obviously they have staff, an organisation, to do it).  So clearly they find it important to see what major world markets are doing but I think (based on TV interviews with these people) this is more to do with gauging if there is anything at odds with their expectations occurring rather than seeking short term trading opportunities from pattern correlations.

What I can say from my own experience (I trade the Nikkei from time to time but it is not a main focus) is that trading is a probabilities game and not a predictions game.  Literally no one can say what the markets will or will not do or how they will react on any given day to anything, not news, nor other markets, nothing.  Many try to explain market moves for this or that reason but so what?  That is why the market already moved not what it will do next.  You very often get reactions that are "odd": good economic data produces a bearish run ("it was already priced in" or something...); bad data produces a rally ("the Fed has to act" or something...).  The Dax is following the Dow, the Nikkei is following China, everything is following the SP500 and what about Bond yields?  Personally I don't have the brain power or the computing power to analyse all of this and come up with a credible tradeable system solution and do not have sufficient insider knowledge to "know" why markets move the way they do.  That said I do believe that in big picture terms there are correlations between markets (rising bond yields is bad for stocks) but they are never permanent and you can't trade this, you can only use it to set up your overall fundamentals assessments to try to discover a turning point and/or identify a trend emerging.

I firmly do not think you can draw any conclusions that are trade worthy on the Nikkei from what happened the night before on the US markets.  You have to assess the Nikkei (and any other market) on its own merits: Fundamentals big picture and current emerging price action). But if you are still intent on looking at this then I would urge you spend some time taking a large sample of such situations from historic data, looking at various time frames and understanding the overall market condition (Bull, Bear, consolidation) at the time of you sample and testing your hypothesis that there is a trade worthy correlation.

In the final analysis the difference between a trader and a gambler is the former uses a tried and tested system or methodology (doesn't need to be a computer system) to attempt to gain an edge whereas the latter uses gut feelings and received "wisdom".

Good luck with it.

 

So I think maybe I wasn't so clear in my original post, but simply using the US markets as to whether or not the current trend (ie bull/bear) will continue. I haven't found that the Asia markets often shift the US markets away from an overall trend yet unless there is a huge change in Asia, natural disaster etc.  

I have been taking a rather methodical approach to trying to recognize trends and potential indicators (actually it was Dalio`s principles which prompted me to start). I have been logging each trade with every bit of information relating to it and keeping my bets to the absolute minimum (50p per point) with take and stops which I have found to give me enough leeway for random swings against the trend which can potentially take you out of your bet prematurely.

The way I see it is that all my failed bets are useful data in showing me what mistakes to avoid. 

I watched the markets and studied the trends and curves and still on a demo account tried out several different times/amounts/stop&take/ etc before I settled on a framework for my bets. 

Since I started last week I am 400 up all told (based on a 1000 deposit) with a max of two bets placed a day. I write down lessons from each trade which adds to my overall framework.

I feel people tend to take this so much from a "you have to have a maths brain to be a successful gambler" perspective which I feel is a little shortsighted. Being someone who studied politics and international Relations it has been fascinating to see how geopolitics has an impact on the financial markets and can better allow me to hedge my bets successfully. 

Trumps twitter is a brilliant tool also XD. 

I am not naive enough to believe that this system will always work as the current bear market wont necessarily hold into the new year. Yet I am building a framework for when the market shifts and am being adaptable for the moment when my system needs to change. 

Yet the two major things I have learned is: 

- Always stick to your system

- Don't get greedy.

If i had followed the above more rigidly I would have been more like 600 up, but hey ho, we learn from our mistakes and this will be a learning process for at least another three months before I even think about putting real money into it. 

Edited by xr89

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@xr89,

In terms of patterns then it seems as if the Asian markets have followed the US's lead downwards. Donald Trump's trade war with China, the recent interest rate rise by the US Federal Reserve, major equity indices in the US hitting bear market territory, prolonged US bull market which was longest in history, overbought conditions, are all pointing towards the US stock market going downwards. The Asian markets seemed to have followed suit as in this time of multinationals trading with each other around the globe, the economies of countries are becoming more connected. There is a famous saying that,

"If the US sneezes then the rest of the world catches a cold".

I think on this occasion the US has sneezed and caught a cold but the rest of the world could catch the flu!

This is without even considering what happens after Brexit!

From an economics perspective, China's loss in the trade war with the US could lead to the gain for other countries. China's smaller Asian economic rivals like Thailand, Vietnam, Indonesia and Cambodia could enter the supply chains that traditionally Chinese companies were in. These countries are what I call 'Frontier Markets' and I invest in these markets with a long term view of capital growth. 

So @xr89, there may well be a pattern emerging but how credible and reliable is this or is it just simply down to chance? What you must do is obtain the data to support your assumption and provide evidence which validates your view. I have a feeling based on the last month of two that you may well find this data supporting your theory. 

This bear market may well go into January and possibly into February and March of 2019. I am not ruling this out. I will let the price action tell me the story going forwards. Trying to establish such patterns and trends are useful if you are going to trade the major US indices and the major Asian Indices otherwise what will you do once any pattern is established and confirmed?

Are you shorting the US and Asian markets? 

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