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US 500 - Potential Shorting Opportunity

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There is an article that just popped up on zero hedge with Wells Fargo saying that pension funds need to buy $60bn of Equities whilst switching out of bonds to help rebalance their books towards year end. This explains some of the huge end of day buying we have been seeing. Let's see what happens again in a few hours because liquidity isn't great currently. 

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@elle,

A comment like, "haha" is meaningless and adds very little value. My live trade whether successful or not is a live trade to share with the IG Community. 

The next post a clip of Kenny Rogers song. Again add some comment, thoughts or opinions into the post as otherwise it adds very little value. 

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@MFG,

Welcome to the IG Community and congratulations for the taking the time and effort is submitting your first post. 

I would have liked to have shorted Oil but did not but it was in my opinion a great short trade so well done for actually shorting. However, I think the bulk of the move has occurred so opening a short now would represent a larger risk in my opinion. Also the risk/reward is less favourable now than it was a few months ago. 

I am trying to ignore all the 'market noise' in terms of news channels, media publications, investment channels and online websites and just trade based on trends, price action, volume, etc. Price action alone will determine whether this trade is profitable for me or not. 

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12 minutes ago, TrendFollower said:

@elle,

A comment like, "haha" is meaningless and adds very little value. My live trade whether successful or not is a live trade to share with the IG Community. 

The next post a clip of Kenny Rogers song. Again add some comment, thoughts or opinions into the post as otherwise it adds very little value. 

"Haha" means the target I suggested has been hit. I note that when I posted the idea, you did not comment on it., nor have since.  I also noted that as your trade continued , you let us know how many pips you were making, you were effectively " counting your money whilst still at the table"

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@elle,

It may just be me but I find your posts at times difficult to follow as it is not always clear to me. However, it may just be me and others may be following them just fine. If you had just stated the above in the post then it would just make more sense rather than others merely assuming and at times coming to the incorrect assumptions. Just a thought so see what you think. It may just be me!

@elle, I try and follow as many posts as I can and I am getting a lot of personal messages and people contacting me plus posts on my threads so it is like a full time job! I am doing the best I can but there are times when I simply cannot dedicate the time (though I would like to) on the IG Community. I try not to ignore any posts to me but equally there may be some or even many that slip through the net as I am sure you can appreciate. As I have stated I do not find your posts very clear and do not want to make assumptions that could be simply wrong so I find it difficult to respond to your posts but that is just me.

This live trade and also my live trades with Gold and Silver are just something I am merely sharing with the IG Community. I am not obliged to and nor do I get any incentive to do so. There are not many others who are openly sharing their live trades with the IG Community and nor should they be expected or required to do so. This is my personal choice so I accept I will get positive and negative comments. I hope many appreciate it. Equally I have many other trades which I am not sharing with the IG Community. 

One final note, the points up or down updates are just that. They are not actual profits or losses until actually taken. The latest position on this specific trade is as follows:

Short opened on 20/12/2018 at 13:30 is up around 25 points at time of posting.

Short opened on 27/12/2018 at 07:57 is down around 25 points at time of posting. 

Overall with both positions combined I am around break even but this is fluctuating both on the profit side and loss side constantly due to the volatility. 

Now obviously at a time when I was up I think 140 points from just the first short opened it is a turn around but this is the extreme volatility in play at the moment. 

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Many thanks   -  once again " I will try and do better" with comments  ,have a lovely weekend:)

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2 hours ago, TrendFollower said:

@MFG,

Welcome to the IG Community and congratulations for the taking the time and effort is submitting your first post. 

I would have liked to have shorted Oil but did not but it was in my opinion a great short trade so well done for actually shorting. However, I think the bulk of the move has occurred so opening a short now would represent a larger risk in my opinion. Also the risk/reward is less favourable now than it was a few months ago. 

I am trying to ignore all the 'market noise' in terms of news channels, media publications, investment channels and online websites and just trade based on trends, price action, volume, etc. Price action alone will determine whether this trade is profitable for me or not. 

Thank you !

Yeah the risk/reward is slightly against me at $55 however I've hedged myself long in an oil stock which I plan to keep in the long run and use the Short position to capture as much profit while were in this negative period.

Gold mining stocks are the only thing I will buy long in the current time they usually gain good returns in volatile markets :D

Anglo American is another pick I'm looking to add as it's done well to avoid the negativity vs the FTSE and is performing well

Anglo American PLC_20181228_20.36.png

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I just read this article from DailyFX which is part of IG and the amount of indirect 'bias' to influence new, beginner, less experienced traders is phenomenal. 

Below is the link to the article. 

S&P 500 Technical Outlook – Trade-able Low Looks to Be Nearing

https://www.dailyfx.com/forex/technical/home/analysis/spx500/2018/12/27/SP-500-Technical-Outlook-Trade-able-Low-Looks-to-Be-Nearing-PRtech.html

Now I am not suggesting that the article may end up being wrong. It may end up being right. The simple truth is I do not know. The title of the article is suggesting a low looks to be nearing but how do DailyFX know this? When you go on and read the article it is clearly 'sitting on the fence' stating the tradable low is nearing yet it is saying the current price action may not have reached its low yet. Again pure vagueness without helping or assisting any traders. 

It is as if DailyFX are enticing traders to go 'long' the S&P against the trend and against several indicators. Now this may be a superb (Contrarian) trade but the article is vague and full of 'waffle' without any real substance. I am not suggesting my position on the 'short' side is right and only price action and time will tell. What I have done is shared with the IG Community how and when I opened the short positions and what indicators I used to come to those decisions. All I see if vagueness which is hiding behind technical analysis. 

I think there are a lot of analysts who can get the current price behaviour to fit into some form of technical analysis to support their view. I suppose most of us could be guilty of this and do so without necessarily realising including myself. 

It will be interesting to see how the price action on the S&P 500 kicks off in 2019.

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In hindsight (which is a wonderful thing of course!) a better entry point for the second trade (addition) to my original position may have been around the current price and now when I look at it I clearly added a second position too early.

With profit taking (today) it could well have presented a better opportunity to add to my short but it the current 'rally' reverts back to the downward move then I would not have been a millions miles away. If the S&P continues to rally then it would have been an error on my part and I can then only blame myself.

If the trade moves against me then I face the danger of being stopped out and making losses on both trades combined though I am still in profit on my original trade and a loss on the second addition to my trade. I shall update this thread on my latest points on each trade when the market closes today. It may be tomorrow morning or afternoon as I will be enjoying myself at a New Years Eve party.  😉

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@elle,

Looking at you chart it shows the 150 EMA scoping downwards which supports a 'short' trade. The risk in this trade is the extreme volatility at the moment which is why I am looking to trade this based on the longer term trend and a longer time period. 

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Hi @elle. Could you tell me the time frame of your graphs. I can see 25 ticks so presume that is one candle every 25 seconds although I'm not really sure. By the way, I have added your preferred 150EMA to my charts. At first glance, it looks very useful indeed.

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ticks are what they are, not a timeframe, you can see the x axis varies in time - good luck

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@elle and @Nelsy-Boy, I think it is extremely tricky to start looking at different time frames. I tend to stick between the 1 hour, 4 hour and daily and this form part of my trading strategy. 

I try not to even look at the 1 min, 10 min, etc. Yes there are some indicators that work on many timeframes but unless you know exactly what you are doing then you will begin to get stuck. If you change your time frame then it needs to be implemented into your trading strategy and the reason why must be clear. 

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From a 'Fundamental Perspective' based on reports (not sure if they are credible) suggest the mother of all Bear Markets is going to arrive shortly. If this was the case then it would imply a potential recession as well. If these things happened then markets would go down (it is being suggested by 40% but who knows). This would also imply potential 'safe haven' and defensive assets such as Gold, other precious metals, Gilts and Bonds. This is only from a fundamental perspective. 

Therefore my short trade here is indirectly (some would argue directly) linked to my long trades in Gold and Silver. 

Just look at the US 5 Year and 2 Year T Notes. 

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Latest update for 2018 closing prices on this live trade I am sharing with IG Community is as below:

Short opened on 20/12/2018 at 13:30 is down 2 points.

Short opened on 27/12/2018 at 07:57 is down 52 points.

Overall, I am 54 points down as a result of both trades combined.

Now this is a big turnaround from the 140 points I was up just on the first original trade. Part of this could be attributed to the extreme volatility we are seeing on the S&P right now. Another could be my entry points on both trades. It could be that though my trade idea may well be the right one, my timing is wrong. Or it could be that my trade idea is wrong.

The price action from tomorrow onwards is going to answer these queries and the price action alone will answer them. 

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I want to just give the IG Community an idea of the volatility we are witnessing in global indices. The S&P 500 which I am short with x2 trades open and live as performing as below before the US markets open today which is a stark contrast to the position only yesterday as my post above shows.

Short opened on 20/12/2018 at 13:30 is up 42 points.

Short opened on 27/12/2018 at 07:57 is down 8 points.

Overall, I am 34 points up as a result of both trades combined.

The volatility here is staggering. The whipsaw back and forth is immense. Just 24 hours difference is highlighting the volatility here. 

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With around an hour to go until the US markets close the current performance on both trades is as follows:

Short opened on 20/12/2018 at 13:30 is up 56 points.

Short opened on 27/12/2018 at 07:57 is up 6 points.

Overall, I am 62 points up as a result of both trades combined.

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This is an even more difficult trade to participate in than I had envisaged. I knew it would be tricky and difficult but due to the extreme volatility and price swings, the downward trend I was expecting has not come as I envisaged. If anything the 'Jobs' news from the US released has made me think very hard about this trade. The trades have finished as below:

Short opened on 20/12/2018 at 13:30 is down 22 points.

Short opened on 27/12/2018 at 07:57 is down 72 points.

Overall, I am 94 points down as a result of both trades combined.

A few things can happen going forwards:

  1. My stop losses will trigger on both trades and I will be out should the price action continue the way it is. I can see the price going towards $2600 before any next leg downwards continues. Obviously this is an assumption which the price action will confirm or reject.
  2. Due to the volatility and price swings with whipsaw action being witnessed there may be some profit taking and closing of positions which may lead the price to go down in which case the trades will continue as they are.
  3. The longer term trend is downwards yet the shorter term trend is upwards. The price action will determine what happens next in these trades. If the price action goes against the trades aggressively then the trades will be closed. 

I appreciate that there was positive news in the US released on Friday (yesterday) but that is based on now. The stock markets are 'Future Discounting Mechanisms' that are looking at around six months into the future. So in theory once those who trade on news have done their trading, the normal trend should resume. This of course may not happen but is how I am thinking at the moment. However my trades are based on current price action and that is what I must use to make any decisions and this is where I need to keep my discipline and stick to decision making based solely on price action rather than 'news', 'fundamentals', etc. 

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On ‎04‎/‎01‎/‎2019 at 18:07, elle said:

Capture supply.PNG

Capture fs.PNG

now looking like it wants to return to the "Fed Spike" 

Capture fed.PNG

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At the rate of the current price action it seems my stops may well be taken out tomorrow if not later today. 

This may well end up being a loss making trade bar some negative news in relation to the US-China Trade War (meeting) or anything else which creates more 'selling' rather than more 'buying'.

I shall keep this thread updated via a post should I get stopped out. 

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Big Gap up at the moment

Capture es.PNG

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Looking at the price action it seems like this is heading for the 2600 level. This is close to the 50 DMA so could be a pivotal point. This trade has gone against me so far and it is about cutting losses quickly and I have exited the second trade.

My stop loss was triggered on my second additional trade and the final result of this trade was:

Short opened on 27/12/2018 at 07:57 was down 122 points and therefore made loss. Short trade opened at 2456.77 and exited at 2579.09. Stop loss was around 5% of the opening price of this second trade.

My original first trade is still open and my view has not changed that there could be further downside still to come and the recent low still to be tested but it is all about timing and my timing has clearly been wrong on this occasion. That is fine and I accept that. The markets clearly reacted to the positive jobs news that was released and this went against me amongst other things. One could argue that this could be seen as a flaw when it comes to trading using trend following principles and trading based on price action alone. Fundamentals and news have clearly played a part in the recent rally and this can go against solely trading on price action. I have had some excellent results in 2018 based on trading on price action alone which some of you will be aware of so this loss is not going to cause much concern to me. I got it wrong, I learn and I move on. For me it is about the profits from the winning trades being greater than the losses from the losing trades. 

Short opened on 20/12/2018 (Original First Trade) at 13:30 is down 65 points (at the time of this post).

I am expecting the S&P to rally to 2600 and slightly beyond and then it will be crucial, either it is going to come crashing back down or it will continue to rise. If it continues to rise then my stop loss on this trade should execute and I shall be out with a loss too. The price action alone will determine the result of this trade.

I think I am the only one who has shared a live trade with such detail on IG Community. I am not embarrassed or have any ego about sharing such an experience. I would rather follow live trades like this so IG Community can learn what to do better and what not to do.

I shall keep updating the thread with my original live trade. At this juncture I am expecting my losses to increase until the 2600 level is breached but will monitor the price action to see if my assumption is correct or not. 

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@TrendFollower I for one very much appreciate your insight and willingness to share your live trades in such detail. As a newbie trader, it's extremely valuable.

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@Nelsy-Boy,

Thank you very much for your kind words. I think you can learn far more with live trades than just simply posting analysis, charts, lines, arrows, more analysis, arrows, lines and charts. 

I would like to see some of the more experienced traders on IG Community share some live trades with us all so that we can see how they apply their experience, knowledge, analysis, charts, lines, etc. to a trade and exactly how they trade. Actions speak louder than words. Obviously it is their personal choice and they are not obliged to do so but if they really want anyone to take their posts seriously and their analysis seriously then for me one must be able to clearly follow their live trades using their own analysis, charts, lines and arrows. It does not matter if the trade makes a loss. That is trading and would represent a far more realistic picture. It is the application of the theory and analysis that leads to the entry and exit points which is important.

I shall keep updating this thread. Obviously I have many other trades open as well at the moment and I am only sharing these two here and a short on the S&P 500. I hope you can appreciate that I cannot share all of them and nor would I have the time to but I do what I can for the IG Community. 

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