Wednesday, January 24, 2007

100 Ticks

Homeruns - we see them, they are there, aren't they?

Yes, they are there! Each and every day you can find them in hindsight. No need to revert to overnight swing trading, the homerun can be made during regular trading hours.


can we find them in advance?

Is there a way to hold-on, to keep a precious trade until it reaches the magical target?

First let's see which of the contracts I regularly follow made 100 ticks yesterday. That doesn't mean there aren't other contracts which make 100 tick runs, it's just a selection narrowed down to those contracts which show usually a very good daily range.

I don't distinguish between different ticksizes or tickvalues. You can easily compensate for that by trading 2 contracts instead of 1 contract if the tickvalue is 6.25$ or 5$ instead of the regular 10$-12.50$. I'm interested in 100 ticks.

The most obvious to do that on a daily basis, actually multiple times a day is the HSI (the HongKong Stock Index Futures traded on HKFE)

Times on the chart are Central European Time, which is 6h ahead of Eastern Standard Time. The 100 tick runs are marked on the chart with a white line.

Let's continue with European index charts:

The German DAX

It made the 100 ticks twice yesterday, as did the french CAC40

The Russell made the 100 ticks yesterday as well, but from my experience that's no longer really common, still an 80 tick run can be seen most of the days.

Gold makes them on a regular basis

Oil as well. But not in the usually in the US traded QM contract. 100 ticks can be seen most of the days in the COIL contract traded on IPE.

There was a sedate 100 tick run and a news inspired short squeeze.

Last the currencies. The major pairs Euro/USD, Pound/USD and (not as often) the CHF/USD have returned to daily ranges exceeding 100 ticks, which means we see the 100 tick runs again.



and the USD/CHF (I have posted the Forex chart, the futures are traded as CHF against USD, but otherwise show the same pattern)

These were the homeruns I found for Tuesday, January 23 2007.

Now, do these homeruns have something in common?

Yes, they take time

There is usually just 1 homerun per day, with the exception of the HSI, which is about to make the 4th 100 tick run right as I'm writing this, but to trade this contract, you need to have deep pockets

I said, you need to give it time. A 100 tick run takes usually 3 to 8 hours to be made. That means, you can't trade it on a 3min chart. I've posted 9min charts, which is about the lowest I consider feasible to start trading a 100 tick run.

The runs usually start from a bottom or top and are actually trend changes. So the trade starts as a countertrend trade, after a previous trend move has exhausted himself. Look at the DAX or the CAC40 above. Both made a 100 tick run, bottomed out and reversed upward, when the US session started trading.

So we "just" need to find a way to identify a bottom or top enter and hold on to the trade. A lot easier said than done!

I will keep you informed. This post was just to make sure

THEY EXIST and are there for us to take them home