Trading the E-Nikkei

I have been trading E-Nikkie(E-NK) since 1st Nov 2004, so it has been 3 weeks. So far, I realised it is easier to scalp NK than Simsci as it has bigger volume and liquidity. Now, I wonder if my 'school fee' paid for Simsci is worthwhile.

I also realised that it is safer to trade E-NK after Osaka opens as Osaka sets the trend! Even though NK's standard daily range is around 150 points, but when dollaryen fell to 102.90 level last Monday, NK plunged 300 points!! Of course, that day I was caught long by then. Well the good thing is I can always bring my positions to E-NK (3:30pm) to cut. The reason why I cut at E-NK session cos' I can usually cut at a better price, but this may not be always a good practice.

I also develop my trading 'secret'. I notice I can make 1 tick each after Osaka's break (10am) and close (2:10pm). The tactic is to queue 10 points before and after Osaka's close. As there are houses that need to cut loss, close their positions before session end. Of course, this is not 'free risk'. There was one time I got caught and could not get out when the session closed and I risk any possible fluctations duing the 1 hour break.

So far, my equity on NK is positive and I need to fine tune my scalping method so that I can ride 2 ticks or more profit per entry.

Taking a break next 2 days to Malacca, so guess I am going to miss my dear Miss NK! ;)

Weak GDP report on Japan

On Friday, Japan's GDP was reported to be weaker than expected. Nikkei (NK225) reacted when the Osaka market opened, slided down for a while, then retracted up all the way. And you know what? This is all predictable! Let me explain.

Actually, GDP report is expected to be poor as there was already an indication from Thursday's machinery report, which caused the usually quiet afternoon session to drop 200 points suddenly after the report came out at 1pm, left a lot of people off guard.

On Thursday, I missed the whole movement, only got to switch on my PC at 3:00pm. I was surprised to see the great fall and reckoned it was due to the machinery data. The market went flat at 10830 level after SGX Nikkei 225 floor session closed. When e-Nikkei session opened again, I know it was a good buy at 10830-10840 level after all the long squeeze.

As usual, after a great fall, the next possible direction for the market to move is UP! During e-Nikkei session, I was tempted to buy at 10840, but since I was at home, I did not take the trade. Or else I could have made a small profit at 10890- 10900 level as it stalled there for a while. Never mind, there is always another chance to make a better trade.

On Friday, when the GDP result turned out to be bad, the market reacted for a while, dropped to a low of 10,850 and quickly retraced back. I believe this was because it had already factored in yesterday's fall.

And when "masses" came in to sell the market, thinking that the weak GDP data would push the market down further, the professional house traders were all in to buy back and brought the market to a high of 11040, an up swing of 170 points! This time, shortists got squeezed.

So the morale of the story is:

• Must be aware of the annoucement of important economic data and react accordingly to the fact.
  
• When the market hits a rock bottom, there will be good buying opportunities.
  
• During open-out cry, big players like to squeeze the smaller sellers or buyers, so the position during e-Nikkei session (after 3:30pm) with a more reasonable price. But again, it is never wrong to cut, remember the first cut is always the cheapest!