Trading the Nikkei 225 and SiMISC Futures

Jesse Livermore by ChartSpeak

2006-03-16T11:26:00.000+08:00

I got hold of this article from a lady friend who is always willing to share.

I read and can't agree more with the author.

So I thought I should pass it on to you - if you happen to drop by my website.

I hope you will find it useful and insightful, and in return, pass it on to someone whom you think may need it or refer your friends to this web-site.

Meanwhile, wish you a good day! and you know what? It's always nice to share.

Here's the link to the article: ChartSpeak_031206.pdf

The Closure of GETC

2005-07-30T10:15:00.000+08:00

I went back to meet up my local friends last evening at GETC. It was sad to see them pack and go like that at 7 pm when Nikkei closed. Some of them had been trading there for years day-in day-out and of course they would have developed sentimental feelings towards the people and place there. Of course, most of them denied it.

Trading as Local has fewer and fewer advantages over retail customers as most of the freebies had been removed from SGX and rebates on commission by brokeage firms were either reduced or ceased totally.

Some of the Locals plan to or have changed their trading style from scalping to even position trading as they have no speed advantage when they trade from home or from their broker's trading arcade which are believed to be slower than SGX's lease line.

Sigh... it's sad but just like in any business, we have to accept changes when changes embrace us. I still believe to be a full-time trader, one must have real passion for trading and must treat it as a business, and not deem it as another job. It's never a Job!!

No employee will wake up early in the morning with a smiling face and say: "I can't wait to go to work!" I know of a Local who was so angry with himself when he was 5 min late for the Nikkie opening. Because he was late, he missed opportunities for 'yum' trades. That's the different mentality and attitude between a salaried employee and a business owner.

Passion - quoted from Steve Job: " If today were my last day of my life, would I be doing what I am about to do today?"

Ask yourself this question from the bottom of your heart.

Settlement Price Calculation for SIMSCI

2005-06-17T09:33:00.000+08:00

According to SGX, the calculation of the Final Settlement Price (FSP) of SGX MSCI Singapore Stock Index Futures Contracts will be changed from the current Averaging methodology to the Special Quotation (SQ) methodology effective 1st Sept 05.

Current FSP Methodology – Averaging
The current FSP methodology is based on the average value of the MSCI Singapore Free
Index, taken at 1-minute intervals in the last one hour of trading, together with the closing
MSCI Singapore Free Index value on the last trading day, excluding the highest and lowest
values.

New FSP Methodology- Special Quotation
The Special Quotation is calculated by MSCI using the first traded price of each component
stock in the MSCI Singapore Free Index on the day following the Last Trading Day,
irrespective of when those stocks first trade in the SGX trading day. This means that the first
traded price of each component stock may occur at any time between SGX market open and
market close on the day following the Last Trading Day. Should any component stock not
have traded by SGX market close on the day following the Last Trading Day, the last official
closing price of that stock will be used to calculate the Special Quotation.

This will be effective from 1 September 2005 (i.e. for contracts expiring in September 2005 and beyond). For contracts expiring before September 2005, the current FSP will apply.

So what is the impact on traders who specialised in making money on Simsic's settlement price? Well, in my opinion, it is a bad news! First of all, this golden opportunity only happens once a month and now with this new calcuation method, it will involve more risk. Why? Because it will definitely be tougher to 'guess' what would be the settlement price the next day. I believe no careful traders would be willing to take so much risk(holding overnight positions) for a meagre profit potential.

That is precisely the reason why traders do not speculate Nikkei's settlement price. Because Nikkei uses this method.

Looks like livlihood of traders will be affected. But traders are very creative creatures, i am sure they will find ways to fight the system, at least it is what want to I believe.

Where to place your stop in Nikkei?

2005-06-10T16:14:00.000+08:00

When I scalped Nikkei using 15-min chart, I realised that when I was on the right side, my stop will never be triggered. But when I was wrong, then 3 ticks' stop ( i.e. 15 points) is good enough to prove me wrong.

Of course, there were times that the market hit your stop and went back to your level,, or even worst, back to your profit target level. Well, when that happened, you can only blame it on your luck or timing of entry. See, trading is an art, not a science. That's why only 5% of traders are making real obsense money.

But most of the time, a three ticks' stop is a good guideline to prevent you from losing big. After all, successful trading is all about knowing how to protect your captial . And at time, the stop can also act as a good indicator for you to turn around. That your first decision is wrong and you should now act the opposite.

I always like this quote: : "Your first cut is always the cheapest!"

Conquer the Crash!

2005-05-23T02:20:00.000+08:00

Anyone interested to buy the above book at BIG discount?

The author is Robert R Prechter Jr. He is also the author of "At the Crest of the Tidal Wave" written 1995.

This book is timely for all of us. It is published at another peak in social optimism, with the stock market rallying, the Dow back above 10,000, economists unanimously bullish and commentators assuring us that the recession is over. If you think that all is well and your finances are safe, read this book before it is too late for you!

The book "Conquer the Crash" is brand-new with hard cover. It is selling at USD27.95 in US. I am offering it at S$20.00 with free shipping within Singapore. Write to me and let me know where and how to send you a copy.

By the way, I only have few copies left, so don't take too long to decide. It's just a S$20 dollar decision!

Anyone game enough to trade full-time?

2005-05-20T05:33:00.000+08:00

Well, after one year trading as a local, what I get in return are more white hairs & less beauty sleep ;)

Just a word of caution to those who intend to trade full-time. While on surface, it seems like you will have a lot of time freedoom and flexibility, in reality, not necessary the case. I hate holidays. Because the markets that I trade would be closed for holidays, that means, I cannot trade that day or even for a few days, that implies, no opportunity to make money. Just like any business owners, they wont dare to think about taking leave, not until their business picks up. Hence, t o trade full-time, one must be prepared to work extremely hard..... more hardworking than being employed.

Next, you need to ensure you can survive for at least one full year (12 months) without a stable income. So, if your mininum monthly expenses a month is S$2K, then you need to set aside S$24K per year. This excludes your trading capital, which is typically S$30K miminum. Of course, it would be ideal to have a further spare cash that can strech you for two years as it is quite diffcult to make good money during the first year.

Hence, if you have less than S$50K to start off, it can be very strenuous. If you plan to trade full-time, start saving now and mointor the market closely. Attend free-preview of those trading gurus to get some ideas what trading is all about. The preview is also a good networking place to mingle with experienced tradres. Talk to friends who are trading full-time to understand the 'dark-side' about trading or you can write to me.

Japan Golden Week

2005-04-29T03:30:00.000+08:00

If case you are not aware..........Nikkei will be closed tomorrow (29th April) and on 3th-5th May. Trading will be resumed on 6th May onwards.

Nikkei still looks weak after the recent 450 points plunged within a day. Unless it can recover to 11300 level and close the gap, I think any rallies is to sell especially Dow is also moving directionless at 10100 - 10200 level, one day up, next day down.

Somehow I have this hunch that Dow is going to crash, it will break the 10000 psychology level!!! I would hate to see this happens as my US-linked unit trust is still under water! And there would be more retrenchment coming and everyone got to tighten its belt again......sigh.....i think am getting a bit paranoid....

Japan Machine Orders

2005-04-06T11:58:00.000+08:00

It has been quite sometime that I had 'ignored' this blog for a while. Got to be more hardworking in writing my blog ;)

Japan Machine Orders will be released on 8th April at 1.00pm and this is a crucial data that will 'make' or 'break' Nikkei. It is expected to be increased by 2.7% (month to month).
Since Nikkei is heading nowhere now, this piece of information will definitely move the market.

Last month, Machine Orders was expected to be in positive range but the actual result came out to be -2.2%, Nikkei collasped 100 points based on this information.

And I have learnt from my mistake. Never place any orders in the queue or having any positions before the release of any important data. So, on 8th April by 12 noon, I will just watch the market and await for yummmy trades.

Triple Top is forming in Simsci

2005-01-31T08:20:00.000+08:00

Simsci formed a double top and when it made a low of 247.2 last monday, it gave people a wrong impression that bear was in charged. Who knows the next thing is shortist cut losses and it brings to a high of 250.8 last Friday. Hence, a potential triple top is forming.

In fact, the volume of these three tops has a significant impact on buying momentum. I would say, any rallies is to sell. Especially, during chinese new year period and shorter trading hours, there is a tendency that big fishes would like to push up the market and forcing small guppies to cut loss. I would like to look for opportunity to sell any rally!

I will sell at 252.5 and 253.5 levels, I might just average up. Will cut loss at 254.5 level. These are meant for position trade. Profit target will be at 238 or even 235 levels.

Time to short NK?

2005-01-05T20:17:00.000+08:00

NK hit a high of 11555 yesterday and started to lose stream today. In fact, minus off the gap down of 100 points, today's range is only 50 points.

Since NK did not break the 120% of AB range (A is 10545, B is 11450), i.e 11630 and today's candle is a dojit with tight range, it seems like NK is losing its up trend momentum too, and a correction is likely to be expected.

If Dow is down again tonite, then any rallies in NK would be opportunity to sell. And if tomorrow it closes at the low, which means a red candle formed, then it is believe that NK will retract to 11100 level (about 50% retracement at least). So tomorrow's candle is important.

Well, let's see if my prediction is correct this time.

Trading from home

2004-12-23T05:15:00.000+08:00

My lunch partner is going to trade from home and I really envy her. Unlike me, I have to wake up at 6am, try to catch my usual train so that I could hopefully get a seat on the train, rush to GETC to switch my PCs and get settle down to prepare to trade. While there is this eagerness in me to trade, but when the market opens, I am lost....don't know to buy or to sell.....well, I wonder do all day-traders have the same dilemma?

I have already closed my books this Tuesday till end of this year. I thought 休息是为了走更长的路. I plan to go through all my trading blogs and read through my trading books and do paper trades!

Yes...paper trades! I know it is always easier to make money with paper trades as the emotional part has been taken care of.

OK....I bought 1 lot of NK @11210, stop loss at @11190 at 1:00pm. Profit target @11300. Why do I want to buy? Two reasons:
1) 18D line has already turned up and it is likely to test last high of 11280 again. So as long as tonight Dow does not drop a hundred points, NK will hold firm @11200 support level. By the way, Dow is likely to do a inside day (range market) tonite.
2) Year end window dressing. Most traders believe this myth, so shortists are very wary about going against the crowd.

Alright, hope my view is correct.

Which markets can trade and make money?

2004-12-04T13:31:00.000+08:00

I come across some traders who trade from one market to another, then change to another market a week or two later. It is like today trades Simsci, tomorrow NK, then jumps to Dax, mini S&P etc....

And the reason being, they losed money in market A, so cursed that market A for not being liquid, then they switch to market B, losed money, complaint that market B moves too fast, too volatile, then changed to trade market C.

Well, there is really nothing very wrong about switching markets. And I personally believe that a trader should trade a few markets as not all the markets are active or have entry levels every day. But I strongly subscribe that a trader should have at least ONE 'bread and butter' market that will consistently generate a good income.

Most traders lose money but do not really find out the real reason. They just conveniently switch to trade another market. What they did not realise is that, may be it is the trading plan they executed is not making them money, so it really doesnt matter which market they trade.

I stopped trading Simsci for a while since the volume became thinner a month ago. But last week, simsci volume came back to normal level again and I seized the opportunity. And of course, my 'bread & better' now is E-NK. But I monitor and analyse both markets everyday.

I believe it takes time to understand a market's character, so it is vital to spend enough time and research in a market in order to make money out of it.

Anyway, this week has not been a productive week for me as I was sick for the whole week. Only spent average 3 hours trading a day. But the lucky thing is I made money this week. :D

Trading the E-Nikkei

2004-11-24T20:12:00.000+08:00

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

2004-11-13T23:05:00.000+08:00

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!