Monday, September 29, 2008

Getting a Head Start

I sometimes trade futures on Sunday evenings after the markets open at 6:00 pm. EST. Usually, it's a fast trade to get a head start on the week.

This was mostly a technical trade of the S&P Emini futures last night with NRIBs (NR7) on declining volume, even though I was watching the news. As the evening and early morning progressed, I became comfortable with the idea of holding overnight after reading this on Bloomberg, "Stocks tumble in Europe and Asia overnight and U.S. index futures retreat as bank bailouts accelerated and the $700 billion plan to rescue American financial institutions failed to unlock money markets."

It was a very late night (not a good idea to go to bed at 4:00 a.m. on a work night). I overslept and the dog didn't wake me up until 8:30 EST, so I tightened my stop heading into the open. I took a partial when price approached S2. Subsequent to a close below S2, price quickly rallied back and I closed the balance of the position.

As I watched the bailout vote unfold, I was having difficulty comprehending that it was about to fail to pass. Other, smarter traders anticipated and jumped into the short side before the final tally was in, pushing prices lower at full throttle.

I'm sorry the bill didn't pass. After listening to all the experts and pundits, it seems that all paths in the blame game lead to Nancy Pelosi for that last minute jab re: failed policies of the Bush Administration. Reckless, stupid, ....???


As the day wore on, it became increasingly difficult to trade. On this FWLT trade my stop failed to trigger, so I had to send a market order which resulted in a late exit. When market makers become overwhelmed with volume, they ignore special instructions and market orders are the way to go.

I had my share of fat finger f#&k ups and realized I could only manage one position at a time. Took this JOYG trade on a market order and exit market after 3 consecutive green bars. Level II screens could not keep pace. One eye on the candlesticks and one eye on the inside bid and ask. I'm glad this isn't the norm, day trading would be exhausting.

6 comments:

Anonymous said...

Hey Jamie,

I also traded FWLT today (twice). I can not believe the VIX levels (upper 40s) - incredible.

During the rally into early summer, I had moved to 90% fixed income in my retirement funds. I moved a large portion of that back into aggressive funds on the close. I have no idea how close we are to a market bottom, but I do know that many stocks were on sale today. Somewhere in this extremely high VIX zone is an overall buying opportunity.

yr said...

Jamie,
Thanks for sharing this post on overnight trade on futures.

Quick question on it. While I understand your entry was based on 2NRIBs, they however, came about after support on the blue moving average and a strong bullish bar with high volume. Was the negative news the negating factor in this setup? Thanks

YR

Jamie said...

Hey Jim,

I buy the weekend edition of IBD. Last week after, the proposed bailout was put on the table, I couldn't get a copy as there were none to be had at the numerous magazine shops in my area. This weekend, I was surprised to read that we were in a confirmed rally. HaHa!

Hope you're right about the bounce. I too have 1/2 of my retirement account in fixed income funds, but still have taken a sizable hit. My 1/3 cash portion now represents more than 1/3 of the account.

Congrats on FWLT, nice work.

QQQBall said...

i watched the vote and hit GG before it finished. i liked the guy who wanted to propose another vote(LMAO)... i think some of the people that would have voted for it didnt b/c they assumed it would pass - so if it worked, they win and if it failed, they could say they voted against it... the guy sounded panicked, really panicked.

i think thats what really happened - after that, it was blame the other guys.

i had a good solid day. totally discretionary. hit pivots and sold resisatnce all day - all counter
-terns moves on long side.

Jamie said...

YR,

When trading futures in off hours, one must take a trade after price/volume contraction, otherwise, not trade at all. I saw 2 successive lower highs, higher volume on the initial thrust lower and waited until the hanging man was taken out, confirming a negative bias.

Yes, the negative news, primarily overseas with European bank failures and, secondly, lack of clear leadership leading into today's bailout vote, was a big factor in the success of the trade.

As I pointed out, I don't usually hold these overnight, I usually cover as soon price stabilizes or reverses. This was an exceptional trade under exceptional circumstances.

Jamie said...

QQQBall,

I watched it too - your analysis is right on. Smart move to long gold!