Monday, October 01, 2007

Night Time Futures Trades

Trading the overnight session is not as bad as it sounds....

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This is my 3rd time trading the overnight session in certain futures markets. The perception that low volume in the overnight session leads to wide spreads is not always the case. In Natty Gas, that is the case for sure, but in wheat and the majority of the Forex Futures markets, the spread is 1 or 2 ticks and the low volume does not lessen the volatility. In fact, everything seems to occur in slow motion, which gives me enough time to assess my position in real-time, but the volatility still remains pretty good to me.

Anyways, I went short the British Pound Futures at around 940pm (PST):
Trade1: Short B6Z7 @2.0382, stopped out @2.039,
Trade2: short @2.0385, stopped out @2.0392
Trade3: short @2.0374, initial stop = 2.038, exit @2.0358

In trade1, I used too tight a stop. In trade2, the entry was good, but I had not learned my lesson from trade1. After trade2, I took a break. I knew that the main volume would not come in until after 11pm (PST), so there was no point forcing a trade. So I waited until I began to see the other currencies start to drop (which is what I should have been doing in the first place), and then I entered my 3rd short.
I'm glad that I was able to recover from the mistakes of the first two trades, and with the profitable wheat trade that I made, I probably will not be looking for a fourth trade in Cable.

I also made 2 trades in Wheat:

The first trade was short @950, initial stop=951.5, exited @947.75.
The second trade was short @947.25, initial stop=948.5, exited @945.

I exited the second trade @945 when I saw 200 contracts show up at the bid @944.25. That pretty much meant the end of any further downside for the next couple of hours.

The second trade reflects the lack of patience in holding the first trade longer for larger profit; I really should have held from 950 all the way down to 945. In fact, the second trade was a bit of a mistake, and I got lucky that price did not retrace to stop me out.

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