IIFT Daily Note with Peter Brown

Calmer

Posted by:  |  Time: 7:16 am  |  Topic:  |  Comments: 2
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More like it yesterday. Nice range , good S&P gap close, Euro Usd and Chf offered some nice technical trades.

Bit hairy overnight, Slovakia reject EFSF. Will try again. This is a matter of when the market returns to Risk off not if.

Looks like a fairly quiet open. 1.3575 good bottom support on Euro.

Market will be driven by comments.

2 Comments

Paul

October 13, 2011

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Hi Peter,
One of your Dip students here. Can I ask you about the S&P gap close here? Is it the S&P futures you were looking at?

Is this example was is S&P closing price at 21:00 on the 10th = 1191.4, then price following morning at 7:30 was 1185.6 leaving a Gap of 5.8, meaning 58 points to close the gap? Is that correct?

What stop loss would you recommend here?
Paul

Peter Brown

October 14, 2011

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Hi paul,
The Gap needs to be 80 points to be worth a trade. The gap can widen from opening during European trade to give you 80 as happened on the 10th. The important thing to remember is that the gap has to fill in American time or be filled by then. There is a bit of a waiting game involved. The closer you get to US open before you trade the better. You will get good at that with experience. If the mood in Europe is against the gap I wait till closer to the american open. If the mood is with the gap obviously it could close quickly. The gap can also close and open up again before America. This is still a valid play as the Americans will still play it. As for stops , it very much depends on volatility. When you get experience you will notice gap plays because the market tends to move without any news. If u wait for that action your stop can be 30pips. We can discuss this more in class.