Crazy Volatility Overnight?

[ellie 10]

Hi Everybody,

 

I am new here and really appreciate the level of experience, which can be found in this Forum. I am a Newbie and am currently reading and trying to understand the System.

 

One thing, that I have not yet understood quite right is the risk, that goes with holding mini future positions overnight. Is it that you wake up, see that your limits were triggered by unusual volatility and you lost money? Or that you did not set limits and unusual volatility caused your broker to close your position and you are left bankrupt? What would the worst case scenario be?

[maxima 10]

the worst case scenario is a newbie trading eminis holding his position overnight.

[Tams 20]

Hi Everybody,

 

I am new here and really appreciate the level of experience, which can be found in this Forum. I am a Newbie and am currently reading and trying to understand the System.

 

One thing, that I have not yet understood quite right is the risk, that goes with holding mini future positions overnight. Is it that you wake up, see that your limits were triggered by unusual volatility and you lost money? Or that you did not set limits and unusual volatility caused your broker to close your position and you are left bankrupt? What would the worst case scenario be?

 

 

well... trading emini is no different than any other endeavors in life:

 

1. don't do anything you don't understand

2. don't take on challenges bigger than you can handle

3. don't try to reinvent the wheel

4. don't take advice without due diligence

 

 

first, try to understand why do you want to trade.

then understand why do you want to trade emini,

finally, understand why do you want to trade emini at a particular time.

 

 

for the "final" question, I will give you a hint:

there are many trading zones in a 24 hr period... each with a different characteristic.

Edited April 5, 2010 by Tams

[maxima 10]

trading emini is no different than any other endeavors in lif

I beg to differ. but what do I know

[Tams 20]

I beg to differ. but what do I know

 

you can slice anything anyway you want...

if you look hard enough,

you can find the meaning of life within/between the up ticks and down ticks

at 1 second after midnight every night.

... and it happens every night, without fail.

[Frank 10]

this is an all-time classic:

 

[ame=http://www.youtube.com/watch?v=vIMwMsY0ndo&feature=related]YouTube - Stock Futures Trader losses it all and flips out[/ame]

[maxima 10]

You can read his lips:

 

"Why did I click that red button?! WTF! What does Sell mean?! I have very bad feeling about this -25K figure on the screen!! Whatever it is Don Antonio is not going to like it! OMFG!! I have to fly to Siberia and hide amongst the white bears!! No more pizza for little Giovanni!... Why I ever click wrong buttons! "

 

the other version:

 

"I will never hold my position overnight! I will never hold my position overnight! I will never hold my position overnight! I will never hold my position overnight! I will never hold my position overnight!"

[DugDug 10]

Very funny - thanks - the other links are also hilarious as well, especially the photocopying of the computer screen.

 

I am sure every overnight trader has had similar feelings - however as per normal this should be part of the plan...... plus it also shows why money management, position sizing, and trading with the trend etc; are so so so so so important.

 

Personally I have had the "vomit in the bin" type of day before as well (lost 18% of that particular account in 4 days - everything became correlated and illiquid - luckily I was up 45% for the year previously but still never nice)..... there is only one thing you can do. Cut, and start again - dont let yourself be ruined and out of the game.

[BlowFish 10]

In a market that trades 23.45 / 5 Monday to Friday the only difference trading over night is liquidity. As a newb is only going to have a small position open thats a complete non issue put your stop in and sleep soundly. If you can't sleep follow Livermores advice....reduce your position to sleeping point! I am not sure where this 'conventional wisdom' came from, presumably the days (and markets) that could open limit up or limit down for days at a time. It is just not valid nowadays with the e-minis (the subject of your question).

 

I would be wary of anyone that just out and out advises you not to trade over night especially if there prime reason is 'overnight volatility'. Absolute nonsense (though you can verify for yourself by comparing the overnight range with the daily range in excel or similar). The advice is usually from other nubs or maybe scalpers that watch every tick. To suggest that it is appropriate for everyone is crazy talk.

 

Funnily enough when I started out the advice tended to be the opposite 'trade the swings that last 3-5 days, if you can't catch those you will be unlikely to succeed intraday'. Mind you intra day trading was considered the devils work back then.

 

When I used to trade in and out a lot I sometimes used to mess up and not realise I wasn't flat at the end of the day. Did it once on a Friday with a DAX position and the market was shut for the weekend by the time I realised the market was shut, it was not particularly comfortable. Guess lots have been there but not being able to add up is not a reason to refrain from having an overnight position!

[bakrob99 11]

...Or that you did not set limits and unusual volatility caused your broker to close your position and you are left bankrupt? What would the worst case scenario be?

 

Don't ever trade (intraday or overnight) with a large enough position to trigger you broker's attention. If you hold something overnight, do so only when you have sufficient profit in it to cover the typical range and your analysis suggests, based on soem sort of statistical probability, that you can expect the overnight to be favourable.

 

Also, consider - what is the day of the week. Friday - do you really want weekend risk.

 

What is your position: Short or Long? Short is safer to carry overnight because terroist attacks don't cause markets to gap up.

 

Do some backtesting and know your limits.

[Tams 20]

Don't ever trade (intraday or overnight) with a large enough position to trigger you broker's attention. If you hold something overnight, do so only when you have sufficient profit in it to cover the typical range and your analysis suggests, based on soem sort of statistical probability, that you can expect the overnight to be favourable.

 

Also, consider - what is the day of the week. Friday - do you really want weekend risk.

 

What is your position: Short or Long? Short is safer to carry overnight because terroist attacks don't cause markets to gap up.

 

Do some backtesting and know your limits.

 

unless you are shorting oil... and the attack is at an oil related facility.

[sevensa 10]

Don't ever trade (intraday or overnight) with a large enough position to trigger you broker's attention.

 

I don't really understand this part of your post? Besides not meeting margin when the broker will liquidate your position, what else is going to trigger their attention? And if you have margin, what are they going to do when you "trigger their attention"?

[maxima 10]

nah.. this is another spreadbetting/forex/bucket shop/etc victim.. he is saying - once you showed the money the ugly criminals who call themselves a broker will crawl out of the shadows and take it all! (this is not how do I think - I am trying to interpret )

 

:haha:

[ellie 10]

Thanks to Everyone, who gave me feedback in an effort to deliver useful information. Especially BlowFish and bakrob99. I really do appreciate it!