Following the big money

thanks srmf,

its all very new to me this way of trading and looking at the market,im feeling my way through it and can see the benifits .i have a couple of questions if you dont mind,
your e/u touch trade today was almost to the pip,i understand from your last post on your directional bias,but was 13080 a level for your touch trade your own design or the offered touch from your broker,if it was your design was it a predermined past level,fib,or previous buy level ect,
i have been using the spreadbetters overnight prices on ftse for sometime with very good results for direction of europe and london open,the benifits to me regarding the touch trades is the limited risk and still maintaining equal and somtimes better reward,would i be correct in assuming that.,,,?

my initial feeling from your posts on this were that you were gaining some directional bias which you have detailed in your previous post thanks again for your insights.i need to study more about the pionts you made,
but these touch trades will be a massive boost to my ftse trading

regards
william

The 1.3380 level was the previous day's low and approximately 1 big figure from the spot when I opened the position.
Options are traded mostly by professionals, that have a lot of info about the markets, including the order flow. All the available information is priced in the options premiums. The dealers can't manipulate the options prices like the charts, because they can't fool the other market participants. The same is true for the interest rates. That is why I use also the forward points.
The most useful indicators of the options prices are the implied volatility and the risk reversal.

Frankly, I don't know which web sites are good these days. I've learned the options trading 10 years ago but couldn't make good progress until I worked as risk manager for a company. I was hedging the price and currencies risk with options and options structures and this way I could see how the options exactly work and what they can tell us about the markets. I would recommend you to search the Google and find a few sites to start with. Then you should start trading if you want to learn the options.

thanks smrfx,very helpful

it seems i have some work todo,

can i get a feel for the implied volatility from the forward points,have i understood you correctly,or am i trying to find an easy route without doing the relevent research.

regards
william

IV and forward points are different. IV shows the expectations of the options traders for the future volatility. The forward points show the interest rate differential which is the main driving force for the currency pairs.

The markets were pretty volatile today and I could make only this trade. I will close it before the maturity at 21:00 GMT.

I hope DOW won't rally 25 points in the last four minutes

My trades from today.

hi smrfx,

ive been observing the touch trades on the ft100,especially towards the expiry time of 4.29 pm gmt,on my spread betting account,not cfd acount.

now the payout ontodays touch which was 5942,and the other was 5940.the price at execution was 5939,with a fixed risk of 100 uk pounds and a payout on the 42 level of unbelievable 1890 uk pounds and a payout of 560 aprox same level all though the latter was slightly earlier.although there was only 6 minutes to expiry,i dont want to post the reasons for my strike price .

now ive seen this a few times now since u made me aware of touch trades ,and traded them with the minimal stake allowed as its only testing my ideas and maywell be coincidental at this moment.i also placed a larger buy at the same level.now what happened was price touched my first trade at 40 and payed the pay out in this case 56 pounds on 10 pounds risk,price in my mind was held up at that price for the next 3 minute candles,and hence my 2nd touch didnt realise so no payout,10 pound loss,but on the next candle price shot up 10 points almost as a catch up to the real price,maybe im being paraniod on this,but its seems to be a pattern,antways i gopt 10 pips on my long trade .

i know this is not what your doing and off track,but thought id post these obsevations,i will continue to see if it has any real worth over an extended set of trades,should the original reason for the strike price fall into similar circumstances,

regards
william

My trades are volatility based but I'm exploring the opportunities for directional also.
This is the chart of FTSE index with Chaikin volatility indicator. You can see how the volatility always is going up and down. It is much easier to trade a market with chart like this. You can use plain vanilla or binary options. They have some different characteristics than can be used in different market conditions.

Today was a pretty interesting day. I should use some defensive strategies.

Today was a very good day for volatility trading.

Volatility is lower and a directional price move could be expected. I bought a digital strangle with strikes 1.3030 and 1.3230. Intraday volatility change allowed me to cover my 15 pips costs and now I have a free trade.

Volatility is very useful tool and can help a lot no matter what trading style we use. The best thing about volatility is that it is always in a range a could be traded much easier than the underlying asset.

Friday usually the volatility is high. I have a 1.3060/1.3280 strangle with daily OT options. Total cost is 16 pips, maximum potential profit is 84 pips.

Hello Srmfx
Kindly excuse my ignorance, but I will be obliged if you can explain to me , what is strangle ? and how do we play it?
thanks for your time.

The strangle is a simple options structure when you buy out of the money put and call at the same time. You have limited risk up to the premiums paid and you benefit from price move in both directions. You loose only if the market stays in a tight range. That is why I prefer to use this structure when I expect increase in volatility.

Short GBPUSD @ 1.57621. 1-st part closed for 6.4 pips profit, 2-nd +12.5p. Initial stop 6 pips, currently at BE.

Stop at +30p

Last two parts closed at +56 and +69 pips. I still have one touch option at 1.5650.