[Soultrader]

I read across a couple of interesting threads on candles and VSA. One of the things that popped into my mind was filtering out trades and reading market direction one step ahead of futures.

Here in Japan, the banking, securities, and electronic sectors are considered the heavy weight.

Banking especially because a stock like Mitsubishi is priced at over $15k which is ridiculous. Therefore each tick is BIG. One of the techniques I recently picked up was to watch some of these BIG tick stocks. Mitsubishi's asking price changing to a bid is considered weakness and I have seen the futures fall plenty of times because of this. This information has been quite mind blowing for me.

For US traders, do any traders here rely on stocks to trade index futures? Do you pay attention to heavily weighted stocks for the S&P or Dow to determine strength vs weakness?

[brownsfan019]

Originally Posted by Soultrader »

I read across a couple of interesting threads on candles and VSA. One of the things that popped into my mind was filtering out trades and reading market direction one step ahead of futures.

Here in Japan, the banking, securities, and electronic sectors are considered the heavy weight.

Banking especially because a stock like Mitsubishi is priced at over $15k which is ridiculous. Therefore each tick is BIG. One of the techniques I recently picked up was to watch some of these BIG tick stocks. Mitsubishi's asking price changing to a bid is considered weakness and I have seen the futures fall plenty of times because of this. This information has been quite mind blowing for me.

For US traders, do any traders here rely on stocks to trade index futures? Do you pay attention to heavily weighted stocks for the S&P or Dow to determine strength vs weakness?

That's a good idea James. I personally have never done anything with the S&P or Dow heavy weights, but I could see the validity there for sure. I guess it comes down to how much can one person properly watch and screen during the day.

Question for you - what timeframes are you now using in your trading? Just curious what you are using that would allow monitoring of stocks and futures.

[Soultrader]

I use a 5min and 30min chart for the Nikkei, 5 min chart for the 10 year JGB (bonds), 10 min chart for stocks I trade, and just pull up a dozen or so Level 2 screens for heavy weight stocks.

The JGB bonds here tend to give heads up on the futures direction so is a fairly handy way of viewing the markets.

[feb2865]

James

Have you ever try a screen based on sectors?? That could give you a head start before a big move

[kenpo]

I use the ADD and VOLD along with SPX to see the true direction of the markets breath. This helps me to be on the right side of the trade, and more importantly it tells me when to stay out and stand on the sideline and wait for clear setup without getting chopped up like ground beef.

Hope this helps.

[Nick1984]

James the situation you describe is very very similar to our stock market here in Aus. Like feb said watching a chart of a sector is a great tool for trading the equities. If you're trading any of the financials keep a watch on the 90 day bank bill market as well as this has a huge correlation with any financial companies that are primarily lenders i.e banks, mortgage brokers etc.

For electronic sector stocks believe it or not the price of Nickel is correlated as its used extensively through electronics manufacture. These are all things I kept track of when trading stocks.

Of course the big players in the market will have a huge effect on the market itself, so its a good thing to keep an eye on your major players.

Keeping to a longer time frame chart in stocks where markets are prone to gapping is a sensible idea. Have you considered also using a longer time frame anchor chart for the stocks or only for futures?

[Soultrader]

Oh yes, I watch all the major sectors. Trading the Nikkei is a whole lot of fun as there are correlations in alot of areas of stocks, sectors, and bonds.

Feb, by sector screen... are you referring to something like a matrix spreadsheet or simple charts?

[feb2865]

Originally Posted by Soultrader »

Oh yes, I watch all the major sectors. Trading the Nikkei is a whole lot of fun as there are correlations in alot of areas of stocks, sectors, and bonds.

Feb, by sector screen... are you referring to something like a matrix spreadsheet or simple charts?

Matrix spreadsheet


I did it for a long time when I switched to electronic trading. Back then banks and brokers were something to watch as they normally gave you a head start on a move. As the matrix moves by tick very much like the tape, I normally had a gut feeling on the speed on the matrix. Some people watch and wait for a rate of change on the matrix, to me that's lagging.

James I am curious. You're looking to watch the stocks to anticipate a move on the Nikkei. Would you care to elaborate a little more? I trade the other way around using NQ(leading) as a mirror image on the cubes (qqqq)

I mean, without compromise anything as I know you're trading with prop firm now.

Thanks