V.1:7 (160-165): Day Trading The Averages by JOHN F. KEPKA
Product Description
Day Trading The Averages
by JOHN F. KEPKA
When Stock Index Futures trading with the Value Line contract was initiated at the Kansas City Board of Trade, futures traders suddenly gained the opportunity to trade the entire stock market. Large profitable moves became available, but along with them came the associated high risk, due to the increased daily price swings of the Dow Jones Industrials, S&P 500, NY Composite, Value Line, and the new S&P 100 Index. Trading by using daily High, Low and Closing prices can be very risky in a market where futures contracts can move $2500 or more in one day (There are no daily price limits in stock index futures contracts.)
I have always believed that excellent trading results could be achieved in this market by using technical trading systems, operating on intraday data. By monitoring price action more frequently during the day the risk factor on a given trade can be reduced, and turning points in the market may be entered and exited at optimal times rather than only at market openings or closes, thus giving the trader a distinct advantage. Since the market turns up or down throughout the day, the closing price, which most traders now use for their analysis, is the confirmation of the turning point not the turning point itself.
Expense is always a consideration. Recently, the equipment for providing intraday price quotes and analysis, both hardware and software, became available to the trader at reasonable cost. The most expensive part of the analysis is the monthly charge for the quote machine, of which a large percentage is the monthly fee paid directly to the individual exchanges by the quote machine supplier. My current equipment configuration for intraday analysis consists of a Commodity Communications quote machine, an Apple computer (disk drives, ram disk and serial card and an optional accelerator card, which is really necessary to speed up computations by 3½ times), an Integral Data Systems 460 printer, and the Intraday Analyst (IDA) software. A second Apple system using CompuTrac is used for interday number crunching.
When Stock Index Futures trading with the Value Line contract was initiated at the Kansas City Board of Trade, futures traders suddenly gained the opportunity to trade the entire stock market. Large profitable moves became available, but along with them came the associated high risk, due to the increased daily price swings of the Dow Jones Industrials, S&P 500, NY Composite, Value Line, and the new S&P 100 Index. Trading by using daily High, Low and Closing prices can be very risky in a market where futures contracts can move $2500 or more in one day (There are no daily price limits in stock index futures contracts.)
I have always believed that excellent trading results could be achieved in this market by using technical trading systems, operating on intraday data. By monitoring price action more frequently during the day the risk factor on a given trade can be reduced, and turning points in the market may be entered and exited at optimal times rather than only at market openings or closes, thus giving the trader a distinct advantage. Since the market turns up or down throughout the day, the closing price, which most traders now use for their analysis, is the confirmation of the turning point not the turning point itself.
Expense is always a consideration. Recently, the equipment for providing intraday price quotes and analysis, both hardware and software, became available to the trader at reasonable cost. The most expensive part of the analysis is the monthly charge for the quote machine, of which a large percentage is the monthly fee paid directly to the individual exchanges by the quote machine supplier. My current equipment configuration for intraday analysis consists of a Commodity Communications quote machine, an Apple computer (disk drives, ram disk and serial card and an optional accelerator card, which is really necessary to speed up computations by 3½ times), an Integral Data Systems 460 printer, and the Intraday Analyst (IDA) software. A second Apple system using CompuTrac is used for interday number crunching.
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