Play for Friday, July 17th (the last play of the day!)

Good morning everyone!

I am a tad late this morning but I was off the desk from yesterday evening. This is the last play of the day entry: this blog is shutting down. I will be leaving for graduate school at the end of August and from next week onwards I am simply taking time off to get some rest and get things ready for my departure. No more trading for me.

Now, since I am short at 4352, I am going to pull and xTrends kind of chart (aka "Pulling an Atilla"): that is, I am going to post the only chart that support my position :-) and disregard everything else.

See the divergence on the hourly below, as we made higher highs on prices the RSI, ROC and Linear Regression Slope all posted negative divergences. I am sitting here hoping this works...

If it doesn't work, well I'll take the loss and be done with it and realise I was wrong...some pseudo traders that run a popular blog could learn from this.

Short at 4352

This trade has a very wide stop, so be aware of the risk.

I am short at 4352 for a 30% fill, stop at 4430. I am short because we hit this retrace area and my stop is at the 78.6% line.

Be aware though....

That yesterday's run took us in the 50% to 61.8% retrace from the May highs to Monday's lows, an ambush short area. This has occured on more than one index.

Play for Thursday, July 16th

See retrace areas on the chart below, there are two areas into which to look for strength and go long:

• 4260s to 4280s: this is the preferred area, we also have the 7 day weighted moving average in the 4270s.
• A larger retrace could takes to the 4200s - 4230s, an area that has provided resistance recently.
  

In either case, a small countertrend on the short side could be taken, but I would wait for a confirmation on intraday charts: yesterday's strength was impressive and retraces did not occur even on the smallest timeframes.

Short at 4346

For a 10% fill only. Stop at 4375.

I am taking this just out of curiosity and for entertainment purposes. Last night, after ES re-opened higher, the FTSE was quoted exactly at 4346, then it stalled, and after four minutes went back into the 4260 (on my broker at least). Probably a system error...but still I am just too curious not to try on on a small position :-P

Update: well got stopped out of this entertainment trade. Damn....no magic number from yesterday's freak episode. Now flat and out and watching, recommend the same.

Staying flat

We are barely making 50% retraces on the 1 minute chart to jump on the long bandwagon for scalps.

I am sure plenty of permabears will seek shorts at these levels: let's if the 4300 line holds at all, remember the triple top calls I was making back in May? In theory, the 4300 line should now act as resistance, but we have seen this penetrated to the upside already.

Best chances are to look for weakness close to 4300 for a quick short and/or be on the lookout for strength IF (big if) we retrace down.

I am staying flat for now.

Play for Wednesday, July 15th

Given last night's jiggles, I will remain cautious today.

Daily momentum is looking north, while weekly momentum is looking south. We could range, we could trend, we could do a number of things: however, given daily momentum the bias is to look for a long entry.

However, given that we did not really break the 4290s (my broker went mad for 4 minutes last night), we could still seek weakness and retrace down to the 4180s to 4160s (a good spot to find strength). Otherwise, let's see if something can be scalped: again, I'd remain cautious on size until a proper trend or range has been re-established.

Ok, this is not cool....

My broker stopped me out...apparently: at 9:30 UK Time ES re-opened after the pause and was quoted at 908. My brokers concurrently quoted the FTSE at 4346 on the bid...thank you!

Now the price is not moving: no wonder. My stop order is blinking and not executed for now.

Re-entered at 4239

10% fill only, stop at 4255.

Partial cover

I have covered my 4230 entry at 4207 for 23 points.

I am now left with a 20% fill from 4251 and have moved my stop to 4246.

Update: my leftover short got stopped out at 4246 for a modest 5 point profit. All flat now.

Added at 4251

For a further 20% fill.

Short at 4230

30% fill, stop at 4290.

Covered short at 4201

From 4225 for 24 points.

Now flat.

Let's give the short side a chance....

Short at 4225 for a scalp, 10% fill only, stop at 4240

Play for Tuesday, July 14th

Let's keep it simple.

We are heading towards the upper trendline of the current downward channel and are within a 50%-61.8% retrace from the 4330s high reached on July 1st to yesterday's lows.

For a short look for weakness up to the 4250s, with a stop above 4290.

Otherwise, shall one wish to marry the long side, look for strength in the 4150s-4160s. The 7-day average however is in the 4180s and might provide support as well.

Daily momentum is positive, weekly momentum is negative. Happy Bastille Day!

Closed long at 4130

From 4099 for 31 points.

Long at 4099

For a scalp, 10% fill only, let's give it a chance! Stop at 4075.

Play for Monday, July 13th

I am off the desk most of the morning (again), so I'll update later with charts.

We sold off from the 4150s last night and we currently quote in the 4110s. Intraday momentum, daily momentum and weekly momentum are all negative.

We might get a bounce: if we do it could be playable for a long. Areas to look for weakness are the 4140s to 4170s, the highs 4190s to 4200s and then the 4220s-4240s.

If we don't bounce, I'd sit tight and wait for a retrace to play.

Closed long at 4142

From 4125, as we are approaching the close.

I am done for the week, have a good weekend!

Moving stop to breakeven

On the small long I have from 4125.

Covered all shorts and flipped to long at 4125

I have covered the short I had from 4214 and concurrently went long at 4125.

10% fill ONLY, stop at 4095: it's a countertrend trade, but I want to give it a try. I am done for the week after this trade however it goes.

Covered half position at 4134

I covered my 4174 entry at 4134. We got the sell off even before open...

Left with the original 20% at 4214, and moved the stop at 4182.

Play for Friday, July 10th

Yesterday we respected the black trendline in the chart below, and obviously stayed well within the current channel (in pink).

However, intraday momentum is currently mixed: looking south on shorter time frames and up on longer ones. Daily and weekly momentum is looking day, and the 7 day weighted moving average (which often acts are resistance/support) is at 4169.

There is a strong chance we might get a sell off at the open, but I'd keep a an open mind: as mentioned yesterday, a more significant retrace up could get us up to the 4230s-4250s.

I am maintaining my current trade, which is set up to stop at breakeven.

Moving my stop

To 4195, putting on a risk free trade. Momentum is rising on 4 hour charts, better be safe.

Added short at 4174

For a further 20% fill, stop for whole position still at 4230.

Play for Thursday, July 9th

As predicted, yesterday we broke below the 4170s and found resistance again in the 4130s (or slightly below).

We are currently quoted in the 4150s on the bid: a potential area to look for weakness is the 4150s to 4170s.

Alternatively, if we do rally for a larger retrace up, the final area of resistance would be the 4230s to 4250s, with the 4200 line before this.

I am still short and might adjust my stop either up or down.

Play for Wednesday, July 8th

Apologies for the late post.

I am off the desk most of today, and will leave my current position as it stands. I'll be back to check on it in a few hours.

The 4170s marked a support/resistance, we broke below and another support/resistance to watch out for is now the 4130s.

Time to look for shorts only: intraday momentum is negative, daily momentum is negative, weekly momentum is negative.

Flipped at 4214

Took profit on the small long I had left from 4192 and concurrently went short at 4214 for a 20% fill, stop at 4230.

Covered half at 4232

From 4192 for 40 points. Now left with a 10% fill at 4192 and moving stop to 4198: worst case scenario I get stopped out with a 6 point profit.

Covered 1/3 at 4212

From 4192 for 20 points. Still hold on a 20% fill from that level and moving stop to 4187.

Long at 4192

30% fill, stop at 4180. Let's give a long scalp a chance.

Chart update

As promised, this is the only channel I see at the moment, coupled with major resistance/support levels.

Play for Tuesday, July 7th

Intraday momentum is mixed, but with both daily and weekly momentum pointing south the only entry to seek at the moment is still a short entry.

There are several areas to look at:

• If a stronger bounce occurs, look for strength in the 4190s-4200s. This area might present an opportunity for a long scalp as well.
• Weakness could occur at several points: the 4220s-4230s (retrace from Friday's high), the 4240s-4260s (retrace from Thursday's highs), and all the way up to the 4280s (retrace from Wednesday's highs).
  

We saw the index reach as high as 4231 before US close yesterday, so one inflection point has already occured.

Let's see what the open brings...

No charts at the moment, maybe later.

Play for Monday, July 6th

On Friday, we completed a 50% to 61.8% retrace from Thursday's highs to the lows, and at the moment we are quoted in the 4210s.

Both intraday and daily momentum are looking south, and weekly momentum has began to look south also.

Ideally, I would look for weakness on a bounce to enter a short. A first retrace area is in the 4240s. That said, a retrace on the US markets could drive us to slightly higher levels.

I am going to be cautious today and wait for the US open and markets to re-adjust following the long weekend.

(No) Play for Friday, July 3rd

In light of the total and partial closure across US markets today, I will not be seeking an entry today, and would encorage to do the same in light of expected low volumes.

In any case, if we close this week around the 4200 line or preferably below we will be turning momentum south on the weekly charts. However, beware that days, like yesterday, prior to three day weekends in the US are often countertrend.

Taking on a small long at 4276

10% fill only, tight stop at 4260.

Update: moving stop at 4280.

Update 2: the payrolls stopped me out for a "serious" profit of 4 points...all flat now.

Play for Thursday, July 2nd

Yesterday's rally was again quite abrupt and with no retrace down. However, daily momentum indicators are currently looking back north.

We could sell on weakness in the 4330s to ride a retrace down, or else look for strength between the 4280s and 4300s. Do look for a clear buy signal around these levels, as we have drawn a small parallel channel that could take us slightly lower as well, see below, and intraday momentum is mixed at the moment.

Short at 4309

For a 20% fill with OCO order to manage risk: limit order to cover at 4282, stop at 4330

Update: keeping the stop at 4330, but am managing covering manually if necessary, as I am at the desk for a few hours.

Update 2: I have just covered half of my trade at breakeven, am left with a 10% fill. Have to head out, putting a OCO back with the same details as above

Update 3: Just got back....and obviously I have been stopped out, but at least I was left only with a tiny exposure so no biggie.

Play for Wednesday, July 1st

Yesterday was quite a choppy, ranging day, especially in the morning. I got out of my long, flipped to a short and then got stopped out of it. The market then dropped to the 4230s.

We are drawing both a slightly ascending parallel channel and a wedge, as the FTSE's range is clearly tightening. We have broken out of the cup and handle on Monday, and daily momentum, on some indicators, is beginning to turn back pointing north: this is not confirmed though.

I am probably going to stay on the sidelines for today as I'll be running herrands and be at the desk sporadically. In any case, we are quoted in the 4250s: weakness could come here at open, and other areas to look for weakness are the 4270-4280s or else 4300 remains the area of resistance for now. Otherwise, look for strength in the 4240s. At this point, it would be advisable to be humble in profit taking, until a clear breakout occurs.

Momentum is switching

We could be in for further upside. If my stop doesn't get hit straight away, I'll watch out if the opportunity to either minimise losses or flip sides arises.

Update: nope! stopped out of my short at 4305 for a 18 point loss.

Flipped sides at 4288

I took profit on my long from 4243 for 45 points and concurrently went short, 20% fill, stop at 4305.

I might flip sides again if strength develops: an area to watch as mentioned this morning is the 4250s.

Play for Tuesday, June 30th

I am going to keep it brief. We had a potential cup and handle in the works and we broke above the handle (the descending channel) yesterday.

However, we have also failed just above the 4300 line, as we did on Friday as well. Given the support that the 4310s to 4330s represented, we could now be seeing strong resistance at those same levels.

Intraday momentum is looking north at the moment and given the rangebound market we are experiencing I'll be looking to play both sides. So, two possible plays at the moment: sell the 4310s to 4330s resistance on weakness with a rather tight stop or else look for strength on a dip to 4250s.

Took profit on 1/3 of my long at 4263

From 4243 for 20 points. Moving stop on remainder to 4233 for a risk free trade on what I have left.

Update: moved stop to 4240.

Flipped sides at 4243

Took profit on my short from 4298 (for 55 points) and concurrently flipped sides and went long at 4243, 30% fill, stop at 4230.

I have changed my plan to the upside, but let's see if I am called to flip sides again.

Play for Monday, June 29th

We slightly broke above the descending channel on Friday, but quickly drove back inside. There is still a potential cup and handle formation to consider if we don't break towards the bottom of this channel and touch the 4200 line again soon.

I'll be looking for weakness below the 4270s to add. Intraday as well as daily momentum are looking south. However, I'll be watching the ES closely as well as there is an area where we could find strength nearby and take the European indices up as well.

Partial cover

I covered half of my long at 4265 from 4298 for 33 points. Moving stop on remainder at breakeven, however, I am ready to flip side if appropriate.

Holy cannoli

My stop did not get hit...but I have witnessed a trading miracle.

Actually, may I say that this is really interesting. My broker began to have technical problems at around 9:45am this morning or so. While my broker was out, the official FTSE index went up to touch 4298 between 10am and 11am.

Because no one was trading on this particular broker and they probably had real issues for over a hour, the price they are "quoting" for that period of time flatlined, hence my stop wasn't hit, see the chart below.

I am not a spiritual man by the way.

Downtime...

Just got back at the desk: I have no idea where my FTSE short is at since the broker I used is having technical probles (I can't log on...). Apparently we reached as high as 4298 on the LSE quote, so probably my short got stopped out.

Shorted again at 4298

50% fill, stop at 4310 for a scalp.

Update: I took 3/5 off at 4287, taking back the earlier loss, left with a 20% fill, moved stop to 4300.

I have to jet out now, will leave the above trade on, worst case scenario I'll lose 2 points.

Well that was fast....

Stopped out my small short at 4310...perhaps the market is telling us what side we should be on?

Anyways, going to take a break at this point and look back in a couple of hours.

Play for Friday, June 26th

Notice how we have a potential cup and handle formation in the works, and in conjunction daily momentum is beginning to settle and perhaps point back north again.



However, we are right outside the boundary for the downward channel: one idea is to look for weakness at the open and then look for strength anywhere between the 4250s and 4270s. I am taking on a small short now at 4283, 10% fill, stop at 4310.


We need a strong move above the 4300-4330s to confirm the cup and handle and thus a continuation of the bullish trend.

Took profit on all shorts at 4262

From 4356 and 4274 for 94 and 12 points respectively.

I am now flat.

Added short at 4274

For a further 20% fill, also moved my stop to 4310 to transform my over-all positions into a risk-free trade.

Update: moved stops to 4274, at breakeven with my second entry.

Beware that....

I am seeing momentum creep north...

If we don't sell off at open, this is a worrying scenario for the shorts (alas me as well right now).

Play for Thursday, June 25th

Yesterday I mentioned how the 4270s-4290s would have been an area to watch for weakness: the the high was 4291...

We are currently in the 50% to 61.8% retrace from that level to the after hours lows in the 4230s, as we are currently quoted int he 4260s.

I suspect we could find weakness at the current levels at open, however be mindful that most intraday charts show positive momentum. If we continue higher, a move above the 4330s violates the current downtrend scenario.

If we don't sell off between today and Friday, the scenario for the permabears begins to change. In any case, I am strongly inclined to maintain my idea that this bear market will not break the March lows, unless unforeseen events occur.

I'll be looking for weakness anywhere below the 4310s-4330s to add, or else maintain my current position.

Play for Wednesday, June 24th

Intraday momentum is beginning to look north, and yesterday we found strength in the 4220s.

My plan is still to look for weakness anywhere between the 4270s and 4290s, while we could touch the 4300 resistance as well. The 4230s could be the area off which we bounce.

However, the current quote of 4240s is a the 50% to 61.8% retrace from yesterday's highs to the lows as well: be on the lookout for weakness at this area as well.

Play for Tuesday, June 23rd

Yesterday we broke out of the 4300-4500 area completely, and after-hours we reached as low as the 4190s.

I suggest looking only for short entries on rallies: a full retrace from yesterday could take us up to the 4290s. However, I would expect the FTSE to go down further before making a strong retrace up: eventually we could see it test the 4300 area as a resistance, but this seems very unlikely for today. The first area of significant support should be met between the 4150s and the 4180s.

In any case, I would look to add on weakness below the 4300 line. I am still short as per the details on the left.

Play for Monday, June 22nd

Another quick and easy post.

On Friday we failed at the 50% to 61.8% retrace from Monday's highs and determined a descending trendline: so watch out for it.

However, also be on the look out between the 4280s-4290s for strength to the upside, and that a full retrace from last week's highs could take us as high as 4400.

Please also note that intraday momentum is mixed, and while daily momentum is still looking south, more and more indices are displaying a cross between the 50MA and 200MA.

I am still short at 4356, but have now moved my stop to 4370.

Short at 4356

20% fill. Stop at 4415.

Play for Friday, June 19th

I am off the desk this morning and not at my workstation, hence no access to my charting software...hence no charts this morning.

I perused the charts last night and would advise the following:

• Intraday momentum is looking north from 1 hour to 4 hour time frames.
• Hints of positive divergence on RSI on the 8 hour timeframe.
  
• Daily momentum still negative.
• Look out for weakness at the levels posted yesterday...however also be on the lookout for strength between the 4260s-4270s which might take us to the higher retrace levels mentioned.

I'll be back to regular trading next week: I have had a really busy personal schedule these past few days.

Play for Thursday, June 18th

I am still to find an opportunity to short this market. The downside momentum has been quite powerful since Monday and we have only had minimal retraces. The trendline we have formed this week is extremely steep, see charts below.

Intraday momentum has somewhat turned around: so we might get a chance for a short entry. Watch out for these levels where to find weakness:

• 4290s to 4300s: retrace from yesterday's highs.
• 4310s to 4320s: retrace from Tuesday's highs. The 4320s had also acted as support on Tuesday.
  
• 4350s to 4380s: retrace from Friday.
• 4370s to 4400s: retrace from last week's highs.

I doubt we'll have a full retrace from last week or Friday's highs though, but Monday's move left a lot of traders flat.

I am going to be out again for the most part, both today and tomorrow, so I don't know how much trading I'll be able to do.

Still flat...

I have not been on the desk this morning, and will need to head out now, so it is likely that I will not be able to trade today.

Market seems very weak at the moment: the only ambush we hit was the 4320s, which was a 50% retrace from yesterday's highs to the lows.

Play for Wednesday, June 17th

At pre-open we are quoted in the 4300s, and we reached as low as the 4280s at US close last night.

Let's see if the 4300 support holds this morning. Ideally, we should rally up towards the 4400 line and get a chance for a good short entry: however, given the current downside momentum a sell signal might occur earlier. The 4350-4360s could also provide an entry.

I will not try to scalp a long, as I did yesterday in a rush, and will look for a stable short entry instead (hoping to be at the desk when it appears...).

Long at 4333

Only 10% fill, stop at 4310.

Update: this scalp was in the money for a few minutes and then we broke onto new lows. It missed my stop by 1 point or so. Took this out 4317 for a 16 point loss, this trade was too emotional...

Play for Tuesday, June 16th

With yesterday's down move, daily and intraday momentum is looking down. We still have to break below the 4300 line though.

The short case scenario would entertain a retrace upward where we could seek a short entry fill:

• The 50% to 61.8% retrace from yesterday's pre-open levels would take us just below the 4400 line.
• A more extended retrace from Friday's highs could take us up to 4425.

Alternatively, we could take the route up towards these levels. But at this point, on the FTSE, I'd rather seek a short entry.

Speculative long

At 4351, 10% fill only, stop at 4325. Highly speculative, looking for a retrace up into US open.

If it happens, I'll be on the lookout for weakness to flip below the 4430s, especially between 4400 and 4410s.

Update: stopped out at 4325, I was out when we reached the 4370s briefly...oh well.

Play for Monday, June 15th

Again this week I will maintain a cautious stance to start with: small trades, humble profit taking and conservative stop losses. Let's see if we finally break out of this range.

Look out for the wedge below, and thus strength above the 4410s and weakness below the 4470s. Intraday momentum is looking down, and daily is looking down too at the moment. Look at the weekend wrap up for further analysis.

Weekend wrap up, June 14th

This is going to be a quick wrap up. As we all know, we have gripped on tightly to the 4300-4500 range: actually, the range has gotten even narrower, as the lowest point I have for the week on a 24 hour basis is 4366.


We now have a couple of ascending trendlines too look at (in brown and pinkish purple), both of which could be part of a larger wedge (in pinkish purple, I favoured the major ascending trendline).


As we keep on ranging, the daily RSI is stalling, and while the indicator is moving lower, we can't call it divergence as we have not recorded a new high in prices. Momentum on the daily is now looking to the upside: but just like last week, a 1% move up or down can currently change this.


Looking at the Accumulation Swing Index, as we did last week, please notice how we broke above previous highs for the year and how we have kept on climbing.


My bias is to look for longs, until the picture changes. Next week is option expiry too, so let's keep an open mind. However, as we continue ranging the feeling I have is that, while we will most certainly get a pullback, the lows touched in March will not be broken unless unforeseen events materialize. Please note how the Alligator's mouth is shut tight (below), and has been so for a prolonged period: the next major move, up or down, will likely be quite powerful and fast.

Closed short completely

At 4454, from 4450 for a 4 point loss. Net P&L for today was +54 points, both long and short, that's good enough for me. Upside momentum is building on US indices and in any case I don't want to keep a short over the weekend at this juncture.

Have a nice weekend!

Closed half of short at 4430

From 4450. Moving stop on remainder at 4470.

Flipped sides

I have taken profit on my small long and concurrently went short at 4450, 20% fill, stop at 4475.

Play for Friday, June 12th

I am going to keep this quick as I will be off the desk most of the day.

We broke out of the wedge that I had signalled this past weekend, but have still respected the lower trendline of that wedge even after breakout, as you can see in the chart below.


At US close last night we struck an long ambush area in the 4440s, from which we bounced off slightly as we reached as high as 4469 on the bid since then. Look out for pronounced weakness below the 4470s or else a buy signal again in the 4430s and the 4440s.


As mentioned, I'll be off the desk most of the day, I'll keep my small long for now and either let it ride if we move higher or get stopped out at a small profit. Regardless, I would still advise to be cautious on trade size, stop loss distance and profit objectives. Daily momentum is now positive, but intraday momentum is mixed.

Moving stop

On the long I have left from 4412: moving stop to 4425.

Primer on CFDs

I would like to post this brief primer on Contracts for Difference (CFDs), aimed mostly at non-US traders who wish to trade leveraged products, or any trader who wishes to expand his/her product knowledge. From CFDs I will pass on to Spread Betting, which however would only interest residents in the UK and Ireland.

A contract for difference (or CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time or when the contract is closed. (If the difference is negative, then the buyer pays instead to the seller.) For example, when applied to equities, such a contract is an equity derivative that allows investors to speculate on share price movements, without the need for ownership of the underlying shares. So, CFDs are just another type of derivative contract.

Contracts for difference allow investors to take long or short positions, and unlike futures contracts have no fixed expiry date, standardised contract or contract size. Trades are conducted on a leveraged basis with margins typically ranging from 1% to 25-30% of the notional value, depending on the underlying product and the broker.

For example, today I decided to short the FTSE. I sell one (1) CFD on the FTSE at 4500. My margin requirement is 1%, so £45 (FTSE is denominated in pounds). I can hold positions overnight, and if I choose to do so, I pay or receive interest depending on my position. So, I am short the FTSE, hold the position overnight, and receive interest. My overnight margin requirement is the same: 1%. The next day, I buy the FTSE at 4450. I made 50 points, I had 1 contract open, hence I make 50 pounds.

Margins, commissions, P&L per point vary according to what you trade and your broker. But essentially, CFDs are products that allow you to take a leveraged position on an underlying financial product: for the FTSE example above, margin is set at 1%, thus leverage is 100x. Products available vary by platform, but usually include all main world indices in cash and future form, US, European and Australian equities, commodities (not all contracts though), bonds, and some even inflation and other products.

Now to Spread Betting...In the UK (and Ireland) there are no taxes on winnings from bets. That is because the UK tax man doesn't allow you to deduct gambling losses either: no deduction on losses hence no taxes on wins. To take advantage of this, UK finance houses repackaged CFDs as a bet, hence spreadbetting. Instead of buying a CFDs on the FTSE, you place a bet on the FTSE. Just like for CFDs, you can go long or short.

Let's look at the FTSE example above under a spreadbetting format. I believe the FTSE wil go down. I bet £1 per 1 point movement in the FTSE going short. My margin requirement is fixed to a set amount of pounds for every 1 pound I bet. So, for example it could be £30 margin for every £1 pound bet. I hold the position overnight on a short, and I receive interest. The next day I close the position for a 50 point gain: every point equals £1 pound, my profit is £50 pounds. This is just like the CFD trade above, only that it is wrapped as a bet: I could have bet £10 pounds per point and a similar CFD trade would have been to trade 10 contracts.

Spreadbetters to my knowledge don't charge commissions regardless of the product you are trading, in order for the trade to qualify as a bet. The make money by posting larger bid/offer spreads: so on the FTSE CFDs I have a 1 point difference between bid and offer, on the Spreadbet it might be 2 points. CFDs usually don't charge commissions on indices, fx and commodities, but do so on equities: again this depends on the broker.

CFDs are an alternative to trading futures for those traders seeking leverage. The advantage for say, the trader looking to take position on S&P 500 futures, is that when trading a CFD on the S&P 500 contract there is no commission.

These products are not available to US customers, as with most European products (and viceversa). However, there are obvious ways around this, but that's another discussion. That said, CFD brokers and Spreadbetters are some of the most regulated entities in London because of the risks involved with leveraged trading and their market being retail oriented, so they are closely monitored by the FSA.

I don't want to tout the goodness of the product, just explaning what it is: there are good brokers and bad brokers, good platforms and bad ones, great technical analysis and charting software and bad ones. However, CFDs (and spread betting) account for almost 25% of the volume on the London Stock Exchange. Prices reflect market movements, so the FTSE will reflect the movement on the underlying market, and the S&P contract will do so as well. However, as above...there are good brokers and bad ones.

Also, I have had a positive P&L example above...obviously if the trade goes the other way your losses would be of similar magnitude.

I hope this was helpful. On the column on the left, down below, you can find some links to CFD brokers if you wish to check out demos and such: I am not affiliated with any of the names mentioned, but I use those platforms and find them extremely reliable and well thought out.

Long again at 4412

Stop at 4400, 50% fill.

Update: took profit on 3/5 of the trade oat 4426, moved stop on remainder at 4405.

Update 2: taking profit at 4446 on 1/2 of remainder and moving stop, left with a 10% fill long at 4412, stop at breakeven.

Closed long at 4433

From 4417 for a scalp, now flat.

Long at 4417

Stop at 4405, 20% fill.

Play for Thursday, June 11th

Yesterday evening the FTSE reached as low as the 4390s, and by US close had gone back up to the 4420s.

A hour from open we are quoted in the 4440s. Intraday momentum is tilting on negative for now and we could have two scenarios in play:

• Looking for weakness just below the 4450s to 4460s.
• Buying on strength in the 4410s to 4420s.

My bias would be to look for a shift in momentum and a long entry, but I'll be openminded.

That said, I will continue to be cautious in terms of risk: yesterday we failed to stay above 4500 for the 4th time, yet we are building higher lows.

Moving stop

To 4420.

Update: I haven't been stopped out (yet) by 1 point...

Update 2: stopped out at 4420 from 4371 for 49 points. Will we keep on ranging?

Play for Wednesday, June 10th

We have broken out of the wedge, and to the upside, as of this morning. Be aware that we have to take out the 4500 area and stay above it to disconfirm the triple top formation, or in any case the range we are in.

Intraday momentum is positive: unless the picture changes dramatically I would be looking to add longs anywhere above 4400. I am out most of the day, so that's unlikely to happen: I'll keep my small long for now.

Morning update

Let's see how the wedge has played out this morning: disregarding the "wicks" of the candles, we have respected the formation for now.

Play for Tuesday, June 9th

The wedge that I highlighted in the weekend wrap up was greatly respected yesterday, as we found support on the lower trendline and resistance on the top.


I am still long at 4371, and would either look to hold or get stopped out at breakeven (and outside the wedge). I would still recommend caution when boarding risk, in both size and stop loss, and regardless of direction.

Intraday momentum is mixed: from the levels reached at US close last night there is an ambush long around the 4400 area. However, the 4400 line has not provided much resistance/support over the past month: look for confirmations on intraday charts with longer time frames.

Long at 4371

10% fill, stop at 4350. I am going to test the lower trendine of the wedge: notice I am cautious on size and stop.

Update: see the chart below, please note that momentum is pointing down.

Update 2: moving stop to breakeven.

Play for Monday, June 8th

Please refer to the weekend wrap up posted yesterday.

There is an ambush long zone between the 4440s and 4410s. However, do watch out for that wedge pointed out in the weekend wrap up, and that intraday momentum is pointing down before the open.