NexusFi: Find Your Edge


Home Menu

 





Swing trading through economic data


Discussion in Traders Hideout

Updated
      Top Posters
    1. looks_one Erinn F with 8 posts (1 thanks)
    2. looks_two xplorer with 7 posts (4 thanks)
    3. looks_3 BetterTrader with 5 posts (2 thanks)
    4. looks_4 Quick Summary with 1 posts (0 thanks)
    1. trending_up 3,930 views
    2. thumb_up 7 thanks given
    3. group 1 followers
    1. forum 20 posts
    2. attach_file 1 attachments




 
Search this Thread

Swing trading through economic data

  #11 (permalink)
BetterTrader
Jerusalem Israel
 
Posts: 6 since Mar 2017
Thanks Given: 0
Thanks Received: 2

I am contributing as a full time trader with 10 years experience ( fixed income, CL, ES, currencies). I don't think that something wrong with that that I am working in analysis company. I didn't come here to sell/promoting.

Reply With Quote

Can you help answer these questions
from other members on NexusFi?
NexusFi Journal Challenge - April 2024
Feedback and Announcements
ZombieSqueeze
Platforms and Indicators
My NT8 Volume Profile Split by Asian/Euro/Open
NinjaTrader
Better Renko Gaps
The Elite Circle
Futures True Range Report
The Elite Circle
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
61 thanks
Funded Trader platforms
39 thanks
NexusFi site changelog and issues/problem reporting
26 thanks
The Program
18 thanks
GFIs1 1 DAX trade per day journal
18 thanks
  #12 (permalink)
 Erinn F 
Indianapolis
 
Experience: Intermediate
Platform: NinjaTrader
Trading: ES, CL, ZN
Posts: 9 since Oct 2014
Thanks Given: 5
Thanks Received: 1


xplorer View Post
Hi Erinn


Put it simply, if you are a trader holding for more than 1 day (let's say 2- 4 days) that would suggest that you're looking to capture (with one single trade) more ticks than what the average daily range is.

My take is that the impact most economic data releases could have on your trade is (relatively) negligible in that case.

A basic example: taking into account historical CL data (discarding how CL is behaving as of late), the ADR for that instrument can be roughly 100+ ticks. By opening a position over 3 days you'd be looking to make about 300 ticks in terms of range. Weekly CL data releases can affect the price in the range 20-50 ticks, so they would represent a fraction of the total range over a larger period.

Of course the above is an oversimplification. There are factors to consider when trading over a multiple-day period, such as how medium-term macroeconomics may play out and affect your instrument being traded. If you're getting short because you think there's going to be an oversupply of crude oil and then a combination of factors (e.g. data release, OPEC announcement, etc.) influences the trend, that may invalidate your original thesis.

I have seen experienced traders say - for instance - that if they have a trade open the same day and a data release is approaching they may decide to close it or to keep it depending on how many ticks they are in profit. For example, if you are in profit by X amount and you think the average data release affects the market by Y, you may decide that the Y is a good risk/reward ratio for you to stay in the trade. Or to close it if the risk is not warranted.

Clearly certain data releases carry more weight than others - a combination of the data release general importance with the figures being released that specific day may impact the volatility and the general trend so that the trade's profits could be enhanced or diminished.


But - as a broader statement - I'd say that the longer your time horizon, the more negligible these data releases are. If you're day trading then you may want to steer clear of opening a trade near any data release that may affect your product (unless you know how to play them). If you're swing trading on the other hand, there's a bit more leeway.

Analysing larger time-frame periods as well as matching how data releases affected a certain market should help also.


I hope it makes sense?

Hi xplorer,

Your explanation does make sense. I should have been more specific about how a trade would be exited. It seems slippage would be a concern even for just a 1 or 2 lot trade under certain conditions. Although the slippage in the context of a swing trade should be of no importance considering the targets.

Another thought I had regarding news events is how often does liquidity literally disappear? Like for instance during the flash crash (although not news related) you could see the dom become practically empty. Do regular events like FOMC or Inventories every have the same effect? I mean there is slippage because the market is thin at the time, then there is the situation where there is just no one there at all creating the gap kind of like during the Franc collapse in 2015. It really didn't matter if you have a stop because there was literally no one there to let you out.

I realize that last example is among the most extreme of the extremes but is there anything that can be done to avoid such a situation? Is there something Janet Yellen could say that causes interest rates to gap $20K per contract? I know these are not exactly questions that have a definite answer but I think it would be helpful to brainstorm these topics as they are important.

Started this thread Reply With Quote
  #13 (permalink)
 Erinn F 
Indianapolis
 
Experience: Intermediate
Platform: NinjaTrader
Trading: ES, CL, ZN
Posts: 9 since Oct 2014
Thanks Given: 5
Thanks Received: 1



BetterTrader View Post
Regarding the original question, swing traders usually trade wider stop/profit than the volatility of economic events.

Of course that if my stop/exit point in the ES, 0.25% from that target before Janet Yellen speech, better to close your possession before in order not to miss your stop.

It's really depends which event and which markets do you trade.

Same with CL, NG.

Hope that it's help

Thank you for the input. Part of my issue isn't so much the question of where to put a stop. I know the importance of that in the big picture and I'm not discounting it. But it seems at times the market will consolidate, then big news, then massive volatility. At what point do we just say this is a gamble vs. this is trading? Is betting on the reaction to the news actually a strategy in itself? I mean it certainly takes on the appearance of a blind gamble. It seems like with swing trading even though stops are generally wider you may run into the situation where you have an entry that is very close to such news events and therefore cannot effectively manage the risk unless the trade already has a cushion.

Started this thread Reply With Quote
  #14 (permalink)
 
xplorer's Avatar
 xplorer 
London UK
Site Moderator
 
Experience: Beginner
Platform: CQG
Broker: S5
Trading: Futures
Posts: 5,944 since Sep 2015
Thanks Given: 15,447
Thanks Received: 15,291


Erinn F View Post
I should have been more specific about how a trade would be exited. It seems slippage would be a concern even for just a 1 or 2 lot trade under certain conditions. Although the slippage in the context of a swing trade should be of no importance considering the targets.

Bear in mind that slippage would apply if you decided to exit the trade during the data release which, in the context of swing trading, as you rightly point out, would not apply.



Quoting 
Another thought I had regarding news events is how often does liquidity literally disappear? Like for instance during the flash crash (although not news related) you could see the dom become practically empty. Do regular events like FOMC or Inventories every have the same effect? I mean there is slippage because the market is thin at the time, then there is the situation where there is just no one there at all creating the gap kind of like during the Franc collapse in 2015. It really didn't matter if you have a stop because there was literally no one there to let you out.

To the best of my understanding liquidity does not disappear completely. There are market makers (also known as liquidity providers) whose job is to provide liquidity. Having said that, they may elicit in extreme events to take much less risk and lower the liquidity levels they are providing.

Again, in the 2015 Franc example I believe the heavy losses sustained were due to people exiting positions at extreme levels. But to be able to exit a position that means that someone is taking the other side of your trade.


Quoting 
I realize that last example is among the most extreme of the extremes but is there anything that can be done to avoid such a situation? Is there something Janet Yellen could say that causes interest rates to gap $20K per contract? I know these are not exactly questions that have a definite answer but I think it would be helpful to brainstorm these topics as they are important.

It may sound glib but I think the only way to avoid these situations altogether is not to be in the market. Personally at the stage I am at I would not sleep if I had any position open overnight. That may change in the future but as it stands I prefer being an intraday trader.

As for statements such the ones issued by Yellen and the like, bear in mind that one of the mandates of people such as her is price stability. The same goes for the ECB in Europe. So they tend to craft their statement in such a way that avoids, rather than seeks, extreme market movements.

I haven't been in this business for that long but I have not seen the extreme movements you speak of. I was around during the Swiss Franc crash as well as Black Monday in 2015 (I think it was 24 Aug). I have a video downloaded of that day and it shows the ladders for DAX, ES, CL, NQ and Gold. Liquidity was still there. Not where you would want it, but not gone completely.

Reply With Quote
Thanked by:
  #15 (permalink)
BetterTrader
Jerusalem Israel
 
Posts: 6 since Mar 2017
Thanks Given: 0
Thanks Received: 2

Betting it's not a good idea.

Professional traders waiting after the release (they don't like to bet), for this reason you can see many times you can see that even news that As Expected leads to massive movement, if you like to enter to swing trade close to event release, something it's good to place entry order significant under the base price/open the trade after the release happens and you understand that it's support your trade idea.


Sent using the NexusFi mobile app

Reply With Quote
Thanked by:
  #16 (permalink)
 Erinn F 
Indianapolis
 
Experience: Intermediate
Platform: NinjaTrader
Trading: ES, CL, ZN
Posts: 9 since Oct 2014
Thanks Given: 5
Thanks Received: 1


xplorer View Post
Bear in mind that slippage would apply if you decided to exit the trade during the data release which, in the context of swing trading, as you rightly point out, would not apply.




To the best of my understanding liquidity does not disappear completely. There are market makers (also known as liquidity providers) whose job is to provide liquidity. Having said that, they may elicit in extreme events to take much less risk and lower the liquidity levels they are providing.

Again, in the 2015 Franc example I believe the heavy losses sustained were due to people exiting positions at extreme levels. But to be able to exit a position that means that someone is taking the other side of your trade.



It may sound glib but I think the only way to avoid these situations altogether is not to be in the market. Personally at the stage I am at I would not sleep if I had any position open overnight. That may change in the future but as it stands I prefer being an intraday trader.

As for statements such the ones issued by Yellen and the like, bear in mind that one of the mandates of people such as her is price stability. The same goes for the ECB in Europe. So they tend to craft their statement in such a way that avoids, rather than seeks, extreme market movements.

I haven't been in this business for that long but I have not seen the extreme movements you speak of. I was around during the Swiss Franc crash as well as Black Monday in 2015 (I think it was 24 Aug). I have a video downloaded of that day and it shows the ladders for DAX, ES, CL, NQ and Gold. Liquidity was still there. Not where you would want it, but not gone completely.

Interesting. I guess I never put together that part of the Fed and ECB is keeping prices stable.

My comment about the Franc was based on the chart I looked at with a volume histogram. So not a perfect representation but a reasonable one. Before the massive crash there was a lot of volume changing hands with huge volatility. So obviously there were at least a few people/firms that new something important was about to happen. It seems that the best thing we can do is to keep eyes on the depth to see if/when liquidity does dry up. In such an event I cannot think of a better way to avoid disaster. Like in the ZN if suddenly the depth goes from 2000+ per level to 300 per level and I don't know why then probably something is going on that I forgot or have no knowledge of in the first place.

Started this thread Reply With Quote
  #17 (permalink)
 Erinn F 
Indianapolis
 
Experience: Intermediate
Platform: NinjaTrader
Trading: ES, CL, ZN
Posts: 9 since Oct 2014
Thanks Given: 5
Thanks Received: 1


BetterTrader View Post
Betting it's not a good idea.

Professional traders waiting after the release (they don't like to bet), for this reason you can see many times you can see that even news that As Expected leads to massive movement, if you like to enter to swing trade close to event release, something it's good to place entry order significant under the base price/open the trade after the release happens and you understand that it's support your trade idea.


Sent using the NexusFi mobile app


So you mean to say that swing/position traders are waiting until after the news or did you mean intraday professionals?

Started this thread Reply With Quote
  #18 (permalink)
 
xplorer's Avatar
 xplorer 
London UK
Site Moderator
 
Experience: Beginner
Platform: CQG
Broker: S5
Trading: Futures
Posts: 5,944 since Sep 2015
Thanks Given: 15,447
Thanks Received: 15,291


Erinn F View Post
It seems that the best thing we can do is to keep eyes on the depth to see if/when liquidity does dry up. In such an event I cannot think of a better way to avoid disaster. Like in the ZN if suddenly the depth goes from 2000+ per level to 300 per level and I don't know why then probably something is going on that I forgot or have no knowledge of in the first place.

I don't see how that's feasible within the context of this thread, i.e. swing trading - unless you're willing to be glued to your screen for 3 days in a row with no sleep - that's a lot of coffee

Reply With Quote
  #19 (permalink)
 Erinn F 
Indianapolis
 
Experience: Intermediate
Platform: NinjaTrader
Trading: ES, CL, ZN
Posts: 9 since Oct 2014
Thanks Given: 5
Thanks Received: 1


xplorer View Post
I don't see how that's feasible within the context of this thread, i.e. swing trading - unless you're willing to be glued to your screen for 3 days in a row with no sleep - that's a lot of coffee

You are correct. It isn't feasible at all. My idea with swing trading was really so I didn't have to be glued to the screen all the time. But as I started learning more about order flow and volume and learned how it all worked it has me thinking that it should be a core component of any trading method. You have answered well my questions regarding the news. I guess I have to accept that any data coming out during an open position can be good or bad depending on how the market reacts. I think all the straight up/down 50+ tick bars that are caused by news skew my interpretation of what a swing trade really is. Capturing a move that is 200 ticks is a large move but I can't help but shake the fact that in one way or another part of the end result will often be due to some news pushing price for/against me.

But in the long run, isn't the news the fundamental driving force for institutions anyway? I mean certainly a firm trading multi year positions is taking into account the numbers.

Started this thread Reply With Quote
Thanked by:
  #20 (permalink)
 
xplorer's Avatar
 xplorer 
London UK
Site Moderator
 
Experience: Beginner
Platform: CQG
Broker: S5
Trading: Futures
Posts: 5,944 since Sep 2015
Thanks Given: 15,447
Thanks Received: 15,291



Erinn F View Post
But in the long run, isn't the news the fundamental driving force for institutions anyway? I mean certainly a firm trading multi year positions is taking into account the numbers.

Yes, and a firm trading multi-year positions is outside the retail context being discussed in this thread.

My take on fundamentals is explained at the end of this thread, which has a good webinar about macroeconomics.

Reply With Quote
Thanked by:




Last Updated on April 13, 2017


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts