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The HSI Index Futures Scalping Experiment


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The HSI Index Futures Scalping Experiment

  #121 (permalink)
Godzilla
Brisbane, Australia
 
Posts: 206 since Nov 2013
Thanks Given: 43
Thanks Received: 353


jakobe View Post
Very curious to hear your opinion of HSI vs Nikkei price action and flow differences. I used to trade the Nikkei a lot as it was the only instrument I could trade with work. I've looked over the HSI a tad and have enjoyed reading your journal. Looks like it will run a lot more when compared against the Nikkei in regards to volatility. Any insight would be cool, considering touching this market myself.


Hi Jakobe,

The most important factors for a day trader as you know are Volatility & Volume ....if the market does not move then you don't get price action set-ups and if you don't have volume your executions will be expensive (slippage + missed trades) .....Nikkei as Josh corrected me in the beginning is the highest volume contract in Asia BUT I ignore it because it has a minimum 5point tick move Vs HSI with a minimum 1 point tick move....even though HSI has lower volume the 5 times greater tick difference makes it a better instrument for me. I would also argue that the HSI has a greater level of retail punters trading that market vs Nikkei with a lot of institutional money pushing it around with algo's etc. All markets have algo's but nikkei would have more given it's market depth than HSI in my opinion.

Alternatively, others may prefer the Nikkei as it may "move" more "predictably" for their trading style etc. It all depends on the trader...I started on the HHI then "graduated" to the HSI....HHI moves slower but with lower brokerage and good volume its ok.

HSI is certainly a volatile market that looks on paper to be a day trading paradise with the rips up and down BUT will destroy your ego and your account very quickly if you don't know what your doing - start on SIM and see if you can double your account consistently...then go live ....last Friday it taught me a lesson so I had to turn it off for the day....some days are like heaven and others are like hell.....you have to be patient. Just like any and every market you trade.

I trade HSI because I refuse to trade ES at midnight like I tried 20 years ago - I wont do that anymore though I'm a MUCH better trader now vs 20years ago as a DT virgin getting whipped daily....you live in the US so trade the ES it's the global ultimate.

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  #122 (permalink)
On the way
Hong Kong
 
Posts: 2 since Apr 2020
Thanks Given: 1
Thanks Received: 1

@Godzilla
Your post is the first one I follow here. It is encouraging to see your story. And the discussion with Josh is also inspiring. I am setting up to automate my trading. My first target is intra day trade on HSI option. You guys motivate me to continue on my work
It is still an early stage for me, and I am looking for ideas on the strategy. I am certainly going to look into what you suggested!

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  #123 (permalink)
Godzilla
Brisbane, Australia
 
Posts: 206 since Nov 2013
Thanks Given: 43
Thanks Received: 353



On the way View Post
@Godzilla
Your post is the first one I follow here. It is encouraging to see your story. And the discussion with Josh is also inspiring. I am setting up to automate my trading. My first target is intra day trade on HSI option. You guys motivate me to continue on my work
It is still an early stage for me, and I am looking for ideas on the strategy. I am certainly going to look into what you suggested!

Hi " On the Way",

Enjoy the journey as it will certainly have some ups and downs along the way.....with automation please please please do it all on SIM account first then if your happy with the results go live with minimal size in the first LIVE trade...I got burned big time on that one back in 2013..it hurts just bringing that up but learning from others mistakes is a fast track to success.

Good luck...

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  #124 (permalink)
On the way
Hong Kong
 
Posts: 2 since Apr 2020
Thanks Given: 1
Thanks Received: 1

Thanks for your reminder
I am now running simulation with live data every day, but the strategy is a very dummy one. It shows me what issues might happen during a day. I will certainly backtest any new strategy and then put it in SIM mode. I also put some limit on max no. of orders and max positions, because I dont want to lose everything in a single day
Trading is a game of risk management IMO

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  #125 (permalink)
Godzilla
Brisbane, Australia
 
Posts: 206 since Nov 2013
Thanks Given: 43
Thanks Received: 353

Short Week April 27-29 th - HK holidays on Thu & Fri

Mon - -22 tics (4/6) Tried to renegotiate a property loan with the bank while trading...dumb dumb dumb....saved 80bps on my loan but should NOT have traded during this time - mostly waiting on the phone. Summary = "distracted!! - what an idiot!!
T - +50tics (4/5)- everything back to normal though was a little impatient and paid the price with a loss.
W - +70tics - (6/7) - realised how much easier trading is IF your in the "zone" - inner calm and reacting to the market, not rushing trades or hoping for set-ups...perfect patience lying in wait to pounce on the best set-ups.
Better to be slightly late versus early...from my experience. The candlesticks can look amazing for a split second(it's screaming BUY or SELL) ...do NOT click the button - wait for the bar to print then place the trade...as 20tics later that bar can turn from being bullish to bearish (and vice versa) in an instant.

Overall decent week - no complaints but I will do some SIM trading tomorrow & Friday to keep myself sharp.
I don't want to lose my mojo!

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  #126 (permalink)
 
josh's Avatar
 josh 
Georgia, US
Legendary Market Wizard
 
Experience: None
Platform: SC
Broker: Denali+Rithmic
Trading: ES, NQ, YM
Posts: 6,216 since Jan 2011
Thanks Given: 6,752
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jakobe View Post
Very curious to hear your opinion of HSI vs Nikkei price action and flow differences. I used to trade the Nikkei a lot as it was the only instrument I could trade with work. I've looked over the HSI a tad and have enjoyed reading your journal. Looks like it will run a lot more when compared against the Nikkei in regards to volatility. Any insight would be cool, considering touching this market myself.

The thing about the Nikkei that I don't like is this: you never get a free look. That is, if you join the bid, and you get filled, 9 times out of 10 you will now be long at the offer. Or worse: you want to buy, you see 60 on the bid, and you join. They hit and fill the first 30, and then the buyers take the offer and you are left behind. The algos seem to work like this: only hit the bid on the quantity that was originally bid there.

For example: the market is 19800 bid for 60 and offered at 19805 for 175. They will take 300 at 19805, so now the market is 19805 bid for 125. If you now join 19805, they may hit the first 100 or so contracts, but they will just take 19810 now, and leave anything that was not bid immediately behind. They will not hit 200 contracts, ensuring your fill, without your price going offered. It just rarely happens.

So, when you want to get in, or out, you are best to just pay the spread and hit/take. With such a large tick increment (5 points), it sucks, but otherwise you will get absolutely run over as nikkeis will frequently run 40-60 points up with hardly a downtick, certainly not one you're going to be fast enough to get filled on (vice versa for the other direction).

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  #127 (permalink)
Godzilla
Brisbane, Australia
 
Posts: 206 since Nov 2013
Thanks Given: 43
Thanks Received: 353


josh View Post
The thing about the Nikkei that I don't like is this: you never get a free look. That is, if you join the bid, and you get filled, 9 times out of 10 you will now be long at the offer. Or worse: you want to buy, you see 60 on the bid, and you join. They hit and fill the first 30, and then the buyers take the offer and you are left behind. The algos seem to work like this: only hit the bid on the quantity that was originally bid there.

For example: the market is 19800 bid for 60 and offered at 19805 for 175. They will take 300 at 19805, so now the market is 19805 bid for 125. If you now join 19805, they may hit the first 100 or so contracts, but they will just take 19810 now, and leave anything that was not bid immediately behind. They will not hit 200 contracts, ensuring your fill, without your price going offered. It just rarely happens.

So, when you want to get in, or out, you are best to just pay the spread and hit/take. With such a large tick increment (5 points), it sucks, but otherwise you will get absolutely run over as nikkeis will frequently run 40-60 points up with hardly a downtick, certainly not one you're going to be fast enough to get filled on (vice versa for the other direction).

In summary - painful!!
Thanks for your comments Josh.

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  #128 (permalink)
 
josh's Avatar
 josh 
Georgia, US
Legendary Market Wizard
 
Experience: None
Platform: SC
Broker: Denali+Rithmic
Trading: ES, NQ, YM
Posts: 6,216 since Jan 2011
Thanks Given: 6,752
Thanks Received: 18,136


Godzilla View Post
In summary - painful!!
Thanks for your comments Josh.


It certainly can be. Of course, if you are willing to give it a few ticks (as should be the case most of the time anyway) and you have good trade location, these don't matter as much. I don't want to make it sound like it can't be traded, but it requires knowing the product well, but that's true with anything really. But I will say that a 100 point trade in the HSI can be had more easily than a 100 point trade in the Nikkei (that is, in a shorter period of time and with less wiggle and back-and-fill). HSI, DJIA, Nikkei, all have similar values (20000-25000 currently) but only the Nikkei has a 5 point spread. IMO this is the real "killer" and means that when you get in the trade you'd better not jump in an out. Minimum Nikkei target for me is 50 points, I'm not even interested in trying if I can't get that because of the expensive spread. Sorry for the ramble, cheers mate!

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  #129 (permalink)
filtersweep
Houston, TX
 
Posts: 3 since Jan 2013
Thanks Given: 1
Thanks Received: 7

Just want to say thanks to Godzilla for starting this journal and Josh for being active in it, it takes time to do so and it's both rare and enjoyable to read discussion around the Asian markets.

I live in the US central time zone, and with a job/career that requires 100% focus during the day, I've always seen the Asian markets as the ideal choice for the developing trader, and IMO HSI is the best for a price action trader that trades small lots.

I started "day trading" futures back in 2007/08, and after dabbling in the STW, Nikkei, and early morning (for me) Eurex products, I eventually settled on the HKFE products. I had some (relatively) amazing/consistent success for periods of times, followed by either single horrific days where I broke all my rules or multi-month periods where my setups were no longer working (volatility collapse) but I couldn't walk away. Eventually I came to suspect I had a gambling problem, and/or was looking for the market to validate me somehow, which we all know is never going to happen.

Around 2012/13 my career went into overdrive, I starting travelling a lot for work and my kids got to an age where they needed more of my time when I was home, so with that combination it was easy to eventually walk away from trading, with only a couple short periods where I briefly dipped my toe back in, only to be reminded why I left in the first place.

About 7-8 months ago the interest returned, and I started examining intraday charts with a fresh perspective. For the last 3 months I've been either sim trading or trading 1 lots of MHI as a way to validate my (refined) setups, this time with a bit more wisdom than I had before. It's funny how my capitalization is an order of magnitude better than where it was 10 years ago, but I'm much more cautious and committed to either sim or small $ trading this time around. I don't need the money and I no longer have a fantasy of day trading for a living, at least not as an easy way to make money, my day job/career is much easier and allows me to live very comfortably (I'm also good at it and enjoy it for that reason). The reason I trade now is because I want to develop and eventually possess the skill, to become the kind of person who can trade consistently and profitably for the long haul, and maybe it will be an avenue for early retirement or a productive way to spend time in retirement. I have a long way to go but I'm genuinely enjoying the journey, now that I put no pressure on myself to succeed.

Anyway, I don't want to take up too much space in your journal, but wanted to let you know that I'm watching HSI every night (well M-Thu actually, I usually don't trade Sunday nights) like you guys. It's a really fascinating market with unique characteristics. I no longer take trades in the 15 minute opening period (too crazy/unpredictable... and I wouldn't want to have a position on when the cash market opens), and also have a rule to stop opening new trades in the 30 minutes before lunch (too slow, volatility dries up). I've also learned to not take setups in the first 15-20 minutes after the morning cash open... I've lost more money trading those minutes than all other time periods in my trading career combined. In fact, my setups work so poorly in that time range that I've actually started investigating taking the opposite side of those trades (reverse the entry/exit), but more work to be done before I try that with real $. Since my setups are almost all trend following in nature (including a variation of the two-legged pullback "trap" setup that you seem to trade Godzilla), I do my best to sit on my hands for an opening range to form, and then breakout before start putting on trades.

Keep up the good discussion and hope it's alright if I drop in with some commentary here and there. Thanks again.

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  #130 (permalink)
Godzilla
Brisbane, Australia
 
Posts: 206 since Nov 2013
Thanks Given: 43
Thanks Received: 353



filtersweep View Post
Just want to say thanks to Godzilla for starting this journal and Josh for being active in it, it takes time to do so and it's both rare and enjoyable to read discussion around the Asian markets.

I live in the US central time zone, and with a job/career that requires 100% focus during the day, I've always seen the Asian markets as the ideal choice for the developing trader, and IMO HSI is the best for a price action trader that trades small lots.

I started "day trading" futures back in 2007/08, and after dabbling in the STW, Nikkei, and early morning (for me) Eurex products, I eventually settled on the HKFE products. I had some (relatively) amazing/consistent success for periods of times, followed by either single horrific days where I broke all my rules or multi-month periods where my setups were no longer working (volatility collapse) but I couldn't walk away. Eventually I came to suspect I had a gambling problem, and/or was looking for the market to validate me somehow, which we all know is never going to happen.

Around 2012/13 my career went into overdrive, I starting travelling a lot for work and my kids got to an age where they needed more of my time when I was home, so with that combination it was easy to eventually walk away from trading, with only a couple short periods where I briefly dipped my toe back in, only to be reminded why I left in the first place.

About 7-8 months ago the interest returned, and I started examining intraday charts with a fresh perspective. For the last 3 months I've been either sim trading or trading 1 lots of MHI as a way to validate my (refined) setups, this time with a bit more wisdom than I had before. It's funny how my capitalization is an order of magnitude better than where it was 10 years ago, but I'm much more cautious and committed to either sim or small $ trading this time around. I don't need the money and I no longer have a fantasy of day trading for a living, at least not as an easy way to make money, my day job/career is much easier and allows me to live very comfortably (I'm also good at it and enjoy it for that reason). The reason I trade now is because I want to develop and eventually possess the skill, to become the kind of person who can trade consistently and profitably for the long haul, and maybe it will be an avenue for early retirement or a productive way to spend time in retirement. I have a long way to go but I'm genuinely enjoying the journey, now that I put no pressure on myself to succeed.

Anyway, I don't want to take up too much space in your journal, but wanted to let you know that I'm watching HSI every night (well M-Thu actually, I usually don't trade Sunday nights) like you guys. It's a really fascinating market with unique characteristics. I no longer take trades in the 15 minute opening period (too crazy/unpredictable... and I wouldn't want to have a position on when the cash market opens), and also have a rule to stop opening new trades in the 30 minutes before lunch (too slow, volatility dries up). I've also learned to not take setups in the first 15-20 minutes after the morning cash open... I've lost more money trading those minutes than all other time periods in my trading career combined. In fact, my setups work so poorly in that time range that I've actually started investigating taking the opposite side of those trades (reverse the entry/exit), but more work to be done before I try that with real $. Since my setups are almost all trend following in nature (including a variation of the two-legged pullback "trap" setup that you seem to trade Godzilla), I do my best to sit on my hands for an opening range to form, and then breakout before start putting on trades.

Keep up the good discussion and hope it's alright if I drop in with some commentary here and there. Thanks again.

Hi Filtersweep,

Great to have your comments here and you're more than welcome.....sounds like you and I have both taken similar paths with a traditional career doing well and funding the family but not being able to kick the "trading" habit....I can say I'm getting more and more involved in trading/equity investing and less interested in my Real Estate investments these days. I seem to cringe every time I get an email from my RE agent as I assume there is an issue with tenants that my agent doesn't have the balls to deal with.. (yes- I realise I could switch agents). I'm in the process of increasing my equity trading exposure as I liquidate out of RE. I could never go back to my old career in a Bank....too old for that BS now.

Agreed - the HK market is dangerous for the first 5-10 minutes after the cash market opens. I'm the same and have lost a lot trading during this period but sometimes the set-ups are so good I can't resist...overall, I'm very cautious during this period as the reversals can be brutal and big news events are released at this time also magnifying the market moves.

I think the biggest asset trading a fast market like the HSI/MHI is to use tic charts....I used to think time based were good enough (even 1 minute bars) but honestly they aren't for the HSI/MHI - you just get such good clarity of the support/resistance levels that you can anticipate price action around those levels...after learning PATS (highly recommended) I can see the patterns setting up and my right hand automatically gets the mouse into position to pull the trigger....if your into trend trading then I suggest Failed 2nd Entries(Long&Short) and Breakout Pullbacks/ Second entries(as you have mentioned)....these are VERY effective in the HSI when it switches into "trend" mode and the HK locals all start pilling into the trend....like Josh mentions regularly these trends can be FAST & Furious and easy money IF you can get a good entry signal......you know what I mean.

Anyway all the best and I look forward to your comments.

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