c09 JWBT016-Busby September 30, 2008 14:11 Printer: TBD
110 STRATEGIES TO WIN
use my V-factor, an indicator that gauges volume. If I am short, I want to
see sellers coming into the market, and if I am long, I want to see buyers
stepping up to the plate. I also get a warm, fuzzy feeling when other Euro-
pean indexes are moving in my direction. Specifically, I look at the FTSE,
CAC, and SMI exchanges.
Again, like when making Dow trades, my personal rule is that I buy
on the ones and sell on the nines. Once in the trade, I take some quick
profits on a portion of my positions. However, if the move seems strong, I
may hold a few contracts until just before the United States begins its day
session at 8:30AMcentral time.PEARL 14The 6:00AMprice on the Dax futures is the most important price in the Dax
for that day of trading. It may be used as a pivot to gauge whether the overall
market should be up or down for the session.The Basketball Trade
It is said that the most important time during a basketball game is the
last two minutes of play. On a day when the S&P futures, Nasdaq, and
Dow futures are trending in one direction, the most important time for me
with the Dax tends to be the last 10 minutes of the session. This trade is
based on the same principle as the Face Peel in Chapter 6. The S&P ses-
sion comes to a close at 3:15PM, but the Dax, like the NYSE, closes at
3:00PM.
If the futures indexes have been trending up or down throughout most
of their session and the opposing side has been unable to reverse the trend
near the close, I buy or sell the Dax at 2:50PMand ride it for profits for only
10 minutes. That is, if the day’s move has been up and the bears cannot
gain control as the session winds down, I go long and pick up some points
for a short 10-minute run. The reverse is also true. If the trend is down and
the bulls are too weak to make a reversal, I sell the Dax at 2:50PMand
ride down for 10 minutes. Figure 9.2 depicts this trade on April 28, 2008.
From 2:50PMuntil the Dax closed at 3:00PM, prices dropped nine points. At
25 euros or $38 per point, that represents almost $350 in value per contract.
Remember that trading is an art, and once in a trade, keep your eyes on
the indicators and the numbers. If the picture changes and you find yourself
on the wrong team, respond appropriately.