rather than pick out individual stocks to trade, it can often be worthwhile to trade the indices themselves, especially in times of high volatility.

for those so inclined, i attach below charts for FTSE and FTSE 250, though one might equally be tempted to trade Dow or S&P, which is significantly broader in its coverage, or even NASDAQ

for ease of reading, i have attached 1 year and 3 month charts in each instance

4HR 225, not as good as JGB movements but still. Time for a rest I think..



Asian stocks swooned Thursday after uncertainty over U.S. monetary policy led to more declines on Wall Street, with Japanese shares standing out with massive losses as a further rally in the yen thrashed exporters. The Nikkei Stock Average plummeted 6.4% to end at 12,445.38 in Tokyo for its sixth loss in seven trading days. The drop marked the benchmark's decline for a seventh straight Thursday, including the 7.3% plunge on May 23. The selloff came as the U.S. dollar (USDJPY) fell as low as Yen93.76 during the session, nearly two full yen lower than the Yen95.61-level seen in North America late on Wednesday. The drop followed a third straight session of losses for U.S. stocks Wednesday, on concerns the Federal Reserve could taper down its bond purchases. The dollar's tumble against the yen "will put regional markets under pressure, but it may also [force] the U.S. Fed to reconsider its tapering plans in the face of a global sell off," said Kim Eng Securities director of sales trading Andrew Sullivan. Elsewhere in the region, Singapore's Straits Times Index lost 0.7% in afternoon trade. The index had dropped much further earlier in the day to enter a so-called correction territory -- widely regarded as a 10% drop from a recent peak. Stocks in some other Southeast Asian markets suffered much bigger losses, with the Philippine stock benchmark ending 6.8% lower, while Thailand's SET slid 4.6% by late afternoon. The losses Wednesday on Wall Street reinforced "the notion that the market is similar to a junkie who needs a constant fix, which in this case comes in the form of monetary stimulus," said CMC Markets sales trader Miguel Audencial. "Even a slight indication or the speculation that this stimulus will be scaled down may ignite a sell-off," Audencial said. Meanwhile, China's Shanghai Composite tumbled 2.8% as the markets reopened for the first time this week after a string of holidays, giving investors a chance to react to a string of downbeat economic data released over the weekend, including the monthly trade and inflation figures. Hong Kong's Hang Seng Index skidded 2.2%, and South Korea's Kospi lost 1.4%. Australia's S&P/ASX 200 fell 0.6% to enter so-called correction territory -- having dropped more than 10% from the highs reached in May. The benchmark declined despite official figures showing an unexpected improvement in employment trends during May. Stock movers In Japan, stocks found little respite as the U.S. dollar (USDJPY) fell under the Yen94 level, raising more fears about the earnings outlook of companies with a significant international presence. Shares of Fast Retailing Co. (FRCOY) skidded 8.6%, Hino Motors Ltd. (HINOY) slumped 9.9%, Hitachi Construction Machinery Co. (6305.TO) plummeted 8.6% and Advantest Corp. (ATE) lost 9.4%. "The combination of elevated risk aversion and disappointment over recent policy announcements, in particular the lack of detail about Prime Minister [Shinzo] Abe's 'third arrow,' has prompted ever more upside for the [yen]" said Crédit Agricole forex strategy chief Mitul Kotecha. Chinese property developers and banks suffered heavy losses during the session. In Hong Kong, heavyweight stock China Construction Bank Corp. (CICHY) lost 3.2% and China Overseas Land & Investment Ltd. (0688.HK) skidded 3.5%; in Shanghai, Poly Real Estate Group Co. lost 4.5%, Citic Securities Co. (CIIHF) plunged 6.4% and shares of CCB gave up 1.5%. In Sydney, mining stocks came under pressure, with BHP Billiton Ltd. (BHP) lower by 2.6%, and Fortescue Metals Group Ltd. (FSUMY) sliding 3.4%. Rio Tinto Ltd. shares (RIO) declined 2.4%. The company said it plans to sell its Eagle nickel and copper project to Lundin Mining Corp.

John,

I like the idea of using a slow, weighted moving average as a trend identifier. It doesn't work all the time, of course, and it does tend to come a bit unstuck in a ranging market. You'll probably find that you get very similar signals from the lwma to those produced by an awesome oscillator (Bill Williams fancy MACD) being above or below the zero line on the 4-hour timeframe.

Regarding the stop losses, I agree that they should be relatively large to allow a trade to breathe. Of the traders I have on my books, the ones who make the serious money are the ones who take a large trade (upwards of 2m or 3m bc) and let it run for several days on end to get a decent return. The traders who habitually get stuffed are the ones who are permanently diving in and out for a few bucks here and there.

The issue I have, however, is that fixed stops are very rigid and inflexible, and non-adaptive as markets change. Also, 215 pips on cable would represent a different figure on fiber, and so on. Have you ever considered using upper and lower bollinger bands on the 4-hour timeframe as a trailing stop? Statistically, in a rising market, the price rarely hits the lower band, and vice-versa in a falling market. The major difference is that sometimes you'll find your stop as tight as, perhaps, 100 pips, whereas at other times, it may be as wide as 300+ pips. It's adaptive to the market and allows variation in position sizing.

Hils I just make a visual judgement on the angle of slope of the MA, entering manually although of course you can get caught out when the trend is on the turn. As I cannot always sit in front of the screen I use a trade management EA for SL and TP which uses fixed values, the only option is to use the high of x candles ago as the TS which I am not very keen on.

When I used to trade equities and indices with Esignal, I used an indicator which plotted the stochastic of slow MACD which with suitable MACD & Stoch inputs was pretty useful , of course this was coded in EFS and I havn't been able to find it coded in MQL.

A stochastics of a MACD in MQL4? I might have exactly what you're looking for. :o)

Drop me an email - not sure I've got your addy to hand.

i ultimately managed to scrape together a reasonable profit on my dow longs (could have been bigger), which is now in the bank ..... i can't watch consistently over rthe next week, and there's no knowing whether or not the recent extreme volatility will continue, and if it does, whether it will indicate north or south

Tyler's View

"Ding Ding: we now have a new dissenter in addition to Esther George: James Bullard. And - as usual - there's a little in there for everyone aside from the fact that the rose-colored glasses view on the economy suggests that they will be, in fact, tapering at some point soon, which the market is not very happy with right now..."

June Fomc Redline

Bit of a bloodbath on the FTSE today. The fall started quite slowly but appears to have picked up the pace - the image of a runaway train comes to mind!
Oh well, better prices to buy back into for the future?
TT

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Ambrose goes all sober. As if he wasn't teetotal to begin with.

"The Bernanke Put has become the Bernanke Call" - well quelle bleeding suprise!

apart from glum faces, there's certainly not much blue about, though BLNX is a friendly exception

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my inclination is to think that the fall - collapse would be more apposite - has now been overdone, but unless you are glued to the screen (i'm not as still in dubai) it would be quite a brave move, as weak markets, like strong can self-perpetuate for a while

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but being a masochist, i have had a small dow dabble (long) at 14880

cyni remember our post 12475 6000 looming!

crikey ..... that recently?
bet you didn't short either :-)

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Surely some mistake with the volume reported today!?!

The thing I don't understand is that the markets must have realised that QE will gradually come to an end one day. So instead of pretending that this is the beginning of the end, surely it's exactly the opposite? State intervention comes to an end and the natural order is resumed. I suppose it opens up a period of uncertainty which worries the market, but this was inevitable. I can't believe it isn't all factored in considering the time we have all had to absorb the info.

Harry, the market goes up and then guess what? it has to come down.. the reasons come and go.

Harry,

The Yen crosses all turned upwards a day or two before the FOMC, and have continued upwards since. Trend following currency traders were quite comfortable holding through the Fed, which represents just a small cog in a large wheel when you consider the larger and real effects of Abenomics. Your argument about tapering rhetoric being in the price already is, imo, quite true and its effect on the currency markets was merely to accelerate an existing move. This is in stark contrast to equity markets which plunged in a knee-jerk reaction to the statement. That is fairly typical of equity markets though, with equity traders rarely looking any further than the end of the nose on their face.

The market has decided that it would still like some of Shinzo's shekels, but that risk is off for a while as the money goes into fixed income securities. I suspect you'll see a shift in that way of thinking within the next trading day or two - risk will get turned back on again, and you'll see a surge in equities as they make up for lost time.

forgetting the inevitable difficulty of timing - silly billy yesterday evening! - i would be more inclined to back the dow than ftse to head north

Cheers for that insight hilary, but that then goes against the theory that markets are always forward looking. I assumed they (equity traders) had looked at all of the probable consequences of tapering and positioned themselves accordingly. I have, so why can't they! ;o)