I believe the solution is to trade Kospi (Korea Composite Index). Note sure how accurate this info is, but someone posted on trade2win that the spread is about 1 tick.
I had the same concerns before trading Hong Kong, and it's not just MHI... HSI and HHI are just as bad, if not slightly better. Here's a couple thoughts though: - Just because the spread can be 4-5 ticks/points, doesn't mean that it always is. There are many times when, for a second or two, the spread is only a tick. Think about this: around 70% of my entries are on stop-limit orders, which I have setup to get me in with no more than 2 ticks of slippage, or not get me in at all. I'd say at least 50% of the time I get zero slippage, meaning my entry price is the same as the stop price, 30% of the time I get 1 tick of slippage, and only 20% of the time do I have 2 ticks of slippage. Only on very rare occasions do I not get filled and miss out on the trade... maybe 1-2 out of 100 trades. - I almost always exit profitable trades with limit orders, so I experience no slippage on those orders. Many, but not most, of my losing trades are exited with limit orders as well. - 30% of my entries are on limit orders, so I experience no slippage on those orders... doesn't really matter what the spread is when you enter and exit with limit orders - After a while you just get comfortable with big spreads, and when looked at within the context of volatility, you realize its not a big deal. Riddle me this: what's worse... a contract that has a 50 tick intraday range with a 1-tick spread, or a contract with a 250 tick intraday range with a 3-4 tick spread, that tightens down to 1-2 ticks at times? As long as there's enough liquidity to move your desired size, I'd argue the 250-tick contract is more cost effective over the long haul, and if you do the math, I think you'd agree.
Thanks for your detailed reply. I agree with you and I think I can work as you said. One mistake I had made was I was looking at Sept futures because most of the futures have Sept expiry. Today I realised that there is July futures which are active. AS you have said your setups are based on Al brooks book.I hace got that book but it is tough reading. I have never worked with candlesticks but I am amazed the detailed study he has made to be profitable. I have decided to work slowly through the book. Please give your setup examples if you can. That will be much helpful and very much appreciated. Thanks again
Actually, you should be looking at the June contract. HKFE products roll over every month, and you should not switch to the next month until the morning of contract expiry. Very different than the US and European products in that sense. About half of my setups are based on Al Brook's concepts. His book is very helpful but its not the holy grail per se, I didn't become profitable using his concepts until I passed them through the filter of my own market paradigm and experience and decided which concepts made sense and which were useless to me. In other words, I've taken several of his concepts, modified them to some degree, and developed my own list of setups each with its own rule set. That said, I'll try in the future to take screenshots and show how I identified, entered, and managed trades to show examples. I won't show every trade though, because as stated in my first entry in this journal, I am concerned about competition at my entries and exits due to the low liquidity available in the HKFE products.
Actually, you should be looking at the June contract. HKFE products roll over every month, and you should not switch to the next month until the morning of contract expiry. Very different than the US and European products in that sense. Do these futures expire on the last trading day of the month and not 3rd Friday ?
I think they expire the next to last business day of the month, or something close to it. For June, I believe the contracts expire on the 29th (in Hong Kong, 28th in US), so for me I will switch to the July contract next Monday night (28th) before the morning session starts. Also, to another point that you made about Al Brooks and candlesticks... be sure to not get confused that his methods are based on candlestick formations... you could just as easily use bar charts, there's nothing special about candlestick charts. It's really a study of what happened during the bar that's important, and its implications as to what might happen in future bars. It's really the study of support, resistence and the exploitation of other traders at a micro level. Good luck in your studys.
WTG! Very good to read of your successes, and your journal is a help to me. Gives me new ideas. Keep up the good work! Ian
Thanks Ian, and thanks again for recommending Al Brook's book to me last year... it was what I needed at the time. I hope all is going well with you and your trading.
Another night of churning on MHI, virtually breaking even (gross) but paying tons of commissions to IB, and making all my profit on a couple HHI trades. Had to endure a 80-tick range chop fest on MHI for the first hour and half of the session, seeing most of my trades stop out with small losses. Finally got a breakout to the north that lead to some profit to make back some of the MHI losses. Of course when a really good HHI setup forms it works as expected. Can't wait to make the switch and put MHI on the back burner. +1150 HKD (+$148 USD)
Osho67 requested some examples of my setups. See the attached jpg for a notated 5-minute chart showing the best MHI trade of the night and how I managed it. This is a very simple, bread-and-butter with-trend, double-bottom pullback after a breakout from the opening range that lasted way longer than expected (by me). FYI, I use 1 and 3 minute charts during the first hour of the market, then step up to 3 and 5 minute charts as the volatility dies down. Hope you find this helpful.