Thursday, November 15, 2007

Globex Glitch Trade

Some glitch took down Globex (the Chicago Mercantile Exchange's electronic futures trading platform). I was actually watching the open of the Australian stock exchange and Australian futures at the time. Then I noticed that the NASDAQ futures were down 12 points or so from the close of futures trading. I couldn't see any fundamental news and the S&P 500 wasn't down as badly. I switched out of my simulation account at Interactive Brokers and into my real trading account. The technicals also looked like a very short term bottom was being made. The Australian market was flat roughly after an initial small sell off (only the Australias and New Zealand markets were trading at this point globally). The model is long though a gap down overnight is possible. So I decided to go long the NASDAQ futures on the assumption that the steep decline was caused by the glitch. I'm also tracking the S&P (ES) market as the trade progresses. The latter market is the most liquid after hours futures market and it is easier to see what is happening in it. The NASDAQ futures can have a spread of a point or more during the Asian trading session and so it can be hard to see what the price action really is by looking at a chart.

11:15 Eastern Australian Summer Time

Japan opened up after the US sold off. This supports my trade idea. Let's see how this goes.

11:25 Eastern Australian Summer Time

The trade finally moves into profitability.

11:40 Eastern Australian Summer Time

I got out of the trade with only a 1.5 point gain. On second thoughts the current price is close to where the stock market closed at 4:00pm US time. There was a big rise in price in the futures after 4:00pm. Maybe the sell-off in NASDAQ futures was justified? Anyway the 5 min stochastic was showing signs of topping out. Is this a case of selling a winner too soon?

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