future currency contract as an indicator

[szczupak]

have you ever considered checking what is the market mood using changes in future currency contracts before major market news? if theory is true... most traders (90% )must lose to make 10% earn money. Is my approach correct? So if we assume that futures and real price changes are inversely correlated why don't we try to check it before news are issued. I would like to do some backtesting on it. Can anyone join my team ?

[szczupak]

we might even use a zig zag indicator to draw turning points and we could compare it with futures... someone told me about bonds... but i'm not sure if they really anticipated the market..

[Giotto]

But I hope you know, that prices for other months of contracts are realtime changing based on news, situation etc. same as present month contract = spot price in FX (almost).

[szczupak]

i want to change the correlation between futures and spot prices

[jasperforex]

I like to look at imm reports every friday. They give updates on commercial and non commercial positions. Also MNI writes a summary every monday. I think that's what you are after right?

[cyberwiz]

szczupak,

I think you have a very interesting idea worth of exploration. I know that some stock traders are using the S&P futures as a leading indicator for the stocks which they trade. It is a system very close to scalping where you monitor the 1 min S&P futures chart. If there is a trend detected then you look at the 1min chart of the chosen stock to place your entries. I think this system was utilizing a 20 EMA and stochastics to refine the entries and exits. Whatever it is my main point is if it is logical to look at the futures prices for a hint on where the stocks might go then it is worth investigating if there is a correlation between the currency futures and the spot prices.
Let me know if I can be of any further help.

Regards,

Dimi

[united46]

Dimi

Dave Floyd who writes on trading markets and posts on here used the stock trading system you mention here. Ask him about it.

My understanding is that that approach wouldn't work in forex.

Futures trading in forex only accounts for about 2-3% of daily turnover with the main market being spot and OTC.

Contrast this with stocks where futures have a huge role. The theory behind the futures being a leader is that when a market maker sells a futures contract, he will then hedge his position in the market by buying a basket of stocks which represent the market. This buying causes price to follow in the stocks. The delay in generally short but eagle eyed scalpers can use this to make money.

As such, this system wouldn't work in forex.

Given the low turnover that futures represent, it would seem unlikely that futures would help in anyway. However, I know a lot of people do look at COT data and swear by it.


Kind Regards

DUFC

[jasperforex]

Originally posted by united46
Dimi

Dave Floyd who writes on trading markets and posts on here used the stock trading system you mention here. Ask him about it.

My understanding is that that approach wouldn't work in forex.

Futures trading in forex only accounts for about 2-3% of daily turnover with the main market being spot and OTC.

Contrast this with stocks where futures have a huge role. The theory behind the futures being a leader is that when a market maker sells a futures contract, he will then hedge his position in the market by buying a basket of stocks which represent the market. This buying causes price to follow in the stocks. The delay in generally short but eagle eyed scalpers can use this to make money.

As such, this system wouldn't work in forex.

Given the low turnover that futures represent, it would seem unlikely that futures would help in anyway. However, I know a lot of people do look at COT data and swear by it.


Kind Regards

DUFC

I've been tutored and IMM was one of the subjects. IMM is important and it works, you just have to be shown how to use it. Its like a pocket sized version of the whole fx and its much more useful than you think because the data is more reliable.