Euro Chat with Joe Ross
Chat log from: Thursday, August 23, 2007
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| crosten | Hey amigo. |
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| crosten | Where's Joe? |
| marco | It's not 8pm yet ;) |
| JoeRoss joined. | |
| crosten | There he is.............. |
| JoeRoss | Here I is. |
| m.spoto | Hello, Joe. |
| crosten | Joe: CBOT went down today, were you affected? |
| marco | Hi Joe. |
| quester123 | Hello joe and all. |
| JoeRoss | No. I am in a Canadian Dollar option trade on the Globex. |
| JoeRoss | Hi quester, spoto, marco. |
| crosten | Joe, I really need your wisdom, suppose you are day trading a contract on CBOT today and the system went down, what would you do? |
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| JoeRoss | Hi murra. |
| marco | hedge on cme ;) |
| murra | Hi Joe and everyone, how are you Joe? |
| JoeRoss | crosten: There is really nothing you can do until the system comes back up. |
| quester123 | Joe, do you get the options trades from the matrix? |
| JoeRoss | crosten: What were you in? |
| crosten | Bond gapped up when the system resumed. |
| JoeRoss | Aha, I see that now. |
| marco | Joe: what about hedging the trade on another exchange? |
| JoeRoss | I wondered where that gap came from. |
| JoeRoss | marco: Where would you hedge the bonds? |
| crosten | I was fortunate not to have any open position, I would have panicked if I had. |
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| marco | Joe: hmm maybe in German bund futures. |
| JoeRoss | marco: There is not necessarily a relationship between bonds and bunds. |
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| crosten | Joe: seriously if you have an open position and the system went down what would you do? Call the broker to liquidate the position or something like that, what would you do? |
| ronnie | Good afternoon Joe. |
| JoeRoss | Bonds go by U.S. FED policy and bunds react to ECB policy. |
| JoeRoss | crosten: If the position is electronic, calling the broker won't do any good. |
| murra | What is your opinion about supreme question, Joe? |
| JoeRoss | He can't liquidate the position. |
| marco | Joe: today it would have worked to hedge the T-bond with a bund position. |
| crosten | What would you do Joe? |
| JoeRoss | murra: The sub-prime situation is very serious and the number of defaults increased in the latest report. |
| ronnie | Joe, that was an interesting article you posted about the dollar devaluation. |
| marco | Joe: well they're not perfectly correlated of course but if the bonds move big time, bund usually does, too...but sure depends on the news. |
| JoeRoss |
marco: If going in the bunds would have worked today, it was only coincidental.You are missing the point. If the CBOT goes down, you have no idea what your position will be when it comes up again. What if you are long and the CBOT system crash caused the bonds to sell off and go down hard, and you had offset in the bund? You would be gaining 10 euros/tick and losing $31.25 per tick. You would also have increased your margin requirements. One more thing to consider: What if bonds went up as they did and bunds went down--as you say they are not correlated. Then you will have made $31.25 and 10 euros per tick and you would be very happy. There really is no way to tell, so I would do nothing except think about the possibilities. I know of no direct way to hedge the bonds if the exchange mechanism fails. |
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| JoeRoss | ronnie: I felt that it had to be done. |
| sav | Hi. |
| ronnie | I converted my accounts to euro 5 mins. after reading it. |
| JoeRoss | marco: The bonds didn't move big time. They didn't move at all while the CBOT electronic market was down. However they did keep trading in the open outcry pits. |
| crosten | Joe, are you selling put option of the cad dollar? |
| JoeRoss | Good move ronnie. |
| marco | joe: yes but if they do a big move...well maybe I'm just wrong I don't really know the bonds. But the charts often look correlated to me. |
| JoeRoss | crosten: I sold call options. |
| ronnie | How do you see the situation with the Chinese holding so much dollar reserves in T-bills working out? |
| crosten | As long as the US is the superpower of the world the dollar will still be the dominant currency I think. |
| ronnie | That's why our politicians have blind trusts offshore. |
| murra |
They say the situation in under control but Ii don't think so. I think, generally, market goes down, but I don't think in a crash it will be regular to go down because monetary authority and government don't want a violent crash they are putting a lot of money to avoid this. Are you agree joe? |
| JoeRoss |
ronnie: China has a tiger by the tail. If they don't buy U.S. debt, they will have to severely cut back their manufacturing. If they do buy U.S. debt, they just keep piling up depreciating dollars. |
| ronnie | If they sell off just a small amount of their holdings, the dollar would crash. |
| JoeRoss | murra: I believe it will happen slowly. |
| JoeRoss | Right now the whole world doesn't really want to see a crash of any kind. |
| crosten |
Joe, l have been reading about options and I just don't get it suppose you want the instrument to be long you sell put options, why not buy call option Joe it's the same thing right? You want the contract to rise is the main objective ? |
| JoeRoss | crosten: Yes you want the contract to rise, but buying a Call is far different from selling a Put. |
| crosten | If you guys have been reading the tic data, China has not been an aggressive buyer. In fact, they are decreasing by the month. |
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| beginner | Hi Joe and all. |
| crosten | I just don't get it joe what is the difference between buying a call and selling a put , I have been cracking my head about this. I don't get it? Please enlighten me Joe? Please. |
| JoeRoss |
crosten: When you buy a call you have unlimited potential, but against you is the fact that 80% of options expire worthless. When you sell a put you have unlimited risk and all you can get out of it is the premium paid. However you have an 80% chance that it will expire worthless. |
| JoeRoss | And you will get to keep the premium you received for the call. |
| JoeRoss | Today's quiz: What are the types of FCMs and how do they differ from one another? |
| crosten | But I have to buy back the put to get back the premium right?? |
| JoeRoss | crosten: Almost correct. You buy back the put to KEEP the premium. |
| crosten | What if no one want to buy them? |
| JoeRoss |
If you sold it, you have to buy back the put to keep the premium or let it expire worthless. Since you sold it, you don't need someone else to buy it back. Someone else bought it when you sold it. |
| beginner | Joe, what is your opinion about Interactive Brokers? You once said, that you do not recommend them... Why? |
| marco | Joe: what options did you sell in CAD? |
| quester123 | Joe, How do you so accurately identify when the plunge protection team is at work what give them away volume? |
| JoeRoss | crosten: If you are buying the put, someone else has to sell them to you. |
| ronnie | Joe, isn't the difference between FCM's on whether they are a clearing member at the exchange? |
| JoeRoss | beginner: IB is not for everyone. There are many reasons. One current reason is that right now they are having the highest margins in the business. |
| JoeRoss | Their service is terrible. |
| JoeRoss | They do not issue margin calls, they just confiscate your position. |
| JoeRoss | Day trading margins move to full margins in the last 1.5 hours. |
| crosten | emm, interesting, I have been reading on options the math is complex, you math must be good right? |
| JoeRoss | crosten: I am mathematically challenged :) I don't do math at all. |
| JoeRoss | ronnie: correct answer to the quiz. |
| crosten | What is the meaning of confiscate your position? Does it mean they liquidate your position? |
| JoeRoss | crosten: Yes they will liquidate your position with no warning and no margin call. |
| beginner | Joe, you are trading with infinity brokerage, how is it there with stop limit orders for E-CBOT markets? Can you use them or not? |
| JoeRoss | crosten: People who know me know that I am unable to add a column of numbers. |
| crosten | Joe: what broker do you use for trading options? Is it infinity? |
| JoeRoss |
beginner: As far as I know stop limit is a normal order in all electronic trading. I think everyone has them and you can use them. But stop limit is not allowed at the CBOT for open outcry pit trading. |
| JoeRoss | I am using IB, but only because it is a necessity for me to use them. I would much rather trade somewhere else. |
| JoeRoss | However, it is hard to beat IBs trading platform for options. It is the best for that. |
| ronnie | Joe, what do you think of the this whole ICE taking the Russell, will it kill the volume? |
| crosten | Joe I read on the option matrix that when you are trading options you use your stop loss on the futures market. Why is that so? |
| JoeRoss |
ronnie: I think it is a stupid move made by the Russell company. I think it will kill the volume and I think CME will probably replace it with their own 2000. |
| sav | I've been trading the ES in preparation of the ER leaving CME. |
| crosten | Joe, what is the second best trading platform for options then? |
| beginner |
Joe, thank you. I was trying the Infinity AT platform and when I wanted to buy something at e-CBOT using a stop limit order, the platform said that this type of order is not supported by the exchange. So I wrote to Marco and asked him about it - he told me, I can not use stop limit order when trading e-CBOT markets... so I was confused. |
| JoeRoss | sav: ES has been pretty good lately. |
| JoeRoss | crosten: I don't who is second best. |
| crosten | Joe, are you long wheat, they have been making new highs? |
| JoeRoss | beginner: I don't understand that. I use stop limit all the time with E-CBOT trades. |
| sav | Yes I've been going for 2 points (8 ticks) on it on the 60 min chart almost always get it. |
| JoeRoss | crosten: I'm not long wheat. |
| beginner | Joe, I did not understand it too :) , but when you can use stop limit on e-CBOT, there will be no problem with it. Thank you. |
| crosten | Joe, what do you mean by the ES been pretty good? Volatile? |
| JoeRoss |
crosten: Read what sav said. You can make good trades in ES pretty much as you could with ER. I don't know how long it will last, but a lot of the noise that has been in the ES in the last few years seems to be gone at this point in time. |
| m.spoto | Joe, what do you think about at the moment I am short CZ7 |
| sav | I actually found I prefer the way the ES ticks compared to the ER not as fast better for my heart. |
| murra | I agree with you Joe about ES. Thanks. |
| crosten | Like today nice trend? |
| crosten | Joe, last Friday the FED cut the discount rate and issued a statement, what does that mean to you? |
| murra | I see a very clear move in this moment on ES it is easy to read it also for me. Do you agree Joe? |
| JoeRoss | spoto: looks like a good short to me. Reversal bar at the top of a trading range -- the trade should work out. |
| JoeRoss | crosten: I don't pay much attention to the FED. It has very little meaning for me. |
| crosten | Bill Gross just went on TV and said that PIMCO has no subrime, he's good. |
| JoeRoss | I agree, murra. |
| crosten | Are you referring to the ES right now Joe? |
| JoeRoss | crosten: I'm not looking at the ES right now. I can look at it, but which time frame would you like me to look at. |
| m.spoto | Thank you, Joe. |
| crosten | 15 min? |
| JoeRoss | Hold on. |
| JoeRoss | Okay, I'm looking at it. Is there something you want to know? |
| crosten | Yep its going down as you said it! |
| m.spoto | Yes. |
| crosten | Awesome, Joe. |
| crosten | 4pt down. |
| crosten | Joe if you look at the 15 min, it look like its going to break out to the upside but the 30 min look like its in a range? |
| crosten | What do you say, Joe? |
| JoeRoss | crosten: I see is ES moving down. |
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| crosten | And also the USD/JPYat the same time! |
| sav | I like to think the ES will move down, lots of areas with orders a bit further down. |
| BenHH79 | Hi Joe! When do you use adjusted and when not adjusted continuous charts? |
| JoeRoss | Ben I am almost always using volume adjusted continuous charts. |
| murra | ES is sh 1364,25 stop reverse it is n 2 1467,5 (13 tick) first objective cover cost final the (Ross hook time 1457 must to b/o twice) objective 1457,25 and wait |
| JoeRoss | Ben I want the adjustment to be by the most liquid. |
| BenHH79 | Yes, that sounds logic. |
| crosten | Joe, do you fear unlimited risk when selling options? Options are mean to limit risk? |
| BenHH79 | I used to do so also, but I wasn't sure why there are so many ways to build a count chart... |
| murra | 1457, 25 or 2 tick highest are you agree Joe with the plan? |
| JoeRoss | crosten: I don't feel any fear about selling options. I am afraid to buy them |
| crosten | You buy options to protect your open position. |
| JoeRoss | murra: I'm not sure what you are saying. I don't know if ES will reach 1457.25. |
| crosten | Joe earlier on you said that a lot of the noise of the ES has gone the last past year? Can you explain what is noise? Are they spikes? |
| JoeRoss | murra: I don't know where the next tick will be. |
| ronnie | Hey Joe, now that most of the floor traders are becoming screen traders, how are the pro's trading, pivots or technical analysis? |
| JoeRoss | crosten: That is a very expensive way to protect a position. |
| JoeRoss | ronnie: Spikes are noise, yes. Lots of small traders scalping for 1 or 2 ticks creates noise also. |
| JoeRoss | ronnie: Good question. How? |
| ronnie | I don't know any floor traders, hoping you did? |
| crosten | Joe are you expecting CAD to sell off? |
| JoeRoss | I don't have any idea. All I know is that most of the floor traders never make the conversion to the screen. The mortality rate is around 90%. |
| murra |
Yes but this would be a plan for entry in the trade we must always follow the trade and can change our strategy, you teach we must prepared before the trade (stop objective, eventually reverse..etc) is this not good? |
| JoeRoss | crosten: I never trade on expectations. Expectations are nothing more than opinion. |
| BenHH79 | Do you know any good resources to get an overview of the main fundamental events in certain commodity markets? |
| crosten | On a monthly basis how many percent of your trades are options Joe? |
| JoeRoss | murra: Planning and having a strategy are always good. |
| crosten | Joe can you recommend a good website on options? |
| JoeRoss | Ben: I don't know of any, so I've been writing about it in my Chart Scan Newsletter. |
| crosten | Joe do you trade Fib resistance? |
| BenHH79 | Okay. |
| JoeRoss | crosten: It varies. I don't keep percentages like that. I am not a mathematical person. |
| JoeRoss | crosten: I don't believe in Fib resistance. |
| murra | And it was the way that I use for trade so I have made that / fast analysis) I know we must to trade with what we see. I wouldn't say where will be the next tick. |
| crosten | A good website on options Joe? |
| crosten | Please. |
| murra | Why did you tell me that? Am I confused Joe? |
| JoeRoss | crosten: www.tradingeducators.com. |
| crosten | Besides yours please. |
| JoeRoss | Why I told you what, murra? |
| JoeRoss | crosten: I don't visit other people's websites, especially someone else's option site. |
| murra | Where was the next tick? |
| sav | Goodbye. |
| ronnie | adios Joe |
| JoeRoss | murra: I don't know where the next tick will be, but I still have to plan how I will handle my trades, and I have to stick with my plan. |
| JoeRoss | Bye everyone. |
| JoeRoss | See you next week. |
| BenHH79 | bye Joe! |
| murra | Thank you Joe, it is very important to chat with you. |
| JoeRoss | I'm taking a bow. |
| BenHH79 | Thank you for the time. |
| murra | bye bye all. |
| JoeRoss | Ciao murra and spoto. |
| JoeRoss | servus Marco. |
| murra | When are you in Italy? |
| murra | Let me know in advance please. |
| JoeRoss | murra: November 8 |
| murra | Ok thank you. |
| JoeRoss | Leave November 13 or 14. |
| marco | cu Joe |
| JoeRoss | marco: wait |
| murra | The best bye bye. |
Next EURO Chat with
Joe Ross:
Thursday, August 30, 2007
Time: 8:00 - 9:00 P.M., European Central Time (Berlin, Paris, Rome)
COME BACK WITH YOUR TRADING QUESTIONS & COMMENTS!
