The week is packed with events that could bring about major moves in futures trading. Nervous anticipation was detected in SentiTrade’s volatility index already last week, a jump of 5% on Friday alone (see illustration below). We think the increasingly frequent swings from positive to negative news relate to tomorrow’s labour day celebration, upcoming elections in France and Greece, and the Q1 earning reports. Read more…

Tags French elections - Greek default - Greek elections - major market move - PIIGS - Q1 results

Parallel to the market recovery, investor optimism has been become increasingly bullish the past few months. Of course, there is always a place for “positive thinking”, however, one shouldn’t lose track of reality: We’ve recently seen improving numbers from the US economy, worrying signs from China, a “worse than expected” situation in Europe and “unexpected troubles” in the mid-East that contribute to rising energy costs. Read more…

Tags algo trading - market nervousness - market trend - positive thinking - sentiment volatility - system trading - worse than expected

It is one thing to get in to a futures trade, i.e.  knowing under which conditions to take a position. Knowing when to exit is just as important. By pre-defining your exit according to specific profit targets and stop loss settings, you may significantly lower the stress level while enhancing your portfolio performance…
Read more…

Tags advanced trade management - algorithmic trading - ATM - ninjatrader - robo trading - system trading - trading strategy

There are times when market psychology is particularly sensitive to new information. You may create an edge for yourself by identifying when this is likely to happen. There’s of course no such thing as a free lunch, however some of you may be familiar with three day lunches…
Read more…

Tags cognitive dissonance - confirmation bias - crowd psychology - dax certificates - derivatives trading - dominant trends - institutional trader - market psychology - three day lunch - trading strategy

We are now entering unchartered market psychology territory. SentiTrade’s 38 moving average line has crossed the 200 average, signifying a predominately bullish market sentiment. At the same time we note increasingly high levels in SentiTrade’s sentiment volatility index (V-SQ). It is now well above the 85% level, and is normally a clear sign of Read more…

Tags behavioral finance application - bull bear psychology - corrective waves - crowd psychology - dominant trends - market sentiment - psychology trends - sentiment volatility - system trading