Even though Im shorting the whole time now, as long as we stay above 33,800 Im still very bullish. I think a nice healthy correction to around 34,500 will be good for the market, once we have that I believe were going to see some more new highs. OMO
The only way to capitalize on that though is overnight positions. Maybe I just havent had enough experience to be scared of it...yet
heres something more concrete - for interest sake, doing some quick back testing (since 1999 - 2013): 78% of the time overnight movement is between 0 - 300 points. 9% of the time it had more than 500 points movement, and most of those movements were in 2008.
if thats your system then chances are you cant trade THAT system overnight.
I find that chart patterns (H&S, Support & Resistnc, etc) work very well with overnight. Often your stop loss would be more than 100 points away, but to compensate for risk I would reduce my contracts (so that the risk is always as close to 2% as possible, and just in case round down). In other words, 50 point stop loss would mean 5 contracts, then chart pattern with 250 point stop loss would mean 1 contract... If that makes sense.
the 250p was just to illustrate a point, you must also remember that your entry isnt necessarily at the close of the day you couldve entered earlier and already be in profit (or loss). But a target of 750+ is possible.
1 to 2 (risk to reward) trading is not ideal but also not wrong though, then it comes down to the probability of the event hitting target (like H&S hit 2 out of 3 times).
So 67%*(2/3) - 33%*(1/3) = 44 - 11 = 33 (anything above 0 is still profitable)
@760 were on a resistance line on the hourly charts, but on the other hand where in an inverse H&S thats pointing to 36,000. Resistance line seems to be the top of a bull flag. ..which one will win? will we see one more lower before we head