I find that this index can be used better than Nifty, Banknifty or indian stock for swing trading. The reason being that there is very miniscule intraday movement on NSE since the underlying is DJIA which is US index. The activity in this index happens once the US market opens and closes in the night (Indian time). So effectively what we get to know each morning Indian time is the net movement of DJIA index. To use technical analysis or for price action chart we can get intraday and eod chart from google finance or yahoo finance.
I think the benefits of using DJIA future on NSE for swing trading will be:
1) No need to watch the market for the full day.
2) We will know what has happened in the US market during the night every day morning when we get up. We can get good enough time to think about our position when Indian market starts at 9:15, hence there will not be any impulse changes in our position due to favourable or unfavourable outcome during the night activity in the US markets.
3) Decision for a position can be taken any time of the day. So for salaried people we can trade any time of the day from office
Since this will be EOD based trading (as per US time) we can only do swing trading in this.
First of all, thank you all who have replied in this thread. Given your posts I fairly assume that none of you have traded this futures, whatever be the reason. Also you all too can fairly assume that people trading DJIA on NSE too are informed traders, speculators etc etc, much not different for the breed here.
Maybe my usage of word 'swing' might be wrong it could be rather EOD based trading, which I had mentioned in my second post. Also even if it were swing trading, gaps or otherwise are beyond anyones control, why consider gaps only for losses, it can be profits too. Why brand gaps only as a devil? When you are into EOD based trading, gaps or no gaps are not of any consequence.
I trade Nifty on EOD basis since my job does not give me leeway to watch markets for the full day. But since I have 'opportunity' sometimes to track the market intraday, my vision gets blurred toggling from EOD trading to intraday, thereby mixing up things only to get non desired results. It also affect my performance on my job. So if I were to change from Nifty to DJIA then, I can focus on my job and market exclusively. Neither mixing up the two ever.
Earlier I used to trade 2 lots of Nifty futures with 1 Lac, now I have strictly reduced it to 1 lot for 1 Lac and am doing EOD based trading. I can do the same with DJIA and trade only 1 lot with 1 Lac and have peace of mind while trading and while at work.
Think from the perspective of EOD based trading or trading on daily time frame chart perspective, that should help to get us on the same page where I am.
Not quite right, the spreads generally are around 5 - 6 rupees for the near month contract. So for a DJIA around 20k, and for a EOD based system, where 0.5% movement in Index will be 100 points 5-6 rupees slippage could be just fine. And since you get the entire day to execute your order, you can put your limit price basis how the DJIA has performed in the US.
Sir, I have traded DJIA and FTSE100 both. I have often found liquidity issues with DJIA but that for you should not be an issue if you are carrying overnight positions. Spreads can go as wide as 20-30 Rs.
If you have figured out everything and have the finesse to trade gaps, I wish you all the luck in your endeavor. Please do keep us posted of your progress.
Many indices are traded on other exchanges like SGX Nifty etc
What you have to understand that it also has implied risks.
A simple example, our "media" looks at SGX Nifty and the tries to predict opening but they miss by a mile many a times.
Long story short, there's no advantage of what you think that you'll do in time difference thinking "as if you traded in hindsight".
Bcos before an event, those markets also start preparing, buy/sell options etc, how would you hedge your positions?
There is a 50% chance, and that's why its the way it is. Else everyone would be doing that.
Effectively, like BPR said, you want to "trade gaps"?