I never went through this thread I use VSA too still in the learning phase. Would love to contribute on this thread. Also I dont quite agree with you that the Cash decides the futures its mostly the other way round backtest it and you ll find what I mean. But nevertheless commendable job and I ll hopefully learn a lot from you. Yesterday although market went down there were no volumes to support it also if you see the volumes today after 1330 it was massive especially in most of the stock that took a hit and were down yesterday and today. Check ABAN, DLF, UNITECH, NIFTY FUTURES etc.
Trading with Volume Spread Analysis (VSA)
- Thread starter bunny
- Start date
- Status
Cash is the mother of all. Futures are derivatives. Futures follow cash, and not vice-versa. Your observation, that futures moves up before cash is because: The trader who is going to take a huge position in cash will take a position seconds before in the futures market to make more returns. That is why futures move only slightly before cash.
Mate futures has all the information discounted along with the upcoming news and stuff better than the cash. Futures contract is the best indication of the up coming market situation. Do you know why people write calls and why they write puts? I am not talking about naked positions or in trading terms speculative positions. Also what you say is clearly suggesting whenever the smart money is ready to take a huge position they will do so by entering in the futures contract first and later in the cash that is all I am trying to say here. Futures market can give you the indication of where are market is going to head in the short term.
You may have intended to say the same, but the words you used were not correct. You said to the effect that futures market decides the cash market. That is not so. Let it be clear to everyone reading this post that:
Cash decides future contract price. But future moves moments before the cash. However, movement in futures in not the reason for movement in cash.
The dog wags the tail. The tail does not wag the dog.
If futures had all the information, why were it called as derivative?
Cash decides future contract price. But future moves moments before the cash. However, movement in futures in not the reason for movement in cash.
The dog wags the tail. The tail does not wag the dog.
If futures had all the information, why were it called as derivative?
Anyways I still don't quite agree with you that cash decides the futures. Do one thing for simplicity take the trading volumes or turnover in futures and compare it with cash you will find out that more than 2/3 times in a month Futures volume exceed cash. Why is that so there are many reasons and the whole derivatives makes the trade so leveraged that the smart money prefers to enter futures way before they would in cash. The trading volumes in cash is much lower than the outstanding volume of the scrip whereas the Futures can register open interest of upto 90% of the underlying market value of security. Here since we are discussing volumes that gives a better picture. I agree the derivatives market are derived from underlying cash instrument but the cash instrument doesn't show you the direction of the market, futures market does. Hence we so often have premium and discount. When the futures is in premium it shows positive sentiments and overbuying of futures which cash reluctantly follows. And what you say is 100% applicable when the future diverges with its cash counter part which is close to the end of the month or very close to expiry. Anyways my idea is not to argue here I am still very young and learning and this is what I was taught when I did my masters here in the UK and also the Asset Management firm I work for. Regards
Nimish
Nimish
Last edited:
And about your Dog relationship :
When the tail wags dog is happy hence when the futures market wag the cash wags too! Future shows bullishness first than any other market the moving average cross overs etc happen first in futures market followed by cash market and this you can see in charts. If the market is expected to go down this is represented by heavy selling in futures and cash follows it.
When the tail wags dog is happy hence when the futures market wag the cash wags too! Future shows bullishness first than any other market the moving average cross overs etc happen first in futures market followed by cash market and this you can see in charts. If the market is expected to go down this is represented by heavy selling in futures and cash follows it.
Dude go and check it goes on for days. Right now Aban futures and Aban cash the difference is almost Rs7 and it has been like this for quite some time.
Check Unitech difference of almost 0.5%
Suzlon
etc etc
Arbitraging happens even if you see the Nasdaq futures its at a steep discount compared to cash.
The FTSE 100 the discount in mar futures and current month is almost 50 points close to 1%. As the expiry comes close the difference vanishes that is what I said in my previous post. Many thanks
Check Unitech difference of almost 0.5%
Suzlon
etc etc
Arbitraging happens even if you see the Nasdaq futures its at a steep discount compared to cash.
The FTSE 100 the discount in mar futures and current month is almost 50 points close to 1%. As the expiry comes close the difference vanishes that is what I said in my previous post. Many thanks
The future may trade at a consistent premium/discount to its cash underlying. Also, cash market is adjusted after normal trading hours, but futures market is not.
However, if you were given a cash and future tick chart(without price axis) can you trade the cash based on ticks of futures? By how many ticks will the future lead the cash.
However, if you were given a cash and future tick chart(without price axis) can you trade the cash based on ticks of futures? By how many ticks will the future lead the cash.
- Status
Similar threads
-
-
High Volume stocks live on spreadsheet for Intraday trading
- Started by dillip91
- Replies: 17
-
-
-