December Trading

The FTSE100 Index has been going since 1984.

According to the stats the strongest Days in December for an UP close are:

23rd December = 80% chance

24th December = 81% chance

27th December = 85% chance

The most obvious trading strategy is not for points (as the moves are not huge) but it’s a bet that the market will close the day’s shown UP.

In the UK we can do this using a spread or Binary bet, the odds at 80%+ of it happening are great, If you can get odds of 2R great if not then a simple 1:1 might be OK if 2 of the dates work – obviously the aim is to obtain as much R value on the positions as possible.

I plan to take a position on each day at the market open (8am) with a bet for the market close (4.30pm apart from 24th = early close) to be higher in value than the open.

Traditionally the period between Christmas and the new year is a very bullish period – this is week 52 – it also has a 76% success rate at closing the week higher than it started – so I’ll be placing another bet to profit from that weekly scenario at the open of the market on Monday of the start of week 52 of the year

Will they work?  We’ll find out – historically, the stats say they should, but this could be the year when 20% (ish) fail.

Here’s my strategy, I’m only prepared to lose £100 per trade, so

Risk = £100

Target = £200

If 50% of the trades fail = £400 profit and £200 loss = acceptable for what I’m looking to do

If all trades work then – £800 profit for a weeks work and if all trades fail = £400 loss to the account

I like to use these types of bets because you are not reliant upon a set number of points to achieve your objective and they require very little work, all you do is place your trade at the market open of the day/week in question and leave – it’s either going to fail or work.

There is one other trade during that week but on the S&P500 Index – Tuesday 31st December 2013 to close LOWER – same bet size and risk – the S&P500 has managed to close profitable on that day in only 28.6% occurrences, hence the SELL

I’ll leave comments below as to how these trades panned out

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3 Comments

  1. just to confirm yes this is GAMBLING on the close (positive/negative)

    Whenever you place a trade in the normal sense you are gambling, there’s no difference, that’s why you’re encouraged to use a stop on all trades – because it’s a gamble!

    Reply
  2. Obviously it’s not points I’m after but the actual up/down closing result – the only way to do that (that I know of) is to use a Binary Bet – these are priced 0-100, If successful then the bet closes out @ 100, therefore to obtain my req’d 2R profit, I need the Binary Bet to fall to a level of 33.5 to buy it – this cannot be guaranteed, so the risk I have is that I miss the trade due to price not falling to 33 – this I will have to live with as I’m not prepared to take a position unless 2R is available – risking less than 2R IS gambling
    100-33 = 67 = 2 x 33.5 (risk) = 2R
    I’m in the hands of the betting companies because it all depends upon whether their systems fall to 33.5 on those given days/weeks so that I can place a trade, and obviously the market – if it does not fall then the price of the binary bet will not fall to 33.5 and the trade will be off.
    These bets can be traded live around 5pm the previous day – I’ll set an alarm to trigger @ 33.5 at which point I’ll be notified and place a trade.
    You have to be VERY VERY careful with these binary bets because they naturally price themselves for risk : reward of LESS than 1R!!!!!!

    Reply
  3. Update on 23rd Dec – no trade the Binary bet I needed to trade did not drop to my req’d level so no money made or lost.
    This is the problem with these types of bets and are a bit of a pain.
    We can see that this day worked as planned and the stats suggested – there’s not really a decent product out there that I can find that allows you to trade this strategy perfectly, the odds are well and truly against the punter by the betting companies, but occasionally they do offer the right price at the right time.
    The weekly bet has not been placed either due to the pricing by the betting company – I have a feeling that the weeks planned trades might not even be placed

    Reply

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