Asset re-allocation trade

Some examples of ideas to trade found in
Secrets of the Trading Pros: Techniques & Tips that Pros Use to Beat the Markets (Wiley Trading)

Page 38, in reference to large institutional asset re-allocation trades hitting the market:”Every half hour we would get the order to buy a large quantity of S&Ps, and as I would quietly place my orders into the equity pit, I would notice selling pressure in the bonds. The more I did those asset allocation orders, the more I realized that the opportunity existed for the sharp trader to capitalize on the aberrations created by the size….Often I’ll notice that the orders stop at approximately the same time that the European fund managers are leaving for the evening. Although they all have operations that run around the clock, a large portion of any such order is completed by the close of the European bourses (exchanges)…Identifying the source of the transaction is important because it gives the trader an indication of when the order might be complete. A European or Asian order is usually 75 percent complete by the time Europe closes, around 11 AM Chicago time. A domestic order, however, will ocntinue into the bond close at 2 PM US central time, and at times will continue electronically well past the closing bell.”

Page 39, in reference to asset re-allocation trades involving currency markets: “European fund managers will buy U.S. equities as the dollar weakens, hoping for two possible scenarios: a rising stock market with the dollar under control or a stagnant stock market coupled with a rally in the dollar.”

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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