16th May 06 - Let's talk about Taiwan Futures

Today is an meaningful day, full of learning experiences. Earlier in the morning, KOSPI and Nikkei continued to weaken, especially with KOSPI pretty much one-way traffic to the south pole. I sold Taiwan @ 2981 it is likely to be dragged down by it's neighbouring markets, namely KOSPI and Nikkei.

Through my months of observing Taiwan, it's often the market that seemed to be "out of sync" with the other regional markets, meaning the other markets might be selling hard but Taiwan can stand still or even go up. As such, it is often considered one of the weirdest and thus challenging market to trade in. You need to be patient and have firm belief in your position as it takes alot more time for the intraday trend to develop. Once the trend forms and in your favour, hold on to the position and often it's possible to ride the position till MOC (market on close) for maximum profit. For today, I held on the short for 40 ticks before covering @ 2941, a profit of 400 usd. Took more than 3hrs but my patience grew through this trade :)

In the midst of my Taiwan short position, I initiated a long position in Hang Seng @ 16,320. Right in your mind, I know you must be thinking: Isn't it kinda weird to be long in 1 mkt and short in another AT THE SAME TIME ???

Yes, it might be strange but I have my reasons....

Firstly, Hang Seng sold off for more than 500pts on the previous session. I bought as I expect some recovery from that sell-off. Bought @ 16,320 and looking to clear for 50pts profit with a risk of 30pts.

Secondly, as what I said earlier, weirdo Taiwan is often moving in different direction as the other markets. So I can be on opposite sides for these 2 different markets.

Lastly, the expected time frame for the 2 trades are different. As such, I am expecting the Hang Seng long to be done within 30min while Taiwan is to be held till market close which is 4hrs away.

A pity, my Hang Seng long got stopped out @ a loss of 30pts. However at the end of the day, I am still positive due to the bigger profit in Taiwan. I shorted Hang Seng later in the afternoon @ 16,180 to keep overnight as I expect the US market to sell off later in the evening.