debono, I agree 100% (sad for both of us, probably! :-))
After hours trading - if a day trader, holding a position overnight is very high risk; if day trading xjo futs, even higher risk - ESPECIALLY if using close stops and multiply the risk by 400% if using a market maker like CMC or IG. The lack of volume on xjo after hours makes it kimakaze territory, because stops are sought out and hit, simply because they can and it saves the banker (CMC, IG) from paying out a successful trade. And, if you're trading against the house (CMC, IG, etc), then remember that they know your position AND stop. Its like showing your hand to the rest of the poker table before you raise the bid. Tell me they aren't going to hit your stop overnight - it like leaving a $50 note on the pavement in front of Macquarie Bank main entrance. Its sure not going to be there in the morning. In fact, I'll even go so far as to say, on my experience, that putting on a close stop overnight with CMC or IG is like giving them money. It goes against conventional practice, I know, but stops with IG or CMC need to be worked out on a VOLATILITY basis only. If the market has been moving 100 points in a night session lately, then make your stop at least 150-200 points away. It will still temp them but they might have a bit more trouble explaining it when its hit. The practice is called 'stop running'.
The other thing you have to understand is the market makers way of interpreting stops. As a trader you probably think your stop will be hit when theres a previous trade at that price. Not so. For IG and CMC, a stop is hit when the spread encapsulated the price at which you've set your stop. So, if you've got your stop at 100, and the spread is 50pts - say 99-149, then your stop has been hit even if the most recent sale was, say, 110 for a short or 155 for a long. And you know what the spi spreads can be like at night.
i ceased using stops and spend many hours in front of the screen because my stops were hit so often. Then I started only trading futs markets where the cash market was open. A much better system. Alternatively, you can choose which session your stop applies to when trading the real futs. Interesting how often a stop might be hit at night but wouldn't have been hit during the day session.
Hope this rant help. Its an old rant for me. Remember, the futs are zero sum game, and new traders are just fresh meat to the old hands, many of whom work their private accounts while employed by the brokerages I suspect. They love teaching you the hard way - its bit like bending over in the shower in goal. And forget paper trading - 90% of making money on the indexes is learning to think while you're in hyperarousal state (vomiting, hyperventilating and crapping yourself all at once), and paper trading can't tell you about that. cheers!
(20min delay)