welcome to this video on the closing price versus settlement price strategy
and this comes into play very importantly when you're using any type
of indicators or techniques that have to do with calculating the closing price of
bars whether its indicators or intraday for example if you're using floor trader
pivots this would be one of the well one of the biggest places where this could
really dramatically affect potentially where your flirter pivots end up and so
if you're finding that you're drawing for trigger pivots based off the open
high low close running it through the formula and the levels are not working
for you don't dismiss them it might be that you're using the wrong price for
clothes and it could be dramatically off so let me show you an example of that
right now so here we've got the Nasdaq futures so
this was Nasdaq 100 futures this was Friday the 17th of November and if we
come here first of all if we go to the New York clothes these times down below
our California Times so 1,300 is one o'clock California time which is of
course four o'clock New York time so that's the New York lows but we don't
use that for futures so if you're trading stocks you would that for
futures we go to 15 minutes after the hour and there we go
so you notice if down at the bottom or chose the time and that's 1315 if we go
to the very next bar Margaret oh close this and opens back up again 15 minutes
later so 1331 is when that bar closes so these
are just one minute bars you did that to get very precise timing on each one of
these fact if you go to the CMA Simi group.com website in Hue go to the data
section you can pull up these settlement prices and it will give you the open
high low close and settlement for every market every contract and you can see
the numbers there after all is said and done and after all theme
dust has settled so to say well they've got the last price listed as 60309 75
they've got settlement listed as 63 1325 but and by the way the last price
treated in the clothes in the settlement can be three different things so that's
where it gets a little confusing for people sometimes so what is what is the
last price treated the clothes answer is no and the reason for that are the
reason I believe is because if they use the last price tree that somebody could
throw in a you know a last trade at a weird price and really throw off the
stats of everything so it's a good thing they don't do that settlement is the
official number you really want so when you go to the exchange and this is the
best way to get the settlement number is whatever exchange you're trading on go
to the exchange website check out the market that you're trading and look at
the reficul settlement number that again that term is settlement and that's the
number that I would use for my Florida pivots when typing in the close so the
settlement for this day was 63 1325 now the last price is listed on the CME
Group website at 60309 75 and that's because they go over here and if you
there we go and I click on it so if you look at the close of that bar at 60309
75 well dang that's a big difference right
that's three and a half point difference between the last price treated and what
they call the settlement so three and a half points is going to make a big
difference when you plug that in as to how your Florida pyramids plot so make
sure you use the right number in other words if you're using the number on your
chart see here's what a lot of people do they will just go to their chart in me
would use either that number or they would use
they would go to 15 minutes after the top of the hour and they would use that
number 63 1275 not what you wanted to do so it can't depend on your charts this
is the bottom line point do not depend on your charts for the close of the day
you've got to wait until after all is said and done and by the way there is a
whole procedure for how they determine settlement basically several tiers in
the way that they will do it depending on what happens it might be based on
volume weighted average price of the last 30 seconds of trading or the
midpoint of the low bid and the high ask or you know there's a couple different
ways that they will do it in different months different contract months to have
different rules so not no reason to go through all of that bottom line is just
get the REIT number the way to get the read number is to go to the exchange now
let's look at a daily chart so if you're trailing trading off of a daily chart
then of course again whatever the close is on the daily chart that's plotted or
printed on your daily chart that's going to affect your indicators any indicators
that use the calculation of the close of the bar especially so now we're not
talking about affecting the floor trader pivots we're talking about really any
indicators that you use that use the close now so what you want to do is you
want to go to so here's this day the 17th those gotta click on this to get it
again activate the right part okay so there it is same day that we're talking
about and you'll notice that on mine now I'm using kinetic data kinetic data and
they do have as the close 6313 25 which is the same as what is printed at the
CME Group calm for settlement that day so that's good that's what you want I
would encourage you to check that out check that out see if your data provider
who where it is is giving you that number as
the clothes on your daily charts because if it is your gold in and if it's not
well things are going to be a little different that's why sometimes people
say hey how come my indicators look a little different than yours even though
I've got the same settings and all of that it's not the indicator that is
messing you up it is just simply that perhaps the data is just a little bit
different and since the indicators using that data to plot its patterns it will
show up a little different too so double check on that good thing to check and
you know you can ask your data provider and by the way your data provider may or
may not be the same company that provides your charting software where
may or may not be the same company that is your brokerage firm so you've got to
go to the data provider this is a data issue not necessarily a brokerage issue
or a charting software issue all right so that's it might seem like a little
thing and a lot of times it is frankly a lot of times the difference between the
clothes or the last price traded or settlement is not very much so I think
on this day and the ESPY it only was about two ticks off so so that wasn't
too much and there's days when it would be very close so there's other days that
like this day three and a half point difference now that's pretty significant
and yes that will make a difference so if you found this video helpful if you
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