| Market Hours Strategy | ASX 24 night session (~5:10 PM previous day to 7:00 AM Sydney) prices in offshore US/European moves; recalculate overnight SPI 200 Keltner levels and flag instruments sitting near channel boundaries before the day session opens • 9:50-10:30 AM Sydney - the SPI 200 day session opens 9:50 AM and the ASX cash market opens 10:00 AM via a staggered auction; wait for channel levels to stabilise once the overnight gap is absorbed • 10:30 AM-3:00 PM Sydney - cleanest window for SPI 200 breakouts and pullback entries; watch Asian-session catalysts (China data, regional indices) that drive Materials and Energy names • 3:00-4:30 PM Sydney - ASX cash closes 4:00 PM (closing single-price auction ~4:10 PM) while the SPI day session runs to 4:30 PM; judge whether breakouts will hold into settlement and manage intraday risk |
| Asx Specific | 20 EMA, 10 ATR, 2.0 multiplier works well on the SPI 200; channels are typically ~120-300 points wide on daily/swing timeframes and much tighter intraday • For high-beta single names (e.g. BHP, FMG and other resources/mining stocks) consider a 2.5 multiplier - individual stocks swing wider than the broad index • Exchange-traded single stock futures have limited liquidity outside a handful of large-caps; Australian retail more commonly takes leveraged single-name exposure via CFDs (ASIC retail cap 5:1 on shares) or via ASX equity options, so treat single-stock Keltner signals as educational unless liquidity is confirmed • SPI 200 = A$25 per index point (~A$215,000 notional at 8,600); Mini SPI 200 = A$5 per index point (~A$43,000 notional at 8,600) and suits smaller retail accounts - always size off the correct multiplier • SPI 200 positions held overnight (and across the night session) attract SPAN-based initial margin set by ASX Clear (Futures) plus broker add-ons; ensure margin covers both day and night sessions |
| Asx Commodities | ASX agricultural futures (Eastern Australia Wheat, WA Wheat, Feed Barley, Canola, Sorghum) are the genuinely domestic commodity contracts; liquidity is thin and seasonal, so use wider multipliers (2.5-3.0) and extra confirmation • ASX Australian electricity futures trend strongly around seasonal demand but are specialist contracts - prefer a 2.5+ multiplier and reduced size • There is no deep retail gold/crude/natural-gas futures market on ASX; Australian retail typically accesses these via CFDs (ASIC-regulated, leverage capped) or international futures such as CME through an international broker - Keltner mechanics are identical but flag the execution venue • ASX 24 3-Year and 10-Year Treasury Bond futures and 90-Day Bank Bill futures are highly liquid but yield-quoted and more institutional; Keltner can be applied, but the price convention differs from equities • ASX 24 derivatives run day and night sessions (almost 24 hours); the night session often shows the cleaner trend as it reflects offshore flow |
| Currency Futures | AUD/USD is one of the world's most traded pairs and a commodity/risk proxy; an ASX 24 AUD/USD future exists but most retail FX is OTC/CFD - a 1.5 multiplier suits its typical volatility • AUD/JPY, AUD/NZD, EUR/AUD and GBP/AUD track global risk sentiment and rate differentials; standard 2.0 multiplier • RBA cash-rate decisions (the Board meets eight times a year) plus commodity and China headlines can cause sudden AUD channel violations - reduce size or stand aside around announcements |
| Tax Implications | Australia has no securities transaction tax equivalent to India's STT; costs are brokerage plus ASX 24 / ASX Clear (Futures) fees, and financial supplies are generally input-taxed (no GST on the trade itself) • If the ATO regards you as carrying on a business of trading, profits are ordinary (revenue-account) income taxed at marginal rates and losses are deductible; passive investors on capital account may access the 50% CGT discount on assets held over 12 months, though that discount typically does NOT apply to active futures trading • The Taxation of Financial Arrangements (TOFA, Division 230) rules can apply to certain taxpayers and financial arrangements - relevant mainly to larger entities or by election • The Australian tax year runs 1 July to 30 June; keep records of channel parameters, entries, exits and holding periods for the ATO. This is general information only - consult a registered tax agent |
| Institutional Flow Correlation | Australia's ~A$4 trillion superannuation pool is the dominant domestic institutional force; large allocation and rebalancing flows can support the SPI 200 at lower channels and drive breakouts at the upper channel • Offshore investor sentiment - especially around the AUD, commodity prices and Chinese demand - heavily influences Materials and Energy; watch the SPI 200 night session as a read on foreign flow • S&P/ASX 200 quarterly reviews (March, June, September, December) can produce flow-driven moves as passive funds rebalance; channels may compress or expand into rebalance dates • Unlike India there is no published daily FII/DII split; instead confirm Keltner breakout direction using sector flow, the AUD, and overnight SPI 200 behaviour |
Both are volatility-adaptive channels, but they measure volatility differently. Keltner uses ATR (Average True Range) for channel width, creating smoother channels. Bollinger uses Standard Deviation, which can be more reactive and create jagged bands. Keltner is often preferred for breakout trading due to smoother signals, while Bollinger is popular for squeeze identification and mean reversion.
The common defaults are: 20-period EMA for the middle line, 10-period ATR for the volatility measure, and 2.0 multiplier. These settings work well for many instruments on daily and hourly charts. You may need to adjust for specific instruments - higher multipliers (2.5) for volatile instruments like BHP, lower (1.5) for calm instruments like AUD/USD.
Waiting for a close beyond the channel is strongly recommended. Intraday spikes often touch the channel and quickly reverse. A close confirms that price ended the period beyond the channel, showing conviction. Some traders wait for two consecutive closes for extra confirmation, which reduces signals but improves quality.
The middle EMA is very useful: it shows trend direction (upward slope = bullish), acts as dynamic support in uptrends (pullback buy zone), acts as dynamic resistance in downtrends (pullback sell zone), and provides conservative exit points. Many traders use it for pullback entries after an initial breakout establishes the trend.
Common reasons: (1) Trading in ranging markets - add ADX > 25 filter, (2) Not waiting for close - enter only on bar close, (3) Low volume breakouts - require above-average volume, (4) Wrong parameters - backtest to find optimal settings for your instrument, (5) ATR contracting at breakout - prefer stable or expanding ATR.
More volatile instruments (BHP, Crude Oil) typically need higher multipliers (2.5-3.0) to avoid whipsaws. Less volatile instruments (Gold, AUD/USD) work with lower multipliers (1.5-2.0). Backtest different combinations: multipliers from 1.5-3.0, EMA periods from 15-25, ATR periods from 7-14. Optimize for profit factor, not just total return.
A squeeze occurs when Bollinger Bands move inside Keltner Channels, indicating extremely low volatility. This compression often precedes explosive moves. To trade: add both Bollinger (20/2.0) and Keltner (20/1.5) to your chart. When Bollinger is inside Keltner, prepare for breakout. Enter when squeeze releases (Bollinger expands outside Keltner) in the breakout direction. Use Keltner channel as stop.
Use higher timeframe (daily) Keltner to establish trend direction. Only take lower timeframe (hourly) signals that align with daily direction. For example, if daily EMA slopes up and price is in upper half of daily channel, only take long breakouts on hourly. This filter dramatically improves signal quality. Best trades have alignment across daily, hourly, and 15-minute.
Several options: (1) Opposite channel - captures full moves but may give back profit, (2) Middle EMA - conservative, captures roughly half the move, (3) ATR trailing (2x ATR from highest point) - lets profits run in strong trends, (4) Hybrid - exit 50% at middle line, trail 50% with ATR. Choose based on market conditions and your risk tolerance.
ADX is essential - filter for ADX > 25 to avoid ranging markets. RSI can confirm momentum direction (above 50 for longs, below for shorts) and warn of extended conditions. MACD confirms momentum with histogram expansion. Volume confirms participation. Pick 1-2 complementary indicators, not all. Common combinations: Keltner + ADX + RSI, or Keltner + ADX + MACD.
Adaptive systems adjust parameters based on conditions. Volatility-adaptive: Multiplier = Base × (1 + 0.2 × (ATR Ratio - 1)), widening in high vol, narrowing in low vol. Trend-adaptive: EMA Period = Base × (30 / ADX), shorter in strong trends. Regime-based: different parameter sets for trending (ADX>30), transitional (20-30), and ranging (<20) conditions. Backtest any adaptations thoroughly.
Key elements: (1) Correlation management - shared limits for correlated instruments, (2) Portfolio heat tracking - total risk across positions, reduce new entries when heat >10-15%, (3) Drawdown controls - reduce sizes at 10% drawdown, stop new entries at 15-20%, (4) Rebalancing - trim outsized winners to target allocation, (5) Sector limits - max 40% in any sector. These rules prevent catastrophic losses.
Current research directions: (1) Alternative ATR calculations (EMA-based, median TR), (2) Alternative centerlines (Hull MA for less lag, VWAP), (3) Hybrid channels (Keltner-Bollinger average), (4) Volume integration (volume-weighted ATR, volume-confirmed breakouts), (5) ML enhancement (classify breakout success, dynamic parameter selection). All require rigorous backtesting with in-sample/out-of-sample validation.
Key components: (1) Keltner calculation - EMA using exponential weighting, ATR using Wilder's smoothing, channels at EMA ± ATR × multiplier, (2) Signal detection - require new breakout condition (current bar broke, previous didn't), (3) Position sizing - risk-based calculation, (4) Order execution - limit orders with market backup, (5) Edge cases - warm-up period, gap handling, missing data. Validate calculations against known platform values.
quarterly futures expiry days have unusual price action due to rollover activity and gamma effects. Keltner signals are less reliable. Options: (1) Reduce position sizes 50%, (2) Widen stops by 25%, (3) Require stronger confirmation (two closes, ADX > 30), (4) Avoid trading Keltner entirely on expiry day. Similar caution applies to major event days (RBA decision, Federal Budget, reporting season).
Full guided lessons, quizzes, and a complete strategy library for the Australia market. One-time purchase. No subscription, ever.
Get Australia access →