<i>"But how many futures traders are really holding for more than ten minutes? I've been trading the ES for about 6 months, and it keeps getting harder every day.
The ES has become a very hard instrument to trade. It is obvious from the speed of the moves that it is computer driven. I am concerned about my ability to compete going forward, especially when I hear about Chicago area arcades closing up. A lot of those people were well trained."</i>
The ES has changed noticeably in recent past. It used to make smoother moves than ER, they seem to have reversed roles. Lately if the ES is making a move from 1450 to 1470 and the long entry signal is 1452, price action commonly does the following:
1452 to 1453.25
pulls back to 1451.25
rises to 1453.75
pulls back to 1451.75
rises to 1454.25
pulls back to 1452.50
rises to 1455.00
pulls back to 1453.00
pops to 1458+
repeat the process
That type of repeated back & fill at congestion points makes it extremely hard to pull a couple handles out consistently. You never know if the trade is actually working, or stalling out.
Meanwhile the ER and NQ break out of the same congestion patterns and move to their next stage without incessant back & fill behavior. All last month I watched the ER break and run from same exact entry points that ES would just stall out on and chop, chop, chop while going nowhere. ER made $300 to $500 per contract swings, ES churned inside a $200 per contract range.
Similar symbols, very different behavior right now at this moment in time.
The ER will consistently fill 10 contracts (or more) and NQ twice that (or more) with acceptable slippage. Not many retail traders require more size than that per trade.
Computer programs are visibly driving index markets in different ways than ever before. But they have not ended all or even most opportunity for discretionary traders.
We can opt to work a different emini symbol than ES. ER and NQ are perfectly fine, as is the MD (S&P 400) for 1 - 2 lot traders.
We can opt to trade a different market entirely such as crude oil, corn or currencies.
We can lengthen our timeframe of trades to 10min ~ 15min chart and seek wider swings outside the noise. The ES still moves between 15 ~ 30ish points intraday more often than not. Backing off the smaller moves and targeting the big chunks is an adjustment, but opportunity is there.
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Financial markets exist to provide liquidity. Liquidity is created solely thru price movement. If there is no movement, players cannot be attracted to the game. No players for computer bots to profit from = cannibalization until only a few bots exist in the end.
This extrapolation is no more sensible or realistic than the same old mantra of +10% monthly profits on $10,000 balance = a billion zillion dollars in five years. Reality is, a peak in the growth curve always limits upside. Same thing with current bot fixation. There is a peak to how much markets will tolerate automation before liquidity will no longer support one more successful bot.
Meanwhile, markets moving from A to B or B to A will always offer us opportunity. It may take adaptation, compromise and change on our parts. But, opportunity will likewise remain.
