Because only ES?
- Thread starter trader1974
- Start date
Interesting. Any idea why you 'suck' at ES, but not at CL? What would you say are the main differences between the two?
I dabbled in CL for a few months years back now, but I never got a good grasp of, so went back to ES. I feel ES is more respective of levels and in a way more technical and well behaved - while CL was more of a wild beast where accurate levels didn't exist. More like zones at best.
I have a hunch that NQ is somewhat similar to CL in that manner.
Small/micro caps, crypto, exotic derivatives. Much more edge. ES is close to damn perfect. Big players trade for scratch rate instead of winrate
I won't argue against this, but assuming directional (day) trading are you then saying these instruments have cleaner moves and more direction?
Not sure what you mean by perfect.
If it was perfectly efficient I would assume there wouldn't be trends or significant moves on a daily basis, i.e., just small random fluctuations around an established mean.
Clearly this is not the case. For the last few years ES have offered tremendous opportunities on a daily basis.
I'm not talking retail gambling strategies here. Efficiency is LOB games and arbs vs other asset classes e.g. basis trades, spreads, even skew and term structure is moving with spot so perfectly that only the best can find edge here.
If you want to measure how efficient a market is for directional gambling, do a simple test for autocorrelation on your timeframe. The more autocorrelation, the better the trending behaviour and the lower, the more mean reversion. (check investopedia)
If you are the classic 2$ halfturn 5 lot ES breakout trader you will find much better markets to throw your money at. The ES is the centerpoint of almost all equity driven portfolios, ETFs, stat arbs, vol arbs, quants, HFTs. It's arbed to death.
I can only assume that 'retail gambling' was what the OP had in mind.
Examples? I'm seriously interested in adding new markets to my portfolio.
ES generally isn't a breakout market.
You say that like it's a bad thing.
What does a directional day trader / retail gambler need?
1. Direction/volatility/range
2. Liquidity to get in and out
As far as I can tell ES fulfills both these conditions.
Summer doldrum is here and the ranges are narrowing - but still some loose change around to pick up if you know how ES moves, typically. 
See, that's what I'm talking about. As a trader you generally want to be the bank. Either you pick off dumb orders or you want to PROVIDE liquidity for the other guys at YOUR prices.
The last thing you want to do is trade in an ultra liquid market where everyone and their moms is fighting over a couple of ticks of edge. It's just too much competition.
A retail gambler wants liquidity because he doesn't get screwed over that hard when he presses the panic button to get out. But when you want to make consistent dosh YOU have to be the guy who provides the exit for these morons...and that's what the entire street is doing.
That's the reason for HFT and payment for orderflow. They want to be the first in queue on every tick when a ToS client knocks on the door begging to cut the loss. The other guy who bought the order knows what the clients price is and either leans on it or trades against it because he knows his price is trash.
Do you want to compete against them? No, you don't. You want to go where these fucks are not lurking and post a price that you know you can hedge at an edge or trade against a ridiculously priced stale order.
That's how you grow your account. Know the correct price of the assets you are trading, post bids below, bids above and pick off the morons who place wrong orders.
I've seen guys who threw 300 cars of ZN at the screen and battled for queue position with 1000 of ZFs after a lousy year of sitting next to a spreader/market maker. I have yet to see a single guy who makes consistent money day in day out trading the ES outright with more than a 50lot.
Always remember: More size, lower commission, better deals, better infrastructure -> scaling business.
Small size, high commissions, shit infrastructure -> sooner or later you die
A couple of ticks of edge?
You seem to assume that every major player participating in liquid index futures knows what they're doing. They don't.
I know firsthand a smaller fund which operates in index futures trading some size which really have no clue what they're doing (and yes - this fund even uses active stop loss orders in the market which allegedly are frequently hit).
How do I know this? I've seen their performance reports and read their stupid tweets.
I don't really see my trading as competing with anyone. And particularly so in a market like ES where there's so many participants involved for various reasons and with different motives. I just want to buy low and sell high. Rinse and repeat.
Even if this market is ultraliquid because of all the arbitrage and program-trading and hedging activity - it still moves very well up and down. And that's where the profit is made for a directional gambler.
Well, to be fair, who said anything about competing against HFT? Obviously, that's just stupid.
Yes. Hard to disagree with this. Humbly, I'd say this is just as relevant on ES. But in order to know where you should transact you obviously need to have a clue about where it's smart to transact and where it's not.
There are a few main templates which keeps repeating themselves day after day.
Well, personally, I've never seen anyone consistently making money day in / day out trading whatever.
Bottom line - I don't fully agree with your criticism, but I'm sure there are much easier ways to make $$$ than day trading ES. It certainly aint easy and I've taken forever to get to where I'm at the moment.