Choose trading instrument
- Thread starter eagle941
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Subscribe to all available data for a few months and then "backtest" your trade strategy on them. Next, choose the ones for trading that perform the best via your trade method.
Thus, the answer via your trade method will answer your question better than someone's else answer that's using a different trade method.
Happy Holidays
es vs ym spread. or es vs nq spread. or nq vs ym. good place to start on paper and work out some ideas.
Trading is kind of a long, lonely road of self-discovery.
Asking and answering these type of questions this early on will make no or not much of a difference.
All in due time, you will see and learn and realize for yourself.
I would be careful with the meaning of the words safety and difficult.
All markets are difficult and no market is safe.
Maybe think in terms of liquidity instead of safety. It would be highly unlikely for treasury futures or ES futures or SPY etf to have significant slippage, it's possible but account ending most likely not. On the other hand, thinly trades micro caps are a completely different story.
I personally look for instruments with enough liquidity to get in and out with limited or next to no slippage that still moves decent. Tick size also comes into play if movement isn't as great.
All markets are difficult and no market is safe.
Maybe think in terms of liquidity instead of safety. It would be highly unlikely for treasury futures or ES futures or SPY etf to have significant slippage, it's possible but account ending most likely not. On the other hand, thinly trades micro caps are a completely different story.
I personally look for instruments with enough liquidity to get in and out with limited or next to no slippage that still moves decent. Tick size also comes into play if movement isn't as great.
If you can afford, buy ES tick data for the June contract(this contract is summer months and cause lack of volume much harder to make profits generally- for past 10 years and even better all the contract months, ES is by far one of the hardest instruments to trade but had very good volume. Try to amass like 3,000 min sample sizes, anything under this you don't have enough sample to study.Don't cheap out by getting one minute data as most software's don't have any idea if you got in first then stopped out or reached target on same bar. Also, you will want to learn how to read the DOM eventually as reverting back to mean is often going for smaller but more consistent profits, but very often risk much larger. Other markets are can be easier to trade like NQ, Bund, Eurodollar spreads because of either run and gun-quick sustained moves- or much slower moves but they trend, although very slow Eurodollars it is heaviest traded contract and contract months goes out ten years.
I don't know about "safety", NOTHING is safe and even though to can have decades of experience, you have to always trade knowing if the markets stopped and you are long 50 contracts, and exchanges don't open for a week like 9-11, when they resume you are out $5,000 each contract, you have the funds to pay and recover, just cause the margins are so low, be prepared for the worse.
You will generally find in the beginning that nothing works, but trading is a puzzle based on experience, not so much of what you don't know about the markets as it is what you do know can do yourself in, HAVE to keep an open mind to everything. The smaller the targets, the more perfect your entries have to be, whereas going for homerun profits-entries don't have to be tight. Smaller profits you get your winning % have to be extremely high like 90% or higher cause usually risking more than making, larger profit trading winning % are lower cause trades don't usually end in minutes and many false moves. More the number of trades, greater amount of commissions spent, you be surprised to hear but often small funded traders have to do 100-150% of their accounts to pay for commissions each year, $4 bucks a roundturn adds up, when you might be making 2-3 ticks on average each trade and that is when you are good trader.
I think the easier way to profit is spread trading, once learned you are set for life, it is also difficult to learn, if it wasn't, everyone would be doing it. Many markets are seasonable like crops and animals.
Good luck, I don't know anyone who in first 3-7 years was profitable doing reversion to the mean type systems, you really have to perfect on entries and exits for smaller profit systems, automation is fine but you have to be talented trader first to know what to program. Always remember trend is an idea of the recent past of people who trade heavier who are willing to buy at one or more ticks worse, but there almost always periods of counter moves (dips) you can get in for reversion to the trend.
LOL, what performs best for me in back testing is staying in commodity markets for on to five years duration, when systems give a signal a reversal is due I hedge open profits and dance credit spreads around the position. Fees and expenses add up doing intraday trading, more you do plus volume really adds up and profit per trade goes down, longer you can stay in trades your profit per trade goes up. There is a difference of making 100% return in some stock in 2 years and intraday trader having to make 400% to make same monies cause of all the commissions and fees. Unlike the American way, more is not always better. Everyone seems to forget losses of income of outside jobs and bennies, the years it takes for you to become good in trading, you are losing out if you don't have that 9-5 job, whereas longer term trading you have income coming in, not stuck in a cave working years at becoming good if you go this route.
Happy New Year all.
I don't know about "safety", NOTHING is safe and even though to can have decades of experience, you have to always trade knowing if the markets stopped and you are long 50 contracts, and exchanges don't open for a week like 9-11, when they resume you are out $5,000 each contract, you have the funds to pay and recover, just cause the margins are so low, be prepared for the worse.
You will generally find in the beginning that nothing works, but trading is a puzzle based on experience, not so much of what you don't know about the markets as it is what you do know can do yourself in, HAVE to keep an open mind to everything. The smaller the targets, the more perfect your entries have to be, whereas going for homerun profits-entries don't have to be tight. Smaller profits you get your winning % have to be extremely high like 90% or higher cause usually risking more than making, larger profit trading winning % are lower cause trades don't usually end in minutes and many false moves. More the number of trades, greater amount of commissions spent, you be surprised to hear but often small funded traders have to do 100-150% of their accounts to pay for commissions each year, $4 bucks a roundturn adds up, when you might be making 2-3 ticks on average each trade and that is when you are good trader.
I think the easier way to profit is spread trading, once learned you are set for life, it is also difficult to learn, if it wasn't, everyone would be doing it. Many markets are seasonable like crops and animals.
Good luck, I don't know anyone who in first 3-7 years was profitable doing reversion to the mean type systems, you really have to perfect on entries and exits for smaller profit systems, automation is fine but you have to be talented trader first to know what to program. Always remember trend is an idea of the recent past of people who trade heavier who are willing to buy at one or more ticks worse, but there almost always periods of counter moves (dips) you can get in for reversion to the trend.
LOL, what performs best for me in back testing is staying in commodity markets for on to five years duration, when systems give a signal a reversal is due I hedge open profits and dance credit spreads around the position. Fees and expenses add up doing intraday trading, more you do plus volume really adds up and profit per trade goes down, longer you can stay in trades your profit per trade goes up. There is a difference of making 100% return in some stock in 2 years and intraday trader having to make 400% to make same monies cause of all the commissions and fees. Unlike the American way, more is not always better. Everyone seems to forget losses of income of outside jobs and bennies, the years it takes for you to become good in trading, you are losing out if you don't have that 9-5 job, whereas longer term trading you have income coming in, not stuck in a cave working years at becoming good if you go this route.
Happy New Year all.
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I would suggest to you Futures.
I came into finance with a strong computer background and little financial background.
- Forex is an OTC product so you will need to deal with a lot of issues.
- Stocks is not centralized around a single exchange but rather through a variety of venues and dark pool.
- Futures is fully centralized around 1 exchange.
The only complex thing with future is to understand the rolling process and to back-adjust your data so that you can backtest efficiently. But beyond that you won't have to scratch your head on executions too much and it's the type of instrument that has the largest amount of diversified market (even Gold and Silver can behave differently intraday.)
I've had experience in all the markets above, I'm not randomly saying futures.
Given that you are in the UK, why are you asking these questions here? The difference in time zones alone will present difficulties.