Difference between playing ES and NQ

[abenyukh]

I have a, what may be a stupid question, maybe not.

What is the advantage of play ES over NQ or vice versa. Looking at some historical charts, they seem to move almost exactly with each other.

Both go up and down at the same times. Is the only difference the multiplication factor of x50 vs. x20?

thanks-

 

[jester]

I have a friend who trades a mechanical system on the NQ. A while back he and his backer did a significant backtesting of the ES vs the NQ as trading "instruments" trying to determine which instrument would be a better trading instrument *for their mechanical system*.

THey found *for their mechanical system* the NQ seemed to "trend" a little more than the ES and over a period of time their system was more profitable trading the NQ, now all this analysis was completely focused on their trading system so I don't know if this would help. <I> personally have found that I can use wider stops and now prefer to trade the NQ myself and am developing (with the help of my friend mentioned earlier) to create our own NQ system and we are getting close to a tradeable system.

Good luck to you!

J-

 

[Magna]

Quote from abenyukh:

Is the only difference the multiplication factor of x50 vs. x20?

They move with entirely different impulses, dissimilar rhythms if you will, and are often out of sync with each other intraday which provides useful clues. Best suggestion is to simply watch them both very carefully, as playing each has advantages and disadvantages.

 

[abenyukh]

I am very new to this, and today was my first day watching intraday, and the chart looks almost identical for both

 

[wally_]

Quote from Magna:

They move with entirely different impulses, dissimilar rhythms if you will, and are often out of sync with each other intraday which provides useful clues. Best suggestion is to simply watch them both very carefully, as playing each has advantages and disadvantages.

I don't think they are that often out of sync, but I agree that when they are that can be used to trade them.

 

[Magna]

Quote from wally_:

I don't think they are that often out of sync...

Au contraire. To the untrained eye they appear to be usually in sync. But if you watch carefully you will see different shapes on the bearflags, the h&s, one making higher highs while the other doesn't, one making a new low-of-day while the other doesn't, different strength in their rallies and pullbacks, slightly different reactions to government reports, etc. etc. There is almost always quite a few differences, patterns of buying/selling, especially pacing. Or.... one can simply overlay the two charts and exclaim, "Geez, they sure look about the same to me."

 

[wally_]

Quote from Magna:

Au contraire. To the untrained eye they appear to be usually in sync. But if you watch carefully you will see different shapes on the bearflags, the h&s, one making higher highs while the other doesn't, one making a new low-of-day while the other doesn't, different strength in their rallies and pullbacks, slightly different reactions to government reports, etc. etc. There is almost always quite a few differences, patterns of buying/selling, especially pacing. Or.... one can simply overlay the two charts and exclaim, "Geez, they sure look about the same to me."

Timewise (which also means as far as their main intraday direction is concerned) they are more often in sync than not, but I agree that their actions differ in details as pointed out by you which can indeed be exploited.

 

[abenyukh]

Strictly from a swing trading point of view, not Day trading of these futures, do you think that since for the most part they stay in sync that it really doesn't matter which one to trade.

 

[Risk Less]

It seems like there are more aggressive professional scalpers hitting the ES over the NQ. Several traders have commented that they could not compete for the first trade after a number in the ES but they could in the NQ. They also felt like speed was much more important in the ES because of the competition. This is just an observation from a Scalpers point of view.

Risk Less

Quote from abenyukh:

Strictly from a swing trading point of view, not Day trading of these futures, do you think that since for the most part they stay in sync that it really doesn't matter which one to trade.

 

[links]

Quote from jester:

I have a friend who trades a mechanical system on the NQ. A while back he and his backer did a significant backtesting of the ES vs the NQ as trading "instruments" trying to determine which instrument would be a better trading instrument *for their mechanical system*.

THey found *for their mechanical system* the NQ seemed to "trend" a little more than the ES and over a period of time their system was more profitable trading the NQ, now all this analysis was completely focused on their trading system so I don't know if this would help.

J-

Interesting that you mention this Jester. This has been my experience as well. My trend following systems respond much better to NQ than they do to ES. Eyeballing intraday charts is one thing, putting them through rigorous testing w/ multiyear data is another.