Quote from austinp:
<i>"Even one of the best daytraders I know ...a consistant 7 figure guy tried trading futures for 2 months, and gave up saying they are too fast and confusing"</i>
emini index futures trading is based on the stock market, but is very different from trading individual stocks. A few of the key differences:
Scanning for stocks lets a trader apply any high-odds edge to key setups frequently as scans turn up candidates. Emini markets are highly to completely correlated... you cannot find a constant "edge" on demand. Emini trading requires greater amounts of patience to wait for key moments in the market to appear.
Index futures are shoved heavily by program trading, which is somewhat random. That's the greater speed and noise in futures versus stocks. Futures aren't "efficient"... they are noisy due to the homogonous blend of varied stocks and the program arbs that push them around between directional moves.
A quiet day like yesterday's trend move minus the brutal blackbox stuff is very methodical. Unfortunately, we battle the bots far more days than not. Learning to work in front of them or around them is a skill which most stock traders needn't worry about. Individual stocks show cleaner price patterns = movement during consolidations before directional swings break out.
IMO to succeed long-term in futures trading you need a risk/reward ratio of at least 2/1 and preferably 3/1 or 5/1 profit to loss. How is that possible? -$100 or -$150 initial stops in ES seeking +$300 to +$500 per contract gains. How is that consistently possible? Heck, those swings are dime a dozen every day in the ES... often much more. Only need a win ratio of 40% ~ 50% while keeping that 3/1 or greater balance and you're successful.
Scalping eminis is an illusion. Feels good, for awhile. Gives positive biofeedback for awhile. Same with using inverted risk/reward, averaging down = fading trends, etc. Feels good for awhile. Until one day when it doesn't and then game over.
Swing trading eminis either purely intraday or across sessions works. Trying to impose the will of human nature, i.e. scalping, averaging down = fading trends or using inverted risk-reward ratios is what makes us feel good. They are logical choices. They also fail miserably every time, which is precisely why most emini futures traders fail overall.
Learn to do the opposite of what naturally feels good, and you will likewise experience the opposite of what a majority endures.
