ES vs. NQ

[Xela]

Its funny because I was about to say that I disagree with both of these.

Yes, people often do - it's certainly a subject on which I always expect to be in the minority.

I don't find "lack of liquidity" in NQ.

I don't use the DOM (but of course concede that you may have a perfectly valid point there).

I certainly think it's easier to take 5 points from NQ than 2 from ES, overall.

If a trader finds one easier than the other, its simply because he has studied it in detail, and it suits his personality more

Probably, yes. I've traded both but prefer NQ and have certainly studied it more.

but I don't think it means that an entire group of people would be much more profitable trading one or the other.

No, I agree ... but at the same time, I think it's very easy for people reading threads like this to assume that ES is going to suit them better, when this may also not necessarily be true. So I like to put in a word for NQ.

 

[Gotcha]

Just saying that with some plateform you can aggregate several price levels on the DOM.

This won't matter because the CME will only send out 10 levels on each side of the current price. If you use some software that keeps a tab on what the levels were previously, and shows them as you get closer, they might not be accurate at the current moment. As soon as price gets within 10 levels, you get the new update on what the depth is at that level.

Lets put it like this. With NQ, each tick is $5, so 10 levels is a $50 move per contract before you have no idea what the liquidity is. For ES, each tick is $12.50, so 10 levels is a $125 move per contract before you have no idea what the liquidity is. I'm not saying any of this is important to most, maybe to some, but it still is fairly big difference.

 

[Gotcha]

I certainly think it's easier to take 5 points from NQ than 2 from ES, overall.

I would say its quickier. If you're always on the right side of this move, then yes, it would be easier, but if you're on the wrong side, then it would be easier, and faster, to lose 5 points!

Probably, yes. I've traded both but prefer NQ and have certainly studied it more.

I have studied both as well. What I saw was that the "jittery" motion of the NQ made me anxious. Some might be able to use it as their edge, but for me, it was the opposite. I can certainly see though how some might flourish in this environment, and with the proper use of limit vs. market orders, there might certainly be a good trading plan to take advantage of this type of action.

No, I agree ... but at the same time, I think it's very easy for people reading threads like this to assume that ES is going to suit them better, when this may also not necessarily be true. So I like to put in a word for NQ.

That is very true. By me stating that the NQ has issues, it would appear that I'm saying the ES is easier, but this certainly isn't the case at all. Truth be told, I use both as I find an incredible amount of correlation and often, the NQ sets up very nice price action that allows one to take an ES trade.

 

[Overnight]

That is very true. By me stating that the NQ has issues, it would appear that I'm saying the ES is easier, but this certainly isn't the case at all. Truth be told, I use both as I find an incredible amount of correlation and often, the NQ sets up very nice price action that allows one to take an ES trade.

ES, YM and NQ generally follow each other, yes. Generally.

 

[Overnight]

There are many reasons, including:
1. Liquidity / volume is much higher in ES. Yesterday, about 8 times higher in ES; far more, when you also consider SPY vol vs QQQ vol;
2. Partly to account for #1, margins are generally higher on gross vol of contract for NQ;
3. More impt: QQQ/NQ are 100 stks, vs 500 for SPY/ ES, providing not only more liquidity, but more diversification;
4. AAPL itself represents more than 10% of QQQ/NQ. The FANG stocks + MSFT are close to 40% of QQQ/NQ. So trading a few options on FANG may be provide better margin/risk, vs NQ. But not better diversification.

What does any of that have to do with trading a straight NQ future? Just the future. An apple for an apple?

I am not talking about hedging with options or stocks or any of that complicated stuff. I just mean straight ol' futures. That was the gist of my point in my original post.

 

[comagnum]

True - they have close correlation - at times, in the shorter time frames - over time the NQ waves are nearly twice that of ES, and the NQ is spending less time in congestion. Nothing wrong with trading the ES - whatever works for you, just surprised that nearly every aspiring new trader is trading only the ES. Chart is 120 min covering last 2 quarters.

 

[FLfutures]

What does any of that have to do with trading a straight NQ future? Just the future. An apple for an apple?

I am not talking about hedging with options or stocks or any of that complicated stuff. I just mean straight ol' futures. That was the gist of my point in my original post.

My point was not for hedging, etc, but to point some of the fundamental reasons why ES has some advantages. If nothing else, more players, more money, etc., in ES, means at various times, there will be an advantage in more traders/money being on the wrong side -- assuming you are not on that same side.

The past few years with Central Bank ZIRP, QE, etc., have so distorted markets, that individual stocks, no less NQ/ES, all tend to move together, and in similar ratios. That is the prime reason why hedge funds, indiv stk pickers, etc., have performed so poorly the past say 5 years.

But Central Bank policy is in the end game, IMO, and soon the markets will return to more normal/rational action. When that happens, I'd prefer to be trading an ES, rather than an NQ, where 5 stks represent 40% of the movement.

 

[Overnight]

My point was not for hedging, etc, but to point some of the fundamental reasons why ES has some advantages. If nothing else, more players, more money, etc., in ES, means at various times, there will be an advantage in more traders/money being on the wrong side -- assuming you are not on that same side.

The past few years with Central Bank ZIRP, QE, etc., have so distorted markets, that individual stocks, no less NQ/ES, all tend to move together, and in similar ratios. That is the prime reason why hedge funds, indiv stk pickers, etc., have performed so poorly the past say 5 years.

But Central Bank policy is in the end game, IMO, and soon the markets will return to more normal/rational action. When that happens, I'd prefer to be trading an ES, rather than an NQ, where 5 stks represent 40% of the movement.

None of that matters to me if I wish to trade an intraday range of movement.

And that is what we are speaking about here... The range of movement in an intraday position. Who the hell cares what the Zeitgeist uber alles banks are doing? What were they doing last year to affect movement? Nobody knew. What are they doing tomorrow? Nobody knows. How will that affect my NQ or ES trading? It WON'T!. Because people trade ES based on technical analysis of the charts, yes, yes? There has been news forever ago. There will be news forever again.

I thought I read an article not too long ago that stated that the S&P index was out of kilter with today's US economy. It was "imbalanced" or something. It was becoming "less relevant".

Not sure what that means, but it is worth keeping an ear out for.

 

[Scataphagos]

Curious. Why do so many newer (and maybe intermediate?) folks insist on daytrading the ES, rather than the NQ?

The NQ seems to offer great advantages over the ES when it comes to risk v. reward.

ES per tic = $12.50
NQ per tic = $5

Trading hours are exactly the same, and daytrading margins are nearly the same as well (at least through brokers I have looked at). Both instruments are 4 tics per point.

The NQ has much better price action than the ES, on average. And trading futures is all about price action. So what is the reason ES is so popular?

It's been a long time since I traded the NQ and Value Line, so I'm talking from memory. Gomen if I misspeak....

The value of one contract of NQ is ~$20K. The value of one contract of ES is ~$100K.... so you'd have to play 5 contracts of NQ to have the same $$ value exposure of 1 ES. And of course, you'd have to pay commissions/fees on 5 contracts instead of 1.

 

[propwarrior]

Curious. Why do so many newer (and maybe intermediate?) folks insist on daytrading the ES, rather than the NQ?

The NQ seems to offer great advantages over the ES when it comes to risk v. reward.

ES per tic = $12.50
NQ per tic = $5

Trading hours are exactly the same, and daytrading margins are nearly the same as well (at least through brokers I have looked at). Both instruments are 4 tics per point.

The NQ has much better price action than the ES, on average. And trading futures is all about price action. So what is the reason ES is so popular?

I believe ES is traded more by retail for 2 main reasons. Firstly retail brokers actively promote $400 day trade margins on ES (which is insane by the way, 8 point move and you have wiped your account lol). Secondly retail traders are very susceptible to herd mentality, so as it has been the instrument of choice on forums and twitter you will see new lemmings start off trading that.

As for NQ having better price action than the ES, this makes no sense. How can price action be better or worse? Price is what it is. I suspect you may be talking about volatility but better/worse hardly applies to this, some strategies thrive in low vol environments, others in high. What do you mean trading futures is all about price action? doesn't make any sense