Pros and cons of specializing in one market

J

JangoFolly

I'd like to hear opinions on the benefits and liabilities of trading a single market. This is primarily in the context of intraday futures trading, but others are welcome to comment.

On the plus side I see...

1) Depth of experience with price action in that market (understanding its personality).

2) Focus yields more opportunities

3) Less information flying at you (fewer charts)

4) Shorter day (just trade the hours with most activity)

5) Pay less in exchange fees



On the downside...

1) Opportunities dry up as volatility dries up.

2) A significant change in your market can kill your edge (e.g., bots take over, large increase/decrease in liquidity).

3) Missing great opportunities in other markets


Thanks.
 
I cant speak for others but I like just trading ES. After watching it all day every day for a year I am comfortable with it. Trying to keep track of a portfolio is not my cup of tea.
 
After you get the hang on one market, almost all the markets are the same.

Thus, after a while as you become more experienced, it becomes paramount that you spread your trading across many markets.
 
Quote from TudorJones:

After you get the hang on one market, almost all the markets are the same.

Thus, after a while as you become more experienced, it becomes paramount that you spread your trading across many markets.
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I would agree that as the timeframe increases, the more homogeneous the market action becomes across different products.

However, for short-term trading I think the personality of the specific market is a dominant factor -- how intraday S/R levels form, breakout/breakdown behavior, where the stops are, degree of back and fill, time of day, separating the noise from the meaningful movements, etc.
 
I tend to focus on one market at a time intraday. Right now it's crude light (CL). I find that I can make just as much or more doing this. I agree that the particularities you mention affect different markets at different times in different ways. However, I do keep charts up on other markets looking for major moves.
 
Quote from trader07:

I tend to focus on one market at a time intraday. Right now it's crude light (CL). I find that I can make just as much or more doing this. I agree that the particularities you mention affect different markets at different times in different ways. However, I do keep charts up on other markets looking for major moves.
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Same here. The CL has accounted for about 90% of my trading during the past few months. I only trade it from 9:30 until 2:00, and there are always more than enough opportunities each day for my short-term style of trading. I'm going to try focusing 100 percent on crude for a few weeks and see if I can break through to the next level.

Regarding the questions in my original post, I have some concern that in the longer term I might be doing myself a disservice not to follow the other markets. My system is pretty robust across different products, but I think having a deep understanding of a particular market's personality and peculiarities is crucial.

What's your trading style on the CL (short-term, swing, position, etc.)?
 
Quote from JangoFolly:

I'd like to hear opinions on the benefits and liabilities of trading a single market. This is primarily in the context of intraday futures trading, but others are welcome to comment.

On the plus side I see...

1) Depth of experience with price action in that market (understanding its personality).

2) Focus yields more opportunities

3) Less information flying at you (fewer charts)

4) Shorter day (just trade the hours with most activity)

5) Pay less in exchange fees



On the downside...

1) Opportunities dry up as volatility dries up.

2) A significant change in your market can kill your edge (e.g., bots take over, large increase/decrease in liquidity).

3) Missing great opportunities in other markets


Thanks.
More...


I have specialized in the OEX index for several years now.
Everything you wrote in the plus side column and downside column is like "you read my mind."
I will add that through the years, I have experimented with other indexes and tracking stocks like the SPY, DIA, DJX, & QQQQ.
But like Michael Corleone said in Godfather Part 3,
"everytime I think that I'm out, they pull me back in."

I guess what I am saying is, I have become so familiar with the OEX index and the associated trading systems that work well with the OEX, nothing else even comes close for me.
 
Quote from JangoFolly:

I'd like to hear opinions on the benefits and liabilities of trading a single market. This is primarily in the context of intraday futures trading, but others are welcome to comment.

On the plus side I see...

1) Depth of experience with price action in that market (understanding its personality).

2) Focus yields more opportunities

3) Less information flying at you (fewer charts)

4) Shorter day (just trade the hours with most activity)

5) Pay less in exchange fees



On the downside...

1) Opportunities dry up as volatility dries up.

2) A significant change in your market can kill your edge (e.g., bots take over, large increase/decrease in liquidity).

3) Missing great opportunities in other markets


Thanks.
More...

Pretty much the same for me! I'd also like to add that there's too much homework to do if you focus on stocks. You have to identify key price for every stock you focus on and on top of that have to look at the sector index key price levels, the S&P 500 key price levels, crude price levels (cause I focused on oil stock), so on and so forth. I just like the convenience of focusing on 1 index and a volatile instrument like crude. Right now, it's SPY and USO for me (ES and CL for futures).
 
I am very short-term (minutes/hours). I have noticed with CL that it is very volatile intra-day and often range bound. You will see it make a new intra-day high and then immediately fall to new lows and then back up again. This happens often but there are extreme times (news: e.g., EIA petroleum status report, Wed 10:30am) when the market trends and the overbought/oversold strategy can hang you out to dry. That is why it is important for me to focus on one market--the peculiarities. I "watch" other markets (EUR, GC, C, NQ) for opportunities in these other asset classes. I too know that the characteristics of markets change and I have to be on the lookout for changing and new dynamics in all these markets.


Quote from JangoFolly:

Same here. The CL has accounted for about 90% of my trading during the past few months. I only trade it from 9:30 until 2:00, and there are always more than enough opportunities each day for my short-term style of trading. I'm going to try focusing 100 percent on crude for a few weeks and see if I can break through to the next level.

Regarding the questions in my original post, I have some concern that in the longer term I might be doing myself a disservice not to follow the other markets. My system is pretty robust across different products, but I think having a deep understanding of a particular market's personality and peculiarities is crucial.

What's your trading style on the CL (short-term, swing, position, etc.)?
More...
 
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