Have a look at the electronice grains, I have been trading soybeans, thay are in a strong uptrend, the margins are great the spread is tight, I like it.
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Why are US index futures so choppy?
- Thread starter scriabinop23
- Start date
Have a look at the electronice grains, I have been trading soybeans, thay are in a strong uptrend, the margins are great the spread is tight, I like it.
yawn...
"It seems all of the US index futures make their big move in instants, then spend most of the rest of the time randomly moving"
they are not "randomly" moving. one traders OPPORTUNITY is another trader's random.
basically, you seem to state (and complain) that they are not usually "trending", they are usually "choppy"
both forms of movement offer trade opportunities, but they appeal to different styles with different trade setups.
my point is that the so called random movement is no more random when it is "choppy" than when it is 'trending'.
you merely need to employ a different methodology to different types of market character/development, or not trade that kind of market.
but to state that a market is random, because u cannot successfully trade its movements is extrapolating from the individual to the aggregate - an error of ego and understanding.
you can't use "trending" strategies to trade a horizontally developing market. you can't use the same strategies for trading the former either, that work on the latter. that would be what many floor traders refer to as "picking up pennies in front of a speeding locomotive"
i PREFER so called "choppy" markets because they suit my trading style, preferences etc.
but i have enough variety of setups that i will use the setups for a trend day ON a trend day, and the setups for a non-trend day on a non-trend day.
the indexes tend to "trend" (develop vertically) only 4-6 days a month.
if you are always looking for a strong "trend", you will either get a lot of "False breakouts" or you will be sitting on your hands a lot
you want trends? trade frigging corn (or for extra volatility- soybeans) for pete's sake. it makes the indexes look like they are standing still
"It seems all of the US index futures make their big move in instants, then spend most of the rest of the time randomly moving"
they are not "randomly" moving. one traders OPPORTUNITY is another trader's random.
basically, you seem to state (and complain) that they are not usually "trending", they are usually "choppy"
both forms of movement offer trade opportunities, but they appeal to different styles with different trade setups.
my point is that the so called random movement is no more random when it is "choppy" than when it is 'trending'.
you merely need to employ a different methodology to different types of market character/development, or not trade that kind of market.
but to state that a market is random, because u cannot successfully trade its movements is extrapolating from the individual to the aggregate - an error of ego and understanding.
you can't use "trending" strategies to trade a horizontally developing market. you can't use the same strategies for trading the former either, that work on the latter. that would be what many floor traders refer to as "picking up pennies in front of a speeding locomotive"
i PREFER so called "choppy" markets because they suit my trading style, preferences etc.
but i have enough variety of setups that i will use the setups for a trend day ON a trend day, and the setups for a non-trend day on a non-trend day.
the indexes tend to "trend" (develop vertically) only 4-6 days a month.
if you are always looking for a strong "trend", you will either get a lot of "False breakouts" or you will be sitting on your hands a lot
you want trends? trade frigging corn (or for extra volatility- soybeans) for pete's sake. it makes the indexes look like they are standing still
Quote from Maverick74:
Let's do the math.
Take the SP 500:
You have:
the SP 500 Futures (big contract)
the ES mini Futures
the SPY ETF
Options on the big SP
Options on the ES mini
End of month options on the SP (EW)
SPX options (cash index)
SPX weekly options (cash)
SPY options (ETF)
OEX options (SP 100, american)
XEO options (SP 100, european)
That's a lot of derivatives on one single contract. Everytime one of them trades, there is an offsetting arb in one of the others. One cannot move with the others not being traded against. This creates friction. Friction slows down velocity and speed. This creates chop by its very definition.
I did not realize that there are this many. Arb must be huge there, it certainly explains a lot.
Mav74 is 100% correct: the SPX is traded from too many directions for smooth movement. Added to that, low volume & volatility make the problem glaringly apparent right now.
When volume & volatility are normal to high, price ranges are wide enough to negate the chop. Currently, price action consolidates and then explodes in brief bursts on program-driven surges. That's the overall tape flow, with VIX flat on the floor and volume anemic at best.
ES is the only mini with any real size, which is due to the myriad of SPX symbols tied together. Tradable, but very difficult by relative comparison to ER and lesser extend NQ & YM
Just have to lower expectations on the ES until volume = volatility rise, which they surely will in time. For several years we thought VIX at 20 was impossible to sustain and VIX at/above 30 was nornal. A new generation of traders view VIX 14 as high. Surely as the sun will rise here this morning, volatility will swing back to the other side of its spectrum sooner than later. Along with that goes ES trading to much more profitable potential than now.
When volume & volatility are normal to high, price ranges are wide enough to negate the chop. Currently, price action consolidates and then explodes in brief bursts on program-driven surges. That's the overall tape flow, with VIX flat on the floor and volume anemic at best.
ES is the only mini with any real size, which is due to the myriad of SPX symbols tied together. Tradable, but very difficult by relative comparison to ER and lesser extend NQ & YM
Just have to lower expectations on the ES until volume = volatility rise, which they surely will in time. For several years we thought VIX at 20 was impossible to sustain and VIX at/above 30 was nornal. A new generation of traders view VIX 14 as high. Surely as the sun will rise here this morning, volatility will swing back to the other side of its spectrum sooner than later. Along with that goes ES trading to much more profitable potential than now.
Quote from whitster:
if you are always looking for a strong "trend", you will either get a lot of "False breakouts" or you will be sitting on your hands a lot
you want trends? trade frigging corn (or for extra volatility- soybeans) for pete's sake. it makes the indexes look like they are standing still
how do you trade ag futures?????
trends would be nice, but i assumed all the futures markets were choppy....
Quote from austinp:
ES is the only mini with any real size, which is due to the myriad of SPX symbols tied together. Tradable, but very difficult by relative comparison to ER and lesser extend NQ & YM
having only tried trading es and er myself, i agree that er is easier. to me it's easier b/c it's more trendy. easier to jump in and out with a profit, even if you're fairly cautious, like myself.