Why don't more people trade index futures?
- Thread starter I Trade 4 Money
- Start date
As someone who's traded just about everything at one time or another, here's my take on emini futures:
They are easier to trade than most other futures, tougher to trade than stocks. Commodities are erratic... and too illiquid for short-term trading other than gold, oil & currencies.
Stocks require research to either find what's moving right now or find the next one to "marry" when prior darling goes dead. Very few stock traders stick with same symbol(s) day in & out for five years straight.
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The ES is deceptively easy/hard to trade right now. It is all about volatility, or lack thereof. When intraday ranges average greater than 10pts on average, potential to take 2 - 4 of those points from swings most day is rather simple (never easy).
When intraday ranges hold within 6pt or smaller ranges intraday, it's much harder to hit the profit goal while stops are easier to be taken out. Why price action remains in the stop zone area much longer. Normal to wide-range days move away from initial stops, and give opportunity to profit.
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The only reason I would/do trade the ES is managed money efforts. As an individual trader, the ER with five contracts will outperform ES with twenty contracts most given days. It is far easier to average +$100 daily in ER than ES, because ER intraday dollar per contract range is 200% to 300% that of ES with more numerous price swings to boot.
More volatility is a good thing... usually. The ER offers greater profit potential, but can be spiky & erratic times. It is not an easy ride, but once mastered is the best emini for retail traders profit-wise.
The YM seems to trade much smoother than ES, based on system analysis studies. Less noise in YM than ES... easier to hold stop loss orders on the way to profit objectives.
BTW... there will often be serious slippage orders in ES at 1,000 contracts entered at once. During low volume periods of a session, 1,000 contracts will slip one point or more. If that's when you need to exit, the market won't accomodate your decision.
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Eminis require extreme patience and discipline. When volatility is normal to high, profitable trading seems easy. When volatility is low, impatience and frustration set in. Pressing for daily $$ goals and/or "revenge" trading out of anger emotions wipes out more emini traders than anything else.
Individual traders just learning the game may best look to the YM or better yet, NQ... the smoothest (trendy) emini of all. More volume and open interest than YM as well. Lots of pro traders are there, too.
More experience = skilled traders gravitate to the ER, which tends to eat up beginners early & often.
As for the ES? It offer zero advantages over these three other emini symbols except for size. Any successful ES trader can take their skills, adjust them slightly and do exceptionally well in the other emini symbols.
The reverse is not necessarily true... ES is by far the toughest emini of all right now, solely because of low volatility period in time. When the VIX begins to trend higher (it will) the ES will become much easier to trade.
Best Trading Wishes
They are easier to trade than most other futures, tougher to trade than stocks. Commodities are erratic... and too illiquid for short-term trading other than gold, oil & currencies.
Stocks require research to either find what's moving right now or find the next one to "marry" when prior darling goes dead. Very few stock traders stick with same symbol(s) day in & out for five years straight.
*
The ES is deceptively easy/hard to trade right now. It is all about volatility, or lack thereof. When intraday ranges average greater than 10pts on average, potential to take 2 - 4 of those points from swings most day is rather simple (never easy).
When intraday ranges hold within 6pt or smaller ranges intraday, it's much harder to hit the profit goal while stops are easier to be taken out. Why price action remains in the stop zone area much longer. Normal to wide-range days move away from initial stops, and give opportunity to profit.
**
The only reason I would/do trade the ES is managed money efforts. As an individual trader, the ER with five contracts will outperform ES with twenty contracts most given days. It is far easier to average +$100 daily in ER than ES, because ER intraday dollar per contract range is 200% to 300% that of ES with more numerous price swings to boot.
More volatility is a good thing... usually. The ER offers greater profit potential, but can be spiky & erratic times. It is not an easy ride, but once mastered is the best emini for retail traders profit-wise.
The YM seems to trade much smoother than ES, based on system analysis studies. Less noise in YM than ES... easier to hold stop loss orders on the way to profit objectives.
BTW... there will often be serious slippage orders in ES at 1,000 contracts entered at once. During low volume periods of a session, 1,000 contracts will slip one point or more. If that's when you need to exit, the market won't accomodate your decision.
***
Eminis require extreme patience and discipline. When volatility is normal to high, profitable trading seems easy. When volatility is low, impatience and frustration set in. Pressing for daily $$ goals and/or "revenge" trading out of anger emotions wipes out more emini traders than anything else.
Individual traders just learning the game may best look to the YM or better yet, NQ... the smoothest (trendy) emini of all. More volume and open interest than YM as well. Lots of pro traders are there, too.
More experience = skilled traders gravitate to the ER, which tends to eat up beginners early & often.
As for the ES? It offer zero advantages over these three other emini symbols except for size. Any successful ES trader can take their skills, adjust them slightly and do exceptionally well in the other emini symbols.
The reverse is not necessarily true... ES is by far the toughest emini of all right now, solely because of low volatility period in time. When the VIX begins to trend higher (it will) the ES will become much easier to trade.
Best Trading Wishes
Quote from amiindew:
Can anyone tell me what the average daily range is on the YM?
Also, can anyone confirm that YM's average daily volume is about 100,000 contracts? It seems a bit low, lower than the ER2.
Thanks in advance for any responses
I don't know the average range on the YM but a simple daily chart can give you an idea. As for volume, yes around 100k is about average right now. It's right around ER2 numbers, but the ER2 has been higher in volume than the YM. At $5/tick though, slippage on the YM is not nearly as costly as slippage on the ER2.
Actually I left a million in those figures for commission. And if you are having 1 point slippage trading ES then you need to find something else to trade.
I disagree on YM, I traded YM for a year before switching to ES. YM can be very whippy at times and this allowed my stops to get hit more often than in ES. I have actually made YM spike 10 points on just a 10 lot trade where in ES that would not even caused the ask to get lifted. AS far as size in ES, I have never traded over 40 but when there are 3000 on the ask, I don't see why you would not be filled if you hit it for 1000. The liquidity in ES is what makes it smoother compared to YM.
<i>"And if you are having 1 point slippage trading ES then you need to find something else to trade."</i>
If you clear 1,000 ES contracts thru any time of the day, there will invariably be -.50pt slippage in and also out. That's -1pt slipped on the turn... if your action points come during volume lulls or into program slams.
The ES is liquid, but won't handle 1,000 contract turns all the time with zero slippage. You know that, <b>volente</b>... you're just toying with us all :>)
If you clear 1,000 ES contracts thru any time of the day, there will invariably be -.50pt slippage in and also out. That's -1pt slipped on the turn... if your action points come during volume lulls or into program slams.
The ES is liquid, but won't handle 1,000 contract turns all the time with zero slippage. You know that, <b>volente</b>... you're just toying with us all :>)
Myself, I'm in tune with the ER after having traded it since mid-2003. It used to be much more trendy, now somewhat flighty due to the increased volume. NQ is probably smoothest, MD (S$P 400) would be great at $100 point and in between ER - ES but zero liquidity there.
I don't trade the YM, no interest in that one. I do know people who have struggled with ES, switched to YM and are having solid success.
ES is fine, but imo the toughest emini due to lack of range and sideways buzz. When NQ is going one way and YM the other, ES is torn in the middle because Dow and NDX are major components of S&P. While YM traders and NQ traders see directional tapes in bifurcated markets, ES traders are being pulled apart.
I don't trade the YM, no interest in that one. I do know people who have struggled with ES, switched to YM and are having solid success.
ES is fine, but imo the toughest emini due to lack of range and sideways buzz. When NQ is going one way and YM the other, ES is torn in the middle because Dow and NDX are major components of S&P. While YM traders and NQ traders see directional tapes in bifurcated markets, ES traders are being pulled apart.