this is the best post on this...
Why focus on only one instrument while learning?
- Thread starter sheepsucker
- Start date
focus on several instruments, this is the best way to trade, dont limit yourself
I think specializing was counterproductive for me. I tried specializing in CL and then ES, and couldn't get a good feel for the price and volume action. But I find if I'm looking at a CL, ES, USD/EURO, and GC chart simultaneously I get a much better picture of what's the dog and what's the tail.
This is the correct advice.
I have an executive and professional background in futures markets. In a corporate setting you have access to much that is necessary to propel your progress in this business. Raw amateurs coming to ET have access to nothing. Reading books and trying to pick up something from ET also does not take you very far.
So learning one market is the best option for the lone amateur. Despite much of what you may read at ET, if you get to know one market expertly you will find that knowledge transfers to other markets later. If you devise or adopt a reliable methodology which you get to apply successfully in one market, that transfers to other markets later.
Next is the certain death of lost opportunity practised by amateurs. Some set ups here and there will not make you rich. A market offers a maximum number of points open to close, as defined by its gyrations. A gyration is a swing up followed by a swing down (or vice versa). The sum of all the swings is the total points the market offers in one session. That is your target cornucopia for a daytrading menu.
There's a crucial difference between "monitoring" various markets (ie. intermarket analysis) and "trading" various markets. Since there will always be some correlation between two or more markets, it's plausible to follow other markets for cues you might have otherwise missed. For example, I periodically glance at the bond market as well as major commodities to see if inflation is rearing its ugly head.
The biggest folly among novice traders is this perennial illusion of becoming the jack of all trades when in fact most of them end up as masters of none. My advice is simple: Get to know the market you trade like the back of your hand AND keep it simple.
I understand what you're saying, but let's look at gold, oil, and copper for an example. Now typically any move that shows up in one will show up in the other two - maybe 70-80% of the up minutes for one are up minutes for the others too. Obviously over a longer horizon those correlations don't hold so well. But there are distinct similarities in the ticks.
Now look at yesterday, at about 9:40 NYMEX time (roughly, I'm doing this by memory), there was a huge downward move, 2 or 3 minutes long, in copper. I have no clue why, but it happened. The same thing showed up in gold and oil, but to a much smaller degree. This move was very tradable in copper, and you probably would have gotten $500/contract or something if you did a decent job. That could easily make your week right there. Now, the same move also showed up in gold and oil, but maybe 1/2 to 1/3 the ticks and much harder to see where to enter and exit. You'd be lucky to get $150 per contract there and you might screw it up and actually lose money.
Now, watching the charts it was obvious at the time that copper was the dog and gold was the tail. Given this, would it make sense to trade the move in gold rather than in copper just because I'm specialized in GC? My answer: it wouldn't. Specialization is for insects
I have learned that all markets have it's own personality, yes they all have chart patterns, but IBM does not trade like DELL even if both deal within same sector. Just like ES does not trade anything like Dow.
When everyone starts, markets are fun and exciting, more markets, more trades, we are taught more is better, not so when trading. If your knowledge and discipline allows you to make profits, eventually trading becomes quite boring, this when you have figured out you have attained a good degree of profiting from your craft.
I now wished I had learned more from the experienced when I was just starting. Instead of looking at more markets and getting more signals, less markets and learning what to do AFTER I got into a trade is much more important. Anyone can get into a trade, but you have to identify what the price is saying for you to profit.
Some instruments do have a limit of size you can push thru without undo slippage, whereas the ES can handle 500 contracts pretty easily, whether you can breath is another thing after entering.
When everyone starts, markets are fun and exciting, more markets, more trades, we are taught more is better, not so when trading. If your knowledge and discipline allows you to make profits, eventually trading becomes quite boring, this when you have figured out you have attained a good degree of profiting from your craft.
I now wished I had learned more from the experienced when I was just starting. Instead of looking at more markets and getting more signals, less markets and learning what to do AFTER I got into a trade is much more important. Anyone can get into a trade, but you have to identify what the price is saying for you to profit.
Some instruments do have a limit of size you can push thru without undo slippage, whereas the ES can handle 500 contracts pretty easily, whether you can breath is another thing after entering.
Horses for courses....
At the gate ES, winner from previous outings 9.45- 11.00...sprinter
At the gate E6, winner from 6pm to 5am...cannot handle traffic after 12noon...notorious slow runner...middle distance runner
At the gate ZB...slow out of barrier..has surprising speed when needed...good and reliable over long distance
Get the drift...same animal..different breed
NiN
At the gate ES, winner from previous outings 9.45- 11.00...sprinter
At the gate E6, winner from 6pm to 5am...cannot handle traffic after 12noon...notorious slow runner...middle distance runner
At the gate ZB...slow out of barrier..has surprising speed when needed...good and reliable over long distance
Get the drift...same animal..different breed
NiN