Recommendation 5: Do not scalp ES. If you want to scalp, scalp 6E or CL or NQ etc. Can you see the difference between these contracts which make one contract worthy of scalping and another not? Think for few minutes before reading further!
Time to tell you. In spite of having a good education and 3 yrs experience trading FX, I was stupid not to recognize this simple difference between contracts for months. I got too involved in the churns of the market and didn't spend sufficient time thinking about the differences among the contracts. Turned out to be very costly oversight for me.
The difference is tick size relative to average range, or if you want to measure more precisely, average range in per cycle and number of cycles in a day (feel free to define cycle using 1 min or 5 min chart). CL can move 100 ticks in a day and you would pay 1 tick as bid ask spread, so ratio is 100:1. ES will move 15 points in a day and you would pay .25 points, so ratio is 60:1.
Apart from tick against ATR, another aspect is being able to get filled at bid or ask. ES will not fill you unless price trades through your limit. Not so for other contracts (NQ/6E/CL), because size on inside bid and inside ask is much smaller compared to ES. So, in many cases, you will be able to buy at bid and sell at offer. Good for scalpers.
Very important and simple points above - which I have understood only after months of losing money. Hell - noone gave me these tips or maybe I didn't search ET hard enough
Over the last 5-6 months, I lost more than 10k trading 1 ES contract, I was consistent - lost money every month. 10k equals 200 points, over 5 months, so each month I lost around 40 points. Meanwhile, I was making money trading FX and was using this money to burn while trading ES. I was obviously doing something correct with FX and something very wrong with ES. I had a hard time to understand what I had been doing wrong with ES. Finally, I have some insights about how I managed to lose so much money trading ES. I hope reading these insights will help some struggling traders. I will write this post over next few days, throwing one idea at a time. Experienced traders please feel free to critique.
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GM
I think i lost money on ES for 2 basic reasons & related to making money in long silver & long gold, short Citigroup............
a] Benard Baruch said losse s= laziness;
z]So part laziness, but ES is a great liquid deal, but doesnt trend well like the 3 i mentioned.......
Not a prediction;
gold can go thru periods of not trending well, but i like gold trends better than ES trends Also too many best & brightest /hair triggers in ES ]Turtles may invest/trade trends,LOL
ES typically changes direction multiple times in first 20 minutes which means higher number of whipsaws. Also, its a good idea to stop trading after 330 EST.
Your saying the market will change multiple times in the first 4, 5- minute bars. If this is fact, you should be able figure out a way to take this to the bank.
Your saying the market will change multiple times in the first 4, 5- minute bars. If this is fact, you should be able figure out a way to take this to the bank.
Exactly. And has he determined statistically from the price action exactly what the difference is between ES and Forex markets ?
There's all kinds of measures like volatility and entropy, etc.
If he doesn't measure and track this stuff, he's asking for more trouble down the line.
Apart from tick against ATR, another aspect is being able to get filled at bid or ask. ES will not fill you unless price trades through your limit. Not so for other contracts (NQ/6E/CL), because size on inside bid and inside ask is much smaller compared to ES. So, in many cases, you will be able to buy at bid and sell at offer. Good for scalpers.
Well, this might explain why he had trouble. He's indicating more size = less liquidity. Anyone see the fallacy here ?
your best bet as a newb or even seasoned with ES is risk 2 pts and go for 4. set your OCO order and walk away, come back in a couple hours.
Even if you have no fucking idea what constitutes an edge, this simple practice should keep you somewhere near break even.
and you should probably just trade YM anyway with 1 contract, smaller tick size more likely you'll get filled on your exit and the volatility is fairly close.
like other said, ES is ultra efficient, thats why is so hard.
]Turtles may invest/trade trends,LOL
