Check tick and contract volume

Discussion in 'Trading' started by Joe Ross, Apr 9, 2004.

  1. Check tick and contract volume

    Only 27% of all visitors gamble in Las Vegas to make money. What percentage of market traders have a similar attitude about trading stocks or commodities? It may be very close to 27%. Anything less than the best effort to win is unacceptable. If traders want entertainment they should go to a good movie, or buy a cat. Traders should stay out of the market unless they are totally committed to make money and know exactly what they are doing. Trading markets is a risky business, even when you do know what you are doing.

    One of the things that will help you to become a better trader is to learn to check the volume. Day traders should check both tick volume and contract volume. Together, they give you some idea of liquidity. Position traders should certainly check volume to avoid trading in illiquid markets.

    What is decent volume for trading? You are going to have to do a little homework on that one. Look to see what is the average volume when prices are making a decent size move. By decent size, I mean are the moves sufficiently large for you to make the amount of money you want to on a single price bar, or perhaps one or two additional price bars.

    At that point you will know how much volume works for you. In general, and this is subject to change, I want to see at least 6,000 contracts daily for position trades. For daytrades in the e-minis, I want 3,000 contracts/minute for the S&P and 1,000 contracts/minute in the Nasdaq. But keep in mind this is subject to change at any time.
     
  2. Emini only does anything like 3000 a minute during spikes. Nothing like that on avg.