I have been watching the DOW mini's for the last week or two and IMHO, there are a few things worth noting for those who might be considering trading futures. (Its worth noting that I more than doubled one of my small accounts these last two days mainly trading only the YJ....please don't think I am bragging, I am not! I am posting this for the benefit of others)((Could have just as easily lost it all)) 1st the good stuff.......IB's symbols for the DOW Mini's are YJ for the $2 contract (each point = $2) and YM for the $5 contracts. The YJ's are, IMO, the ones for those who already know how to trade but want to get their feet wet trading futures. At $2 per point, its alot less risky than the Eminis at $20 or $50 per point. Margin requirements are much lower for the DOW futures than they are for the Emini's....for instance, YJ requires only $540 for regular hours and $1080 in your account if you wish to trade them outside of regular hours (DOW fututres trade from 12:15am to 5:00pm) Now, think of this, the DOW often moves over 100 points a day - if you were able to catch a good swing for one day, and all ya had in your account was $500 or $600, its entirely possible to make (or lose) $200. Not a bad ROI for a day! Margin for YM is a bit more at $1350 for regular hours or $2700 for trading outside of regular hours. So as far as trading futures go, the option to trade them is there even for those with smaller accounts.....here again, using $1350 on a 100 DOW point day would be $500, not bad eh? How many investors would kill for a return like that in a year? Now, the not-so-good stuff......currently, Qcharts charges $30 per month for realtime DOW mini's - that sux, but it seems that the DOW mini's follow DIA (the stock) and ES fairly well. Per a phone call I made to Qcharts, they said that "soon", the DOW mini's will be no charge, they told me maybe next month they will make it available for free. Then theres the spread. The spread is definately wider on YJ but since volume on YJ is only maybe a few thousand a day, and YM trades maybe five or six thousand, many times the spread is over 10 points on them both - still, IMHO, its not that big of a deal because of the typical daily range of the DOW. Even tho each point of movement on the DOW will not equal the identical movement on the DOW minis, the DOW minis still seem to have plenty of swing to take advantage of. Heres a chart with YM/YJ overlayed with DIA and ES http://www.ttrader.com/mycharts/display.php?p=4687&u=stevieoh&a=stevieoh's&id=15
I don't think you can actually day trade the YM or YJ.. In a fast market the spread is between 7-10 points. So its something like $35-50 per a contract on the YM. Thats still too wide for most. 7-10,000 contracts traded daily is only a few min worth of trading for the ES. There is still no substitute to the CME eminis. I think when the Dow emin trades over 100,000 contracts a day.. then traders will take a serious look at it. Until then.. forget it! --MIKE
i dont trade the dow minis, but a few things came to mind. first, even though the dow mini is $5 per point, the dow is 10x the s&p numerically. glancing at a dow chart, looks like it moves about the same as the s&p in a day. however, given a mini dow margin of $1350 intraday, compared to about $2000 for spoos, that's more $$ fluctuation for the mini dow. i.e. more $$ volatility in your account if you were fully margined in dow minis vs spoos. it looks like you get more effective leverage with the dow since, fully margined, your account will have greater gains/losses.. the only downside would be the fact that you need more dow contracts to trade, increasing commissions. am i wrong on this?
I am looking forward to trade the Dow emini once it actually gets liquid. Anyone care to share their experiences trading the DOW emini.. YM or YJ? --MIKE
I've daytraded them( primarily YM) with about an 80% success rate. Unfortunately there no real liquidity yet. So it's basically just for entertainment purposes. YJ is a real joke. But if you looking for some fun on a quiet day stick some stink bids/offers in. I've had some orders hit 40 to 70 pts off market. Free $.
I think I gave Cdntrader some free money Thursday when I first traded the YJ LOL, I just hit the sell button to short and WHAM, I thought "what the" ....talk about a lousy fill LOL. I mainly traded only one most of the time - then went with 1 YM for a bit. Made a total of 7 trades the last two days with them. The thing is, they are more suited to hold for the better part of the day - scalps with these things are possible but I don't reccomend it. They work best on trend days. The YJ market maker keeps the spread wide, generally between 8 and 12 points. In a way, the YJ more closely resembles stock options to me - but at least ya get what ya trade for.
You can get quotes directly from the cbot for only $10/month. Sign up on homepage. but need to call on phone to cancel. Watch them and then ask yourself, "Do I really want risk my hard earned in a market like this?" There's probably some money there for a very crafty trader, but I'm not that good. But I guess as long as plenty of beginners start out there, there will always be plenty of meat. (reminds me of the hog market. Very easy to get in, but Lord help you if you need to get out in a hurry.) But I don't like to be a naysayer. Ever since I started this business there was always someone telling me I couldn't do it.
Regarding Qcharts dow mini quotes, the $30 is for all CBOT contracts. I get this for the T-Bonds. I only traded YM once this week and spreads varied from 2 points to 15 points. I agree that they are currently suited for intraday swing trades. Which isn't necessarily a bad thing...
Here is my respone to an email I sent the CBOT. -------------------- I have been trading index futures for years. I am a professional daytrader and I am glad that the CBOT introduced the Dow emini contracts. Compared to CME the liquidity is still minimal on the Dow contract. This makes it a disaster to day trade for directional traders like myself. Spreads are too wide, and the slippage is too great. What types of steps is the CBOT going to take to bring liquidity to the markets? How long should I expect this to take? I yearn for the Dow contract to be as liquid as the NQ or ES by the CME. ------------------------------------------------------------------------------ Dear Mike We are very pleased you are interested in mini-sized Dow futures. Contract volume has increased substantially since launch and we had record volume last week. The CBOT is in the process of adding two to three additional electronic market makers who will tighten the spread. Market makers from CBOE and AMEX are getting hooked up electronically and that will increase volume. Liquidity begets liquidity and after a certain threshold, we expect an influx of volume from hedge funds and CTAs, as well as professional trading firms. CBOT is conducting an all out effort to reach these groups as well as retail traders.
cbot screwed up when they pit traded DJ. They exist solely for the benefit of their members. This could have been a fantastic product if they would have touted it as the first totally electronic cbot market. But that would have stepped too heavily on members old fashoined, tired, too late to change toes. Trading futures on a widely followed basket of 30 stocks has all kinds of interesting ideas in it somewhere. I read somewhere that the failure rate for new futures products is something like 95%. Dow Futures, good idea in the wrong hands. I'm a net winner at the cbot, and I want to keep it that way. That's why I don't send any more orders into those pits. What is the name of the German futures market? I forget. At any rate, it only started in 1996 or so. It is totally electronic and already does more business than the cbot and merc combined.