What settings are you using for your Bollinger Bands and stochastics? And how quickly do you cut your losses?
The bands are set at 13 length and 2.618 which is a Fibbonnacci number. The stochastics are k=15, k smooth=3, D=5. I use a 3 and 13 minute chart with a 5 &15 MA...... The wider bands make it so they indicate extremes a lot better. Try it. I cut losses if the stochastics start moving against me, the premise fails on the crosses....or the market simply hesitates too long.
There's not a lot of slippage in the e-minis, so market orders will generally get you in/out at the ask/bid price. It's kind of been my rule though to enter a market by limit orders, exit market order. To answer the original poster, trading the e-minis can be profitable, but they are quite aggravating. Lots of scalping going on, so you can be whipsawed to death. The alternative is to open up your stops, but you leave yourself exposed to larger losses. The NQ is generally more smoothe than the ES, but I've done better with the ES anyway. I just try to trade it early or late. Forget the middle of the day. It meanders around the charts like a drunk on roller skates.
If everybody put in limit orders away from the market, there wouldn't be any trades executed, right? And a limit order past the market is, practically, the same thing as a market order, right? I'd say the answer to your question is pretty close to 50/50. Half of the people are putting in market orders to hit the bid or offer of the limit order the other half of the people are putting in. The half of the people putting in market orders are paying the spread to be darn sure of an immediate execution. The spread is less of a cost to them than the opportunity cost of not getting a fill. The half of the people putting in limit orders are refusing to pay the spread but are risking the market going their way and not being in the trade. The spread is more of a cost to them than the opportunity cost of not getting a fill. If there are more people putting in market orders than limit orders, the market is going to gyrate wildly or streak in one direction. You often see this after news releases or on the morning of IPOs -- nobody wants to be a limit order and get picked off and people are willing to pay up to get in NOW. If there are more people putting in limit orders than market orders you are going to have muted volume from fewer executions. You are going to have a steady, quiet market. Think lunch time lull or overnight Globex session. "It's better to work the trade with a limit order rather than paying the spread with a market order because the market isn't going anywhere fast. I can always switch to a market order later if I really need an execution."
That's been my experience exactly. The first 2 hours (except 930-945 or so) and the last 2. The middle of the day you can just mail in. A bunch of low-probability trades. Occasionnaly you'll get a bona fide breakout but that's such a rarity why bother playing the percentages. I always use market orders; by the time you get a limit typed in it's probably no longer valid anyway. I always get filled within a tick of my intended entry or exit so why make more clerical work out of it.
Thanks to everyone for replying to my previous question about limit or market orders. I trade Qs and SPYs, but transaction costs are motivating me to consider switching to eminis. Would appreciate comments on whether the following math is reasonably accurate: I recently bought and sold 4000 shares of Qs (2 different buys and 3 different sells. Total commission cost = $92.75 at one of the best and lowest priced equity brokers. $9.95 a trade (each way) plus ECN and SEC fees apply. It appears to me that I could have essentially bought and sold a similar dollar amount of NQ emini for around $24.00 at IB, thereby saving around $69 on that particular day. Am I in the ballpark with this calculation? Am I missing something? Will thank everyone in advance for all replies.
You could have used IB or Tradestation as their per share pricing including ECN fees would have probably cut that in half or at least a third less - I would need to know exactly how many shares in each transaction because for the portion of the trade over 500 the per share rate is 1/2 of what it is for the first 500 - You could go to IB fee schedule web site and calculate based on that - then know that TS is slighly higher. Regards, Paul
Are you paying 1/2 a cent per share for ECN's??? 5 trades@ $10 ea should be $50. SEC should be 3.01 cents per $1000 in proceeds, thats about $3. Thats $53. $40 in ECN fees means if you traded on an ECN in and out on all shares they charged you half a cent per share (8000 shares *.005). Am I missing something?