Which one is more suitable for day trading? If I use 20 points as stop loss for YM, how many points should be set for ER2 and ES respectively? Are 20 points stop-loss too narrow for YM?
All are suitable for day trading as long as you have a disciplined trading strategy. 20 point YM stop=$100 per contract 2 point ES stop=$100 per contract 1 point ER2 stop=$100 per contract Depends on your trading strategy and entries. I like to use a 10 point stop but that may be too tight for your strategy.
I first started with ES but now only do the ER. It has better reward in addition to having finer granularity in terms of setting your stop, ie 10 ticks for a 1 pt move versus 4 ticks for 1 pt on the ES. Interestingly, John Carter, TradetheMarkets.com, has the same argument for the YM versus ES. He mainly likes to daytrade the YM. In addition, he also argues that it's easier to get a handle on just 30 stocks versus the ES 500 and the ER 2000 stocks. In terms of volatility, ER is most volatile, YM is second and ES third but they align closely enough that I found if there is a signal on the ES, it can apply to the ER as well. Tick for tick, the ER gives back more of a return.
If you are looking purely at tick vs. tick, then I would add the EC - Euro FX - and QM - Crude Oil - into the mix. I know the original post did not ask about these 2, but it's worth checking out!
This is completely dependent upon your strategy and experience level implementing the strategy. Also, if your going to consider ER2 you really should also take a look at CME EuroFX futures. In addition, do not make the classic mistake of getting fixated on one trading instrument. This month ER2 may be the better one to trade and next month it may be YM and the following month it may be EuroFX and so on especially if you want to avoid drawdown periods. The above has to do with the fact that their volatility levels changes from one week to the next week. Mark
Yes, you're correct. Apples to apples comparison should be using $100 as a base. Breakdown is 20 ticks for YM, 8 ticks for ES and 10 ticks for ER. ER has finer granularity than ES but not as much as the YM. Not at all. Just the fact that you can watch all 30 stocks at once gives you a better feel for their price actions.
Don't totally agree. Since ER, ES and YM are equity based instruments, their analysis are similar. Currency futures and forex trading requires a different market analysis that most people are not accustomed to. Interest rates, intl corporate M/A, foreign banking policies, etc are all events that have to be carefully analyzed to keep a handle on the currency markets. A good reference source is John Percival's The Way of the Dolllar.