ER2 Leading Indicators?

Discussion in 'Index Futures' started by swcom, Oct 22, 2005.

  1. swcom


    For those of you who regularly trade the ER2 - what do you currently use as leading indicators for price movement?
    YM, NQ, ES, IWM, INDU, COMP, SPX, TICK/TRIN, etc. etc.

    I have been experimenting with combinations of some of the above and seem to get mixed results which are different every day depending on the market leader (DJIA, NAS, S&P).

    I do keep an eye on the three major individual sector indices for ER2 weighting (fin. svcs., industr. materials, and healthcare) as well as the ten largest equities in the index itself - and of course the overall market action.

    My question is: what are the best indicators to monitor for price action (outside of Stoch & MACD) for the ER2?
  2. hands down --- the NYSE TICK!
  3. Any quote services have intraday data for the TICK, adv/decl, upvol/dnvol specific to the ER2?
  4. In a kind of automated way?

    Or do you mean adding another focus point in an already complex information load? If so, how do you use that it's worth it to make things more complex for the discretionary trader?
  5. i use very basic indicators to trade the russell on two timeframe charts {350 tick and the 1200 tick -- for catching the smaller cycles that occur within the bigger cycles}. i pick my entry as my basic indicators are at or near a normal signal when the NYSE TICK makes a pop/move in my intended trade direction. it is the NYSE TICK that "authorizes" me to take my basic indicators signal when they are in alignment.

    i am on standby until the TICK makes the type of move i would like to see which supports what the basic indicators signal is telling me -- the TICK is what gets me to pull the trigger.

    i have about 7 to 12 trades a day with this method and i go for only 5 to 7 ticks per trade for my primary position --- then based upon my indicators from my 1200 tick chart i will cover any remaining runners when i feel the move may be over.

    i like to enter trades when the NYSE TICK pops so that i am entering er2 trades when a rush of momentum is taking place in the equities market --- works very good for me. if you watch the TICK for several days as you watch the er2 you will see what i mean.

    5 minute NYSE TICK chart ---

    5 minute NYSE TICK chart from the 9/20/05 fed rate hike day ---
  6. Hello Macro,

    when using the TICK, do you enter the market once a predefined TICK level has been reached ? I haven't paid attention to the TICK so far but will watch it the next few days. With the ER2 being so jumpy and fast, I really need to fine tune my entries. :D
    Oh, btw., when trading for 7-8 ticks, how wide is your stop usually ?

  7. i do not enter on any predefined TICK number per say --- i look for a major jump or directional change of the TICK --- watch it for a while and you will see what i mean.

    as far as stops go i do not use them --- i have position scale-in entries parked right as the first entry is filled {the secondary scale-in entries are not always triggered -- only if price moves against me initially}. at another pre-set and parked level {from my initial entry} i have a hedge position that is on standby should price just take-off against me {in a separate account}. once the hedge position is triggered {about 12% of my er2 trades} i then go to a defensive play to get the total of all positions to a breakeven play --- i do not get greedy when i am on "defense".

    i have traded this way for a couple of years so i am used to it and i have my rules well established {similar to the way i trade the es for my position trades}. for me the scalp method that i use could be done with a fixed stop but it will not have near the results that i am getting without a stop.

    these are very quick scalp hits in most cases and most are usually out and covered for a profit in about 1 to 2 minutes --- having the TICK pop and then getting in right at that moment from the bias of my basic indicators has me in the trade and out very quick most of the time. but the russell likes to bounce around so i have found that using a fixed stop really hampers the performance of a quick scalp strategy.

    i know one person that is using my method with a 1 point stop and he does make money but no where near what i am doing on a daily basis --- but i do think if he could hone his entries better {get very precise at reading the TICK} he my get very close to my results.
  8. I use a 1 minute TICK chart with these indicators

    macd (120,260,90)
    full sto (140,30,30)

    Also follow a 5 minute VIX chart very closely

    mainly watching the CCI (14) indicator for VIX direction

    I closely watch a 60minute chart of the Er2 for volume trends

  9. Thank you MacroEvent.
    What datafeed are you using?
  10. Thank you for the long reply, Macro. Since you go for ~7 ticks per trade "only", are you watching the 1 minute TICK ? Thanks again.
    #10     Oct 24, 2005