ER2 trading strategies

Discussion in 'Index Futures' started by vision, Aug 23, 2006.

  1. vision


    Anyone trading ER2? like to discuss it.

    the volumn this several months increased significantly compared to last year and begining of this year. So more and more people are trading it?
  2. Sure, I'll bite.

    If I'm any indicator, since I first started noticing mini futures everyone else must be as well. I think there's more interest in these things from the likes of dentists, engineers (like me), etc as a way to get rich.

    I've been looking at trading breakouts of the 3 minute opening bar as espoused by this guy:

    Go long on a breakout of the high, go short on a breakout of the low.

    I've been paper trading it so far and it seems to have positive expectency especially if you scale out.
  3. Vision - the ER2 provides some opportunities like the other mini's, but I have found 1 major difference of the ER2 and ES for example - the ER2's move are typically much more exagerrated than the ES. This is great on a winning trade, not so great on a loser. When the ES moves a point or 2, the ER2 could have moved 4 points. And at $100/point, that can add up fast in both directions.

    It's a good market, just understand what you are getting yourself into.
  4. I've found this to be the case also and in addition the ER2 exhibits less noise than the ES. This makes it a good candidate for system trading.

    I've been following an ER2 system alert service as a beta tester for several weeks.


    After 9 winners in a row I had my first loss this morning, but it was very small. So far I like the email alerts. They have a free two week trial.
  5. My trading stratedgy on the er is to not trade it. I have had some bad losses in quick succession, more power to you if you can trade it well, you will make a lot of money. A quote i really like is,

    " I am not so much concerned about the return on my money, more so the return of my money."
  6. I've been trading the ER (along with ES) primarily since 2003. The volume has swelled exponentially, along with program trades via the IWC arbs.

    ER used to be more trendy than it is now, much more intraday noise than before. However, it is a great <b>intraday</b> swing trade vehicle.

    Traders who try to scalp this symbol with tiny charts and tight stops usually find themselves chopped to pieces. Back off to a bigger timeframe (at least 3min charts, if not 5min) and target the bigger moves.

    My ER trades today have been:
    Short 711.8 = stopped out 709.80 +2pts
    Short 709.6 = stopped out 705.60 +4pts

    A third sell signal flashed near 10:39am EST at the 705.60 mark. I passed that one up... content with the morning take and waiting for the afternoon session to trade further.

    That sell signal remained valid for awhile, then promptly dropped to 700.20 current lows without me :>O


    Forget about scalpy stuff with this one... use -1.5pt initial stops, target +3.0pt to +5.0pt profits and the index will cover that ground numerous times per week. Getting skilled at hitting them is where proverbial rubber meets the road!

    Best ER Trading Wishes
    Austin P
  7. vision


    from my observation of past one year of ER2 trading, I found some rules. It's just observation and may only true for 60% of time (or even less, indeed I'm not sure).

    post here for discussion. please give your advice or disagreement to them.

    these rules mainly for intra-day trading. they might apply to longer term but not guaranted.

    1. extreme theory: market always go to extreme, and trend days usually close at highest or lowest.

    2. failed bounce/pullback theory: a failed bounce will break previous low. A failed pull back will make new high.

    3. round trip: market tend to do round trip. ER2 one big wave usually around 30p.

    4. 2:00pm spike: 2:00pm program trading started to be active, usually there’s spike up/down around 2:00.

    5. AH extreme: AH futures tend to go extreme due to small volumn.

    6. trend line theory: when trend line break, will have big move. Either break up or down.

    7. box range: futures most time move within a box. When the upper bound or lower bound break, it move to next box.

    8. neckline theory: for head & shoulder pattern, when neckline break, will have big move.

    9. retest extreme theory: a generalization of rule #2. Market always try to retest previous extreme.

    10. No average down or average up.

    11. No short before see red bar, no long before see green bar.

    12. No long on resistence. no short on support.

    13. When you first time feel panic, it's time to close position. Dont wait to cut until you feel numb.

    14. Gap(intraday) up/down rule: after the first relative big gap (for example, >2p for ER2), there will be a small window (usually less than 10 minutes) for trapped position to cut or for new position to setup, because most time there will be another gap (same direction) after the small window.

    15. Early reversal theory: if up/down a lot in the first hour, there's big chance to reverse later. This is the exception to rule #1.:(
  8. nice job,vision............................just started dabbling with the ER2 & looks to trade like an accordian........that equates to opportunity..............& more bang for the buck than the "thick" ES...........wondering why it took me so long to find this index........looking foward to trading this bad boy.

  9. mkp14


    What market indicator to watch for er2. Like Trin/Tick RUT ? What is more connected to er2. Most of time i watch it follow YM. Any suggestions will help lot.
  10. I was wondering if any of you take into account what ES is doing to make your ER2 calls. I scalp ER2. I would be flying blind if I was not watching the spread between ER2 and ES.

    For example if you are looking to get long ER2 and it is the weaker index you probably are going to get stopped out all day. The chart might make it look all pretty, but if ES is up 7 points and ER2 is only up 4.5 points it can be a hard day to buy ER2.

    I am not a fan of charts. I do not use them during the trading day. They make trading look to easy!!
    #10     Sep 1, 2006