All my long terms start short term. It's just what works for me. I don't trade often, but when I do I put on a decent position (for my risk tolerance, anyway) and keep the stop tight, with an aim to have a daytrade turn in to a swing trade. Yes, this might not work for everyone but it works for me.
Ok, I see what you're saying now. What I meant was that each vehicle (futures, cash) has a unique behavior and provides different signals. So, for me, it's best to watch them all to get all viewpoints. Again, this is just my method -- I'm sure there are many ways to skin a cat.
Can you give some examples of when future and cash markets have given different signals? Are these different signals contradictory or there is a lag between the signals?
Well, I do not have detailed examples, sorry. I'll leave the research up to the reader. One might have a clear signal at a certain point earlier than the other in terms of what is 'more correct' (i.e. price improvement earlier in a yet-undeveloped movement), and yes, sometimes there is contradiction where one might override, and sometimes agreement which could strengthen a view. So, it varies. And, I think there is definitely times where the signal from one instrument (e.g. nq or ym, not just es) takes precedence. While I do analyze on a discretionary basis, in many ways what I do can be objectified. That is definitely something I would like to pursue (just so busy/lazy/disorganized). What might also be cool would be to have the ability to add one or more discretionary (human) controls to an automated system. Position sizing/entry/exit could be automatic, but you could have 'dials', for instance, to control how strongly you feel about a sentiment, or perhaps the immediacy of it. This could be a cool idea to expand upon.
fair enough I whole-heartedly agree that there are times when one of nq or ym or es might give accurate signals, however other indices won't be that clear. I have time and again noticed this. However, I find it hard to believe/accept that cash or futures on the same underlying will give different signals. Reason being they are so tightly interrelated by index-arbitrageurs of the world. I have not done any study here, so I am open for correction. But this just sounds implausible. Now you are saying that yes you can trade based on cash/futures. Well maybe then there is something. Thats why I asked if you can show some concrete example. Otherwise I find it hard to digest. Are you automated trader? In my experience, bringing in discretionary elements to systematic trading does lead to better results. However, the slope is pretty slippery here and often it is possible to experience deeper drawdowns or simply underperform if you mix discretionary with systematic. Just saying.
I am 100% discretionary at this point. I would like to automate as much of what I do as possible. This is not trivial and I would need to allocate large portions of my time to make this a practical reality. What I mean is: since futures trade overnight, they carve out very different chart patterns than the stock indexes. This provides different signals.
ahh---now I see what you meant, the overnight chart pattern differences. Makes 100% sense. It can be at times difficult to understand what the other guy is saying on ET. Thanks for clarifying
The futures almost always exceed cash extremes. This can generate 'value' signals or get you stopped out when the cash seems fine.