ES or NQ ?

I'm just starting out in futures. I'm wondering why it seems everyone trades the ES instead of the NQ. Is it because of the higher volatility? I'm designing a system and I'd like to know where I should put my efforts.

And it seems a little scary to have so much leverage and being in control(I hope) of so much money. Stops will be placed upon entry, but is there something else I should worry about, like a psycho spike from hell that take away a months winnings. I plan on entering with limits and exiting with market orders, five point profit and stop loss.

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No. NQ is more volatile than ES. ES does have a higher daily dollar range.

 

Yeah that's what I meant. That's interesting that ES has a higher daily dollar range. I would have thought it was the other way around.

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"Reality is an illusion that occurs due to lack of alcohol."
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I don't understand exactly what you mean by daily dollar range. The volatility of the NQ is higher than the ES, however the contract multiplier of the ES is higher. Even though the ES multiplier is higher, the NQ is still more volatile even when this is included in the calculation. Meaning that the NQ is more volatile on a point AND dollar basis.

 

Oh, forgot to mention that the ES has higher liquidity.

 

Not exactly, let me show you what I mean.

NQ had a range of 36 points today(1087.50-1051.50). Thus a dollar range of $720(36 multipied by $20).


ES had a range of 21 points(926.25-905.25). Thus a dollar range of $1050(21 multiplied by $50).

See what I mean?

 

cheeks - I see what you mean, I extended your test to include 1 year of daily data. The ES has an average range of 22.2 pts x $50 = $1105. The NQ has an average range of 46.2 pts x $20 = $924. So the NQ has higher point volatility but the ES has higher dollar volatility.

 

Exactly, you got it.

 

Futures-

just a couple words of advice, since in the end you are going to do what you want to at first.

Currently the NQ market is producing more profitability per trade
when compared directly to the ES for that same spread,
with equal entries and exits being considered.

However, this could change back to ES within a few weeks.
This is simply something that you have to monitor on your own.

Secondly, I would suggest that you do not use Limit orders on
entry and Mkt. on exit. Use Mkt on Entry and Exit.

There are several reasons or arguments that can be made for limit orders or not to use them. Without getting into all the debate over which, or moreover, why I'm suggesting against
them,

I will say this. It has been my own experience, as well as admittedly my own initial preference to use Limit orders on anything I traded. In the past two years of actively trading for a living I have realized a couple things. Number 1, about 90% of the newbies to trading, at least the ones I've met, use Limit orders for all the wrong reasons. Number 2, and more importantly, all the Top traders that I've met in the past two years that trade for a living and are actually making really decent
money in the futures market ~4k/day before comms. and taxes,
are using Mkt. order on entry and exit.

They are obviously doing something right, and I want to at least
copy the behaviors and mechanics of the easy *hit first.

Hope this helps you think things out a little better and maybe
even consider it down the road a ways.

With me using limit orders ending up costing me more in opportunites lost that the chump change that I would have saved
by hitting the entry and/or exit on the mark.

best,

momo

 

Thanks guys. And momo, thank you very much for the advice. I am relieved to hear that using a market order in all instances is not a sign of lazy execution or naivete. Because I'm prone to both

I just looked at corresponding moves in the ES and the NQ at spots I would have traded today. The move on the NQ was 6.5 points/ 0.7% and the corresponding move on the ES was 3.5 points/ 0.4%. So I guess that supports what you're saying.

I guess it comes down to a question of leverage. In a sense, the NQ has more leverage than the ES. And a cursory examination of my system with both shows the NQ to be faster to either hit my target or stop me out. Since time is money, and time spent watching trades causes tension headaches, I think I might like the NQ better but I need to do more research. Thanks again.

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