I've only recently begun daytrading ES, after a couple of years of swing-trading equity options. I've been focusing exclusively on 9.30-16.00 EST. My question is... how reliable is premarket trading, particularly in terms of validity of volume, S/R levels and intermarket analysis? Thanks, Neoxx
Validity of volume - do you mean, does the CME through fake volume numbers out there? What you see is what you get. Look at the charts. S/R - depends how you view S/R. Again, open up a chart and look. Intermarket - depends on what you use here. Once again, looking at charts is a great option to see. I find some of the pre-market moves so much easier to take and ride vs. what you may find during the day.
pre-market Es primarily is hedging activities done by brokerages before the upcoming 9.30am open of the stocks . What I mean by this is when instituions and portfolio managers and so on send their buy and sell orders to the brokers to execute , the brokers will use the Es to hedge the upcoming buy or sell orders of stocks and through out the day will gradually unwind futures positions as they finish buying or selling the stocks. The pre-market can be a useful heads up to see how much institutional activity up or down you are going to get that day , the volume is usually pretty thin and so can move price much more than in normal trading hours .
While the volume may be 'thin' when compared to RTH, there's plenty of volume there to trade for most retail traders. And I agree 100% that moves in the pre-market can move quicker and easier vs. RTH. Instead of that being a crutch, I use is to make $.
I totally agree with brownsfan. in the AH (after futures open in euroland 3am est) there are no big US players screwing around with price. as long there is not some sort of world catastrophe, all you have to do is know how to read a chart. the one drawback is the hours you have to keep. Knowing when european (and London) economic reports are due is helpful, too. I get up at 2am so I can put together my data sheet and mark the chart. I do this T, W, Th and Friday mornings. (Although with some of the action on pre-monday rth I might start doing it then, too). It does take it out of you and I rarely even look at the markets after 11:30 on Friday's. OK, I have to admit, I do take a nap a couple of days a week (especially Fri) and I am usually in bed by about 7:30 if I haven't taken a nap.
Interesting post vertigo. I'm up and ready to go by 7am EST now and there's been days where I wish I was up at 4am or so to take some picture perfect trades. There's really nice movements in the pre-market some days. I used to say to myself - there's more movements in the pre-market than all day during RTH. Say that enough times and sooner or later you will rethink when you are trading.
Thanks for the responses, guys, really useful. I particularly liked the suggestion to have a look at the chart and decide for myself. So if practicalities weren't an issue, what do you think are the optimal times to trade ES? At the moment, trading all of RTH except the first 30 mins, and 11.30-1. Haven't been trading long enough to determine which session is more productive for me. I'm five hours ahead (UK), so an earlier start and an earlier finish would actually be very welcome. P.S. I mostly look for the first 1-2 points of a move, so don't need big moves.
neo - Again, I highly recommend you take a look at an ES 24 hr chart and see for yourself. We have NO IDEA how you trade, so how can we possibly tell you when is the best time to trade? If you love choppy conditions, then trade the middle of the day (usually). If you love trends, try the beginning and/or end of day (usually). If you like smaller, but more controlled moves, take a look at pre-market... But only you can decide what conditions are best for how you trade.
Sounds perfect. I have looked at ES charts. Lots. That's why the question arose. I'd been advised to stick to RTH with ES, because apparently, premarket and after hours increased the sigma, but I'd had difficulty reconciling that with my own observations. Because I'm so new to ES, I thought there were angles I was missing.
IMO neo the pre-market hours are just find for trading. There's plenty of liquidity for the retail trader and you can catch some very nice moves w/o much work.