Forex vs. mini's

Discussion in 'Index Futures' started by AstroGlide, Dec 1, 2010.

  1. Hello traders.

    This is my first post here. I've been trading both EUR/USD(spot) and YM(mini Dow) back and forth. I believe I did good trading YM but I got lured on the EUR/USD for some time. I am not trying to put down anyone trading currencies but here's my own biased analysis after a while of trading both.

    I would like to hear constructive - objective opinions. I won't respond to inflamatory remarks. I am not looking to learn how to trade etc. Just general input on both markets.

    Here's my pro's and con's

    Reasons to trade Forex(spot)

    1. Almost a guaranteed fill. Especially if you put a market order to get out of a trade.
    2. No slippage.
    3. You can control your load anyway you want it.
    4. You can place stop order 1 pip ahead no problem(oanda).
    5. can trade 6 am, 5 am no problem on margin.
    6. Oanda has transparency of price. At least that's my experience with them.

    Drawbacks of trading forex.

    1. Trading signals won’t come at the time you’re up. Meaning you literally have to be glued on the screen 24/7.
    2. The charting package I am currently using now don’t paint bars. This is extremely important to keep me in a trade and don’t pull the trigger too fast.
    3. It’s all about signals. They come and sometimes you have to let them go. If you get a signal like close to 4:00PM, you will get screwed due low volatility.
    4. Spread could be variable depending on market volatility. Again if you have a trading signal @ 6:00PM , your spread will be higher. Close to the news is another nightmare.
    5. If you ever feel like trading the news on a straddle, you can’t. Spread will be to the roof. If you’re in a trade and news are coming, you’re screwed if you leave the trade open.
    6. Calculating the load and distance for the stop becomes a hassle if you’re trading on a fast market.
    7. You get two sets of news – 8:30 and 10:00 When this happens, you’re day is pretty much screwed up.
    8. Candles/bars have way different ranges.

    Reasons to trade Mini Dow

    1. Trendy market not too jumpy like Mini S&P.
    2. Gives you plenty of opportunities during DAYTIME!!!
    3. Mini dow 1 minute charts sticks very well with my trading system
    4. I can get away with 10 tics - 1 contract($50.00) or 20 ticks ($100.00) stop loss no problem.
    5. I can follow my system hence manage my trade better.
    6. Better organization on my trading time. I begin at 10:30 and I can be done by 12:00.
    7. Transparency of price – you will have minimal if none slippage trading with just a couple of contracts.
    8. More structured candles - that gives you more assurance in where to set your stops.
    9. Trades can be place 1 tick ahead and sometimes you can even trade within the spread.
    10. Way better charts – I am currently using sierra charts.
    11. Using Sierra charts allows to color the bars up and down the envelope hence managing the trades better.
    12. Although the load is fixed, you don’t have to put a bunch of units in one trade. The ranges are shorter than forex.
    13. You don’t have to deal with 8:30 AM news.

    Drawbacks of trading YM.

    1 Fixed tick value - $5.00. Which I think is an advantage ;cause you don’t have to be crazy calculating your load in a fast market.
    2. Overnight trading comes with a high premium – which I can afford but as I saw these past days liquidity is not enough.
    3.Depending on market conditions, you might have to let a trade pass due high candle ranges – I haven’t see this on YM- since I began to observe it.

    I got interested in spot forex due the flexibility of the load on every trade. But I found out it takes valuable time if conditions are fast.

    Probably I am repeating myself sometimes but is because I am looking to clarify a point even further.

    Again, I am not looking for flamers. If you don't care or don't agree, simply don't post
  2. hi AstroGlide, I'm a eurusd fx trader

    don't understand what you mean, please explain further - attach a chart ? -
    "2. The charting package I am currently using now don’t paint bars" and -
    "8. Candles/bars have way different ranges." and again from 'Mini Dow' -
    "8. More structured candles" and from 'Drawbacks of trading YM' -
    '3.Depending on market conditions, you might have to let a trade pass due high
    candle ranges

    'Mini Dow' "2. Overnight trading comes with a high premium" if you close a trade
    before the 5pm ? close and re-enter the market after the 6pm ? open you are back
    on daytrading margin and can hold 'overnight'

    big difference now is leverage - depending what country you're located in
    fx has been reduced from 500:1 to 50:1
    fx Definitely lends itself to DaytoDays trading, either Daily chart or 4H if one's got
    more time, and the margin amount doesn't increase. last time I did a comparison
    between the ES and eurusd, calculated the eurusd had 2.5 times the average daily
    range of the ES, average daily range of the eurusd in October was 160+ pips
    YM has a fixed commission cost . . .
  3. thanks for replying Wallace

    1)The charts I use allows to have your bars painted under certain conditions on the market. In my case that helps me a lot.

    2)I trade YM on 1 min charts. If you compare the length of the bars between YM and EUR/USD on 5 minute charts you'll notice YM bars have a more structured range. I mean, not always but normally.

    3) I don't like ES and yes EUR/USD has more juice intraday.

    4) I agree with you. Forex should be traded in longer time frames. In my case particularly those time frames are way too long.

    5) Yes after 6:00 PM. Anyway it doesn't matter liquidity is low overnight.

    6)Depends on your trading system, etc. Due the fact that YM has a fixed tick value, you don't have much room to wiggle, like for instance, trading units with oanda. Depending on how many contracts you're trading, distance form stop to entry etc, you might have to let go on some trades. Still, backtesting YM that's rare. Again depending on your load. I assume if you trade just 1 contract and have enough capital, that shouldn't be a problem.

    This is a comparison that I haven't see anywhere. Everybody put side by side currency futures vs. spot, stocks vs. futures etc.
  4. AstroGlide, still don't understand what you mean -
    "1)The charts I use allows to have your bars painted under certain conditions on the market."
    what charts are you using ? maybe that'll help me understand
  5. sierra charts - "color bars based on above/below" is in the studies window.
  6. ok. have you tried NinjaTrader for futures ? you can get a free realtime demo from
    several brokers, here's one:
    have a look thru the 'Version 6.5 Indicators' section:
    presume you know know about the Globex contract '6E Euro Fx' good volume which
    has been rising over the past couple of years, other pairs and currencies have a lot
    lower volumes
    have you tried MetaTrader 4 for fx ?
    tons of various indicators and Expert Advisors - auto trading systems
    unlimited demo here - scroll to bottom of page:

    I've never traded the YM so don't know what its characteristics may be, but the euro
    has its moments like its last two first hour or so openings

    what timeframes are you trading the YM and fx ?
    does Sierra display sub-minute charts ?