Holding ER emini overnight

I hope I've chosen the right forum for my question, but anyway here goes:

I ‘ve been trading the ER emini for about a year on lower time frames–mainly 5-minute and 3-minute charts with some success. But because of time constraints I plan to start trading from the day chart which means holding my position overnight and weekends.

Does anyone know what the recommended stop is if you’re holding overnight and weekends? I’ve read that some traders use the daily ATR as a stop, and I’m wondering if any of you who trade the ER have any input on this? I’d appreciate any comments you might have to offer.

Many thanks,
Jennifer

 

Jennifer - I would think stop placement is going to depend on you and your trading methods. Some might say keep a loose stop so that you don't get ticked out overnight and some will say keep it close so you don't wake up to a gap in the opposite direction you thought it was headed.

Trading the ER2 overnight is for the brave, that is for sure.

Good luck!

 

Your system should dictate where your stop is.

If the market makes an overnight move (ie gaps) at the open past your stop, then you need to put that down to slippage.

If you trade with a profit target then the gaps might mean you get filled at a better price than you expected and so in the long run youll come out even.

If you use some sort of trailing stop then you wont benefit as much from overnight moves in you favour.

 

Almost to the day 10 years ago (before the eminis), Greenspan opened his mouth late in the evening and said something about irrational exubernace . . . The overnight stock indexes and the bond market opened in the morning limit down, and I wasn't the only one to be completely blindsided by Greenspans words . . . Personally, I'd use a tight stop, I wish I would have then.

 

one possible alternative would be to hedge with another highly correlated derivative like ES if holding ER2 overnight

or perhaps instead of ER2 overnight

take home a small position in IWM * etf *

or maybe a small position in IWM options (?)

good luck ...

 

Hi Jennifer,

To stay in sync with your methodology, whatever your using to get into a trade (entry)...

You should use the same or similar to tell you when its time to get out of a trade (exit).

Simply, too many traders are using a initial stop/loss protection, trailing stop or profit target that is in conflict with their entry method.

This makes it very difficult to manage a trade after entry.

Therefore, if your going to use ATR to manage your stops...

You should already be using ATR as part of your entry method.

I day trade ER2, hold it overnight for one day holds, swing trade (several days) or position trade (several weeks).

However, overnight holds, swing trades or position trades are only done particular times of the year.

Here's a list of all the stop methods I've heard being used by traders to manage their stops in ER2 and I do not know what is suitable for your needs considering we know nothing about your entry method:

* Support Resistance Levels derived from math
* Support Resistance Levels derived from chart patterns
* ATR
* Volatility Spikes
* Volume Spikes
* Japanese Candlesticks
* Money Management Rule
* Swing Points (arguably the most common)
* Indicators
* Trend Lines
* Market Depth

There's others that I don't have time to mention.

Mark