Learning the e-Mini's and have some questions

Discussion in 'Index Futures' started by ChunkyBrown, Aug 4, 2010.

  1. Hi all,

    I've never traded futures before and was recommended to look into the YM and the ES to start. My question: Are there any correlations between the Dow e-Mini and the DJIA? Meaning say, if the DJIA is up today will the Dow e-Mini also be a guarantee up as well and vis-versa? Or is the Dow e-Mini a complete beast of its own and plot TA etc according to the e-Mini chart with a complete disregard to DJIA (i.e support & resistance) chart? Thanks and look forward to your replies!

    Sorry, if this isn't too clear. I'll try to
  2. joe4422


    Hey Chris,

    The ES future contract leads the SandP 500 index, and in fact tends to lead the entire financial world.

    The last part of the sentence is an opinion.

    However, the mini contracts and the indices they lead are probably the most heavily arbed instruments on the markets. So, yes, they are very, very much correlated. Nothing follows suit more, as they are technically the exact same thing.

    There is a natural spread between the two, the future contract and the index, and that's called fair value. It's a calculation based on time to expiration, interest rates, etc.. So the numbers themselves are not identical, but the fair value between the two is. It is so heavily arbed that some people only trade the spread between the two.
  3. The short answer to your question is yes. They move basically identically, although the numbers don't exactly match up for the reasons described in the previous post.
  4. I strongly recommend you subscribe to an inexpensive real-time data vendor for a few months or open a broker account with someone that gives free charts to the Eminis...

    Next, just monitor the YM and ES to get a feel for how they move before taking any trades.

    In addition, you should read all the exchange information about them at their website (e.g. expirations) because you should never trade something if you don't know the basic contract information about the futures.


    Also, there are lots of free websites that have international economic calendars and other key market events so that you can monitor closely how these economic reports and other key market events have a direct (almost immediate) impact on the price action of the YM and ES movement. However, you'll only be interested in the schedule times of those reports and other key market events.

    Further, learn the opening and closing times of other key markets (e.g. bond markets, europe index) because they too often (usually) have an impact on the price action of YM and ES.

    All the above will answer any beginner questions you may have about the price action of YM and ES.

  5. Thank you all for replying! Your answers were exactly what I was looking for. :) Take care!
  6. plyka


    The arbs will guarantee that they follow each other to a tee. Although, technically they are two different entities and could go their own way. It's just that the arbs don't allow it because they make money on any descrpency between the two. I've heard that during the 87 crash the two seperated by quite a huge margin. The ES and the SPX that is. Although i wasn't there to confirm, lol.

    BTW, if i were you i would s start with the NQ over the ES. The spread is tighter on the NQ so you don't start off with the same disadvantage. Not to mention the NQ is smaller, so it is a better place to learn trading 1 lots.
  7. Hey All,

    Newbie here. Any suggestions for said "inexpensive real-time data vendors"/"broker ... that gives free charts to the Eminis"?
  8. wildshoe


    all i can say is thinkorswim is a great platform, with free papertrading data and charts, for unlimited time, so long as you know that you have to trade the charts (i.e. the tickers, and the tape, and hte spread, and your net liquidity will all be calculated based on 15m delayed data, the only thing that is realtime is the CHARTS and your FILLS which means you have to ignore everything else basically and just trade teh charts).

    what was said about the es and the s&p and the other indices is true, the correlation is almost 1-to-1 except that futures contracts have elements of time and interest rates baked into them that makes them different. the arbitrage between the futures and the actual indices is so competitive that you shouldn't even fathom begin doing that as your first trading system, stick to directional price risk in the futures market.

    learn everything you can, that is my only advice. knowledge is power in trading. never be sure, never think you have the answer or a 100% set it and forget it system, always be cautious, humble, and wary. always be learning.

    but the most important thing is this: cut losers, and let winners ride, don't take profits until you're 100% sure the move is exhausted, if you have to let a trade go breakeven because the move wasn't large enough, so be it. catch the big trends, cut the small ones breakeven.
  9. If you really want to have fun, open up a paper trading account somewhere and spread ES vs YM.

    If you're bullish go long ES and short YM

    If you're bearish go short ES and long YM

    Then on top of that watch the spread, there is no end to the amount of fun you can have

    Especially when you start legging in and out

    The values change, right now they are very close, maybe 3k more in ES

    When I was fooling around 6 YM to 5 ES would put you dollar neutral, but now I suppose it is more like 11 to 10

    Last I heard the correlation between ES and YM was 95% there's a chart somewhere over on yahoo finace where you can over lay SPY and DIA and QQQ which are the corresponding ETFs to ES YM and NQ

    Even if you have to open up a real account and pay for data charges just to get a paper trading account, that is still better than buying books.

    But yes, unless it is a very narrow day, If the Dow is up, ES will be up more or less. The only thing that usually ever changes is if something really good or bad happens to one of the Dow stocks, since there is only 30 of them that can make the Dow act bad when ES is good or visy versy.
  10. Amp Futures gives a free test drive to CQG or Zenfire data with Ninjatrader (I think it's 30 days), so you might want to take a look at them. There's probably others as well. You probably want to look around just to sample a few platforms depending on you trading style.
    TOS has free charts/data feeds, but their futures commissions aren't really competitive. I'm not sure what their demo account is like, but it might be worth checking out.
    #10     Sep 19, 2011