Newbie Question: Why is trading ES so popular?

Discussion in 'Index Futures' started by Tcl, Nov 13, 2012.

  1. Tcl


  2. very active instrument, with tight spreads, good variance most days. (more opportunity to make money).

    crude oil is becoming close second.
  3. which broker do you use to trade these instrument?
  4. Klemen


    I am also rookie and do not know what is so much about ES
  5. I much prefer TF over ES, it's more predictable.

    With that being said, ES can have some nice long ranges.
  6. Visaria


    Better off trading Dow futures than ES, the spread is only a point wide compared to quarter point for the ES (equivalent to 2.5 dow points roughly).
  7. 2rosy


    its the texas holdem of trading. not much thinking required; just bet on direction
  8. bone

    bone ET Sponsor

    Another point to consider is that the ES contract is a hugely popular spread trading vehicle as well. Both high frequency and longer term holding periods, speculative and institutional.

    A population of the trading participants are using that contract as a spread component to capture a price differential between the ES and another highly correlated instrument, or even a large basket of instruments. Their strategy implies that they lose money in one position and make money in the other position ( s ). They are hedging price risk but they are speculators pure and simple. Arbitrage. These traders can do this on a highly automated basis using very high frequencies, or they can swing trade positions for days weeks months and years. The longer term speculators will occassionally use the calendar spread to roll their positions.

    Another population of the trading participants are using the ES as a spread vehicle to hedge an adverse price move against a broad market equity position they are required by their business model to maintain. They would be termed institutionals or commercials. And they will also use the calendar spread to roll their positions - for stupid ridiculous size typically. And they will dynamically hedge their exposure on-the-fly as well.
  9. S&P 500 Index is becoming more of a bench mark than the Dow Jones Industrial Average especially via the fact that the S&P 500 is "more popular" with index funds and fund managers.

    Thus, many futures traders tend to pay more attention to the Emini ES futures as a "key market".

    In addition, don't forget, the Emini ES futures was introduced (birth) before any of the other Emini futures (YM, EMD, NQ and TF). It quickly became extremely popular (still is) amongst Hedge Funds, spread traders and so on even though it was designed for "small traders".

    Next, add to the Emini ES futures us the most discussed trading instrument at trader forums that have futures traders amongst "retail traders", vendors, brokers, blogs, stocktwits and so on without any regard if its the most suitable trading instrument for "retail traders" trade strategies.
  10. Tcl


    #10     Nov 17, 2012