It's a two way street: If you are market making, you want the big bid/ask spread. If you are hedging, you want the smaller spread. Since my trading potentially encompasses both, it makes almost no difference to me. nitro
"If your not profitable with ES 0.25 ticks, 0.10 ticks is not going to improve your situation." simply false, and could only be stated by somebody who does not understand math. the shorter timeframe you are trading/shorter target/stop you are trading, the more advantageous a smaller tick size is. obviously, if you are gunning for 50 ES handles, it's not an issue. all my setups are extensively tested, and i can state definitively that some are SIGNIFICANTLY more profitable using the YM vs. ES and that's due to the tick size. any retail trader who scalps ES is an idiot, when the YM is simply more cost effective. just as it is important to manage risk, it is also important to manage costs. they are extremely closely correlated, so what POSSIBLE advantage is there in trading ES over YM given the fact that you aren't trading size? some of the most profitable longterm traders simply exploit VERY small edges over and over and over again. and wider spread ERODES those edges.
You're fooling yourself. Because you have ABILITY trading YM you're in turn giving the product too much credit. For starters YM's tape is largely predicated upon ES turning. If you're saying you have a "system" that quickly says "buy 37's and sell 42's" then yes perhaps YM provides you a unique setup to ES. Few folks effectively trade like that. For those who do: Trade the biggest, baddest most expensive tick you can. The Dax for instance. Commissions are a huge consideration. It's the same reason I trade SP options more than ES. Paying 4 bucks for a friggin' MINI is a gip enough without the bs tick size. To rebut costs: If I think the market is going to quickly pop higher a couple of ES points then why buy YM and catch a 14-16pts x $5 when a corresponding ES move will be a hundred dollars? Besides on 5-10-20 cars the incidence of partial fills is constant in YM. Don't get me wrong. I trade plenty of YM. If YM is strong to tech then I take longs in YM and short NQ on up ticks. Or ES or ER2. All depends. In that regard I actually benefit by the small tick size. But I hate it. To me any single digit dollar tick is sort of minor league.
Pennies--probably too good to be true. I'd be happy with the ES tick size being proportionate with that of the big pit-traded (usually) contract. I would also be happy with having the ES traded on multiple exchanges. I hate monopolies. I'd also love to have the big contract traded all day electronically. 1 SP = 5 ES= same commission. Perhaps I should be content enough with the fact that smug New England got beat last Sunday.
I agree with PP. One of the reasons I switched from ym to Es is because of the range. Pick a day and ES will almost always have a wider range than YM. Last friday es had a 20 point range x 50 $1000 while Ym had 179 x 5 or $895 range. The same can be found on intraday moves as well. Also on ym due to lack of liquidity seems to be choppy with a tendency to get pushed around on whipsaws where in es it stays more stable. True Ym offer you more entry and exit opportunities over a $100 point move, 20 versus 8, but with the lower liquidity and more whipsaws I found my stop getting hit quite a bit more on fake outs versus trading es. Plus in ym, the slippage gets ugly if you try to move size during slow times or especially in afterhours.
Seconded. The CME has certainly dragged their heals in that department, obviously for revenue reasons..
"You're fooling yourself. Because you have ABILITY trading YM you're in turn giving the product too much credit. For starters YM's tape is largely predicated upon ES turning. If you're saying you have a "system" that quickly says "buy 37's and sell 42's" then yes perhaps YM provides you a unique setup to ES. Few folks effectively trade like that. For those who do: Trade the biggest, baddest most expensive tick you can. The Dax for instance. Commissions are a huge consideration. It's the same reason I trade SP options more than ES. Paying 4 bucks for a friggin' MINI is a gip enough without the bs tick size." no. again, this is based on the SETUPS. if you can show me setups on a SHORT timeframe/target/stop that work BETTER with ES than YM, i would like to know. because the added tick size will mean in small target/stop trades, the YM will offer an advantage.
"Cheap?" I prefer "frugal." I principally trade NQ and have not touched ES for quite a while. NQ actually gives me more frequent and more reliable setups. Further, I have a much better chance of a scratch trade versus a small losing trade with NQ rather than with ES. Granted, that may not be solely due to tick size, but I'm fairly confident that it plays a role. I am an absolute miser when it comes to my losing trades, and smaller tick size helps. While ES may or may not have a greater daily range more often than not, I am more concerned with my risk containment. Capital preservation first, boyo! If that makes me a minor leaguer in Pabst's eyes, then so be it.
Fair enough. Since you are virtually indifferent, then please do me a small favor and advise CME that you wish to see a smaller tick size: info@cmegroup.com I'll owe you one.