In communicating with scalpers and reading posts on ET, it is apparent that one of the main gripes is that decimalization has narrowed the spreads to the extent that traders who used to scalp teenies are now scalping for pennies. I'm thus wondering why scalpers aren't trading the e-minis, where the S&P e-mini has tick values of $12.50 per contract = 1/8th increment, and the Nasdaq e-mini has tick values of $10 per contract = 1/10th. I thought those wider spreads, combined with extreme liquidity, relatively low commissions (IB charges $4.80 roundtrip), low data feed costs compared to stock data feeds, the absence of market makers or specialists, and data feeds are available in Level II form, would make it highly desirable by scalpers. I want to get back into trading and am looking at all the options out there, and in researching the e-minis I couldn't help but pose this question. I may be mistaken in the above assumptions; please correct me if I am! Comments greatly appreciated.
Do you have any idea how many people ARE scalping the eminis? I dont know the number but I'l bet its pretty high. I scalp them a lot.
Are you scalping both e-minis and stocks? If so, your insight as to the contrasts and pluses/minuses in each arena may be very valuable to scalpers who are solely trading stocks. Thanks for commenting!
I scalp both stocks and eminis. I think if you were successful scalping something like MSFT or DELL before decimalization, then you will still be successful now, provided you DONT'T go for pennies, but just let the stock run up 0.09 or 0.17 or whatever the ultra-short term momentum move will be and exit it as soon as it stalls. So yes, scalping stocks now technically IS a little different, but not necessarily more difficult. I do, however, think that scapling stock index eminis is way more difficult than scalping stocks, since you can use the eminis as a leading indicator for stocks, but there is not an equivalent leading indicator for the eminis, except maybe to an extent the DJIA.
Can anyone provide a good comparison summary of the difference between trading e-minis vs stocks. My interest is focused mainly on extremely short term ( minutes-seconds)scalping trades. Currently I limit my trading to Naz. stocks. Would really be interested expanding my trading to other instruments (anything really) where there might be a skill transference and an opportunity for profit vis-a-vie short term scalping. E-minis, single stock futures, options, currency, whatever. How do these vehicles compare in terms of commissions, liquidity, volatility, spreads, viewing market depth, commentary on any experiences would be appreciated. Thanks. MACD
Sounds tasty, why have I been bothering with stocks! But seriously, do you scalp all day everyday or what is your style? What kind of capital is necessary to trade effectively and earn a living? Have you tried any other products?
We trade anything we can find an edge in. I am probably not the person to answer the capital question, if you make the transition without getting too chopped up, capital wouldn't be the issue. I think standard daytrading margin is $1K per contract and spreads are something like $30 - $40.
The main reason we don't trade emini's is that they are the leading indicator, and the stocks follow...which makes stocks much easier to trade. If you're on the floor of the CME, then you can get a great deal more information about the order flow, thus giving the floor traders a bit of an advantage. I trade emini's once in a while, during obvious big moves, but they are pretty tough to trade on a regular basis. Just my opinion.
We are in Chicago, and all the floor traders do is complain about the upstairs traders having the edge. I guess the grass is always greener...