switching from ER2 to ES

Discussion in 'Journals' started by bandit77, Aug 31, 2007.

  1. <i>"I trade ER2 now, but want to switch to ES for the liquidity. can anyone who has done the switch comment? I'm curious how long it took you to become consistently profitable in ES after the switch if you were consistently profitable in ER2? TIA"</i>

    I traded the ER2 from mid 2004 thru mid 2007 myself. Saw it go from 30k contracts daily to 200+k contracts, saw changes from VIX above 20 to below 10 levels, etc.

    Switched to the ES a couple months ago for various reasons, and should have done so long ago. I don't scalp, I trade for handles. +$100 to +$400 per contract are my profit exits, using 3min or equivalent chart.

    The ER does offer more range at times, that's the sexy part. It also has same range going against open trades to take out stops in the chop whereas ES will usually hold the same relative stop order. In other words, fewer stopped trades that would have worked in ES versus ER. Win ratio is higher.

    Also, the ER tends to give quick pullbacks and/or breakouts before surge moves. You either hit the entry fast or miss many of them. That creates a more aggressive, reactionary = emotional mindset.

    The ES tends to sit on similar entry points for multiple bars before moving off. That permits more deliberate thought = planned action versus sixgun trader mentality. Less emotional angst involved.

    ER tends to spike thru critical price marks, aka pivot levels, trend lines, price patterns in false break manner compared to ES. The ES tends to flag, channel and hold visible S/R levels much more predictably than ER does.

    We are enjoying a return to <b>normal</b> price action now. Gone for awhile, possibly years are those basement level volatility readings with nil-range sessions. What we saw the past two weeks is most probable to persist for months or years ahead. We likewise need to adjust our trading approach to suit this return of normal market behavior.

    There is no need to scalp three ticks in the ES when it covers a 20pt to 30pt total range intraday. Far easier to pick off one - several +4pt ES trades intraday... they are offered all over the chart these days. For that type of trading, no other emini compares to ES when it comes to volume, open interest and deliberate price movement.

    Hope this helps :D
    #31     Sep 2, 2007
  2. Thank you Austinp, very good points. I've been reviewing ES tick data and it does seem better suited to thought out entries instead of emotional gunslinging. I think the 10 to 20 tick target is the sweet spot that I try to shoot for on ER2, which also looks like what you shoot for on the ES.
    #32     Sep 2, 2007
  3. austin, i always enjoy reading your posts. could you give some insight why you think the market conditions we are seeing today are "normal" and what makes you come to the conclusion that conditions will stay like this for years?
    #33     Sep 2, 2007

  4. I think # 3 is the most important reason of them all. The deal breakr was that 500 - 1000 contract issue. I mean, how could I trade the ES with anything less? :D :D
    #34     Sep 2, 2007

  5. Hi austin

    Nice to see someone trade ES profitable. If you don't mind me asking, when you look for 1 to 4 ES points, do you trail you stop every time ES moves 1 point, until you reach your target of 4 points? Also do you trade off a 3 min chart, but use a bigger time frame for trend? and may I ask what stops do you use 1 to 3 points?

    Sorry for the questions, but I am a struggling trader looking for answer, this is my thread at the moment I am deluded with day trading and if it real works over long term?



    #35     Sep 2, 2007
  6. btw, another really great instrument to trade is the DAX depending on if that market can be fit into your daily time schedule. I am also getting ready to add one of the Asian market products into my foray too. There has been some nice moves in those markets from what I have been watching in my backtesting.
    #36     Sep 2, 2007
  7. 3 pt stops is about right....150 smackers..can the newbie tolerate the pain? 2 cars more pain....caution is mandatory...if success is achieved....needs to start on ym....realtime demo until money made on realtime platform....if not don't think real money will help
    #37     Sep 2, 2007
  8. 1st day trading ES full time. Today's net is around $1300, so I may call it a day early just to get the win under the belt.

    I made about 900 on the morning move up, tried to short it around 84, lost the 900, then made it back and then some with the 1300.

    some observations:

    1. it's much less jumpy than ER2. alternatively, slower to watch.
    2. but then again it won't blow you out of your stops quickly like ER2.
    3. the liquidity gives you much more time to react to signals. w/ ER2, I usually throw market orders out there to get the fill. but 90% of the time end up with unfavorable fills. I think today after the first few trades I used only limit orders.
    4. it didn't take as long as I expected for the trading to chew through the 300-400 contracts ahead of me on limit orders, thanks again, I'm guessing, to the liquidity.
    5. the signals I use work similar on ES as ER2, so that's the good news.
    6. I position trade more, since...
    7. I put on bigger sized positions than I expected. I started w/ 2 contracts, but upped it to 15 pretty quickly. which leads to...
    8. higher commission costs than I expected. I'll have to wait and see if ES consistently chews through more commission than ER2. nothing scientific, just a feel.
    9. ES moved more than I expected (I was expecting it to be like paint drying, but it isn't.)

    so far so good. hopefully it continues. I like the reduced jumpiness of ES vs the ER2 since ER2 very easily takes out stops without the liquidity to get out of positions. wish me luck...
    #38     Sep 4, 2007
  9. DonKee


    once you start trading in 5 lots, consider the big contract. at 5 lots you are paying 5 rt's vs 1 for the big contract.
    #39     Sep 4, 2007
  10. I thought about that to save on commission cost. however the downside is that I couldn't scale in/out as much as with ES' 1 contract, or would have to take on bigger positions than I'm comfortable with right now to scale in/out. we'll see though.
    #40     Sep 4, 2007