I have traded ER2, migrated to CL (see my thread "Some Observations on Scalping Crude")and I am doing more ER2 again as the tension is creating more treadable patterns. I am basically scalping using visual aid and my sense of momentum. It's been hard but I am adapting by trading with volume confirmation only and for wider targets. I don't use stops just get out when the swing goes against me. In the last few days I also stopped scaling against moves. I have posted the following yesterday at an other board: "If one looked at a15 second or 89 tick or 89 volume bar chart of ER2 one could see that the patterns have not changed, intensity and range has. Chart patterns are clearer to read because there is intense two sided market at every turn. One of the most reliable patterns the flag or pendant formation on the 1, 3 and 5 minute chart is appearing several times a day in its perfect form, meaning after a move with robust volume - which we now have on impulse moves- the market pulls back a bit on much much less volume. This ebb and flow is not readable well in aquiet market, only in an active market. Most of these patterns in the last week met their measured targets, again textbook. Yesterday afternoon the high volume bottom at 2:30 ESTwas followed by three waves up on less and less volume and the "surprise"drop.Textbook. On the other hand if one is a swing trader, because momentum leads to somewhat bigger overswings it is easier to catch a turn or at lest when one does catch one targets are met quickly(rubberband effect), one can act with more confidence if the breadth reading are lopsided in the direction of one's trade. Four days ago downside volume was 20x the up volume. Needless to say even the simplest oscillator can pick intraday tops in those conditions. As far as blackbox trading I have my own theory, when the market is intense it is a free for all and noone can control the market. If you are a BB operator and stand in front of the freight train it will run you over even if you are GS or MS. The only blackbox person I personally know chips away at moves at their extremities so they are actually containing market moves rather then exagerating them. I do the same as a scalper. One aspect of market movement I don't see discussed much is what cycle in the market is dominant. I don't mean cycle in the regular sense but more like on what time scale the ebb and flow of intensity is at the moment. Skilled traders try to figure out thisd ebb and flow and if they are tuned to it it's like magic. You and the market are one. In individual stocks (unless it's a MOMO stock), the dominant intensity may be daily as the stock is dragged up and down by the ebb and flow of the market, with an occasional jolt from a news item or right after a breakout/breakdown. In futures the dominant action (where there are clearly formed tradeable patterns)are both intra day and inter-day because of leverage more attention is paid to every little move. It takes a lot of learned skill and stamina to figure out,track this and consistently be good at it. When the market is in a crisis mode or after important releases the dominant intensity becomes microscopic. In the last few days the 1 and 3 and 15 minutes charts of ES, EQ, YM had as many good formations as one would have on hourlies in months and dailies in two years. When people don't understand a sudden move it could be because dynamics of a different wavelength are in play then the ones the trader is used to. It is the best to stay clear of these situations - one should chose one battles carefully and stay clear of slower or faster markets then what one is used to." Regards, GC
Trade,DIA,SPY,QQQQ, trade 100-500-1000 shares. It's not so much leverage. You may need a larger account, but is much less stress.
I suppose the original poster has been looking at the p@l board and suddenly seeing futures posters on there making 5-7k a day every single day of the week trading 500 r/t's a day. I say thats bs. All of us who tade futures know one can't money every day. Like today was plain crazy with 5 pt moves in seconds and whipsaws everywere. By the time your order was filled if you had a 2-3 pt stop you were taken out with the whipsaw
In 2000-2003 I worked with a young guy who had devised a mechanical system that worked well during normal market conditions. His paper trading results were good, so he started trading it for real during the beginning of one of the major selloffs in 2002. I warned him that the volatility during selloffs in this period had not been seen since the 87 crash, 1973-74, and before that the Great Depression, and therefore his backtesting (based on 1990-2000) wouldn't mean too much. I said he was very likely to find his stops too close and get killed by the chop, so he should trade much smaller than normal and be prepared to adjust. Being an arrogant SOB, like most people, he didn't listen, and turned a 90k account into about 5k, which he then liquidated literally within hours of the bottom in Autumn 2002. I kid you not. What's the lesson? Systems based on one kind of market behaviour often work terribly during periods of different market behaviour. My advice to you is to stop trading your system entirely until the current correction has clearly passed. If you can't do that, trade on 1/3 or 1/4 normal size. Also, try starting from scratch to design a system that does well in volatile corrections.
As far as liquidity goes ES>NQ>ER2>YM. ES=25>NQ=5.5>ER2=3.5>YM=2.5 Good posts by Austin and Gurucan. All the charts look identical to me, the only thing that's changed is the volatility, so ER2 is going to be like ES X 2. I noticed some liquidity issues with ER2 today, getting partial fills on 5 cards, but ER2 still provided good scalping opportunities with 1 lots getting fills and reversing 4 ticks the other direction in 1 second. I'm not sure what the book looked like on ES today, but I know the book was thin on ER2 today, I remember seeing about 115 per side during trading, as compared to the usual 400-700. Trading IWM or SPY is an option, or switching to YM to lower risk is an option too, and like Austin said, ES is King if you are trading larger size.
Will concur with previous posters saying liquidity on ER is thinning. A market order of mine yesterday near the closing selloff got filled 1.5 above where ER was trading, and ER reversed that 1.5 points to go in my favor (where I got out at BE) in less than 3 seconds. With shit like this, I'm switching to ES. I'll take half the profit on a point move if it means more consistency.
My friend the es has been slamming back and forth 2-4 pts in literally seconds the last few days. when we took out 1450 today it dropped in seconds to 1445. Everythings been trading thin the last week or so
First of all, don't compare yourself to anyone unless he/she is also trading ER2. Secondly, it sounds like your trying different types of fixed stops and its not working as well as you planned. That implies your having problems understanding the price action. Also, you used the word chop in reference to prior trading days. I'm amazed you view the prior trading day's as chop in ER2 considering its swing range has expanded tremendously these past trading days. Yet, I've seen some weird price level skipping in ER2 on those volatility bursts in which the next tick is 2-5 ticks away from the prior tick As for initial stop/loss placement, my stops have been the same as they have been many years of trading ER2. However, I don't use fixed stops (not recommended) for volatile trading instruments. Instead, I use stops based upon the current price action I'm trading that are derived from different types of s/r zones. Thus, my stop will be different when I take another trade later in the trading day because the price action is different... Resulting in a different s/r zone. Simply, fixed stops has a flawed in that the initial stop/loss placement assumes the price action is the same throughout the trading day and that the risk is the same throughout the trading day... Far from the truth. Also, when trading volatile trading instruments you need to have the following: * Re-entry signal * Position reversal signal (prior to a stop being hit) * Strong understanding of Volatility Analysis especially when trading something that's normally a volatile trading instrument Regardless, if you can catch yourself saying to yourself that this will be a wide stop... That should prompt you to lower your position size for the trade to better manage the risk. Last of all, I've been trading ER2 for several year and other volatile trading instruments for many years before traversing into ER2... This volatile is not a surprise via the volatility expansion in March and then the retraction in volatility for April and May to setup a month of two of volatilty spikes... This expanding volatility will eventually calm down to help setup swing trading or position trading like conditions from October through November (sometimes December depending upon the year). Other than that, if your using a strategy not suitable for these volatility like conditions... You should be on the sidelines waiting for things to calm down or trading something that's less volatile right now. I love ER2 because I'm very suited for trading volatile trading instruments. I know for fact its possible to make money consistently while trading futures and know a few traders (personally) with long win streaks in trading instruments like ER2, EuroFX, DAX, CAC-40, ES and YM since March of this year. I didn't say they never have a losing trade. Therefore, if there's someone here in ET profit/loss thread with a win streak of more than 20 consecutive trading days... It's believable for me. Conclusion, if you can't hang with ER2, go to the sideline or find something else. If you can hang with ER2, enjoy the profits. Mark
thanks to everyone for the useful input. it helps to suss things out. being relatively new to trading futures FT (not to investing- >20 years making a living @ it), my acct. size will be larger when i'm confident in both my abilities and my data/executions (i've had some issues there). point being, i NEED to figure out how to adapt to these conditions, as i know that it is these times that i must make hay if this is going to be my job. i've cut down to trading single contracts to mitigate the damage whilst i am less than confident.
Two (lol, helpful) suggestions: 1) You don't have to make anything on these days if for 90% of the days (normal days) you make money most every day. I personally do better on normal days than huge days but that's the price of my strategy and discipline. 2) Another approach in high volatility (which is my one) is to use the same risk but set my entry back from the signal point. You miss quite a few but who cares.