"Think about this >>>>>>>>>>> most days during the next day, the previous close will be recrossed during the next days regular pit session hours. Now i have never researched that and if anyone feels up to the task maybe they could tell us the results. (ES)" i have no idea about the ES, but i know the dow futures/cash index does this 84% of the time. i have specific stats for days of the week, premarket volume, etc. that signify when it is more or less likely to occur, but that is the overall #. but on average the closing price will be touched (not necesasrily crossed) about 85%of the time. this is fundamental to a gapfill trading methodology, knowing all the #'s and statistical probabilities. as for overnight stuff. sorry. i've watched the dow futures and held positions overnight. the dow is arbed extensively, it is affected by (obviously) what is happening in europe and asia, etc. could a fat fingered dood cause a massive run? well, it's POSSIBLE. heck, it happened DURING market hours on the nikkei not too long ago. regardless, it's called TRADING. sometimes your stop is hit, and then then market reverses. so what? that's part of trading also, distinguish between position trades and intraday trades. i have a dow contract i have held since August. one long. that;s a position trade. one contract i also intraday scalp the dow futures. in a different account. the two are unrelated i NEVER NEVER NEVER hold overnight in the daytrade account (my futures position). but that's in that account. daytraders are loathe to hold overnight. i make my INCOME daytrading, but I have stocks and positions i have held for many many years. when a good opp comes along, seize it and hold on to that puppy. participate in the great american economy. that's part of building wealth. regardless, just segregate the accounts. at this point, i have so many accounts it is getting annoying, frankly i have a master advisor account with 5 client accounts under it i have a roth ira account (untaxed, obviously) i have a swingtrading account (taxed) i have a futures daytrading account (i trade some stocks in it too) i have a "buy and hold" (longterm taxed account) i have a deferred comp account (taxed. 50% in classic mutual funds, and 50% in stocks and commodities) and i have conventional IRA account that I rolled into and again, there is LESS risk holding futures overnight than stocks (although I hold both - but NOT in my daytrade accounts), since you (and your stops) can react to market/world events, whereas your stocks will not CHANGE until the mornign when they open, but the EVENTS that cause the change will occur w/o them. that's why there are gaps (well that, and order imbalances, which is often releated to world events, but i digress). that is just basic math. it's inarguable.
I think both sides have a point; starting out it might be wise to keep things intraday, but as you progress and build up your capital you will realize that having to open and exit trades within the regular session is an artificial constraint, and you will eventually need to learn to carry longer term positions. However, holding overnights generally requires wider stops than one might be used to for their bread and butter intraday trades, so in essence it's a "separate" game.
For what is worth. I would feel more comfortable shorting overnight than longing. For instance, I have never woken to a plus 10% market. On the other hand, the downside can be brutal. On friday afternoon I opened a short position on the Qs at around 43.56, I have yet to cover. With the long weekend I would have never done that long. At the same time, I bought USO as Im longing oil into 2007. Not sure I see the relevance but thought I would share what I did for fun Thanks for all input, great info.
Since you are already familiar with equities, your trading software, etc...Why don't you just start trading SPY's or QQQQ's just to get your feet wet and test your system. When you feel comfortable you can open a Futures account.
Ive been doing that for years, part of the reason why I decided to hit futures. If Im profitable with the index ETFs I might do better in futures due to leverage (when Im ready). For example, I saw a pretty clear signal on Friday and shorted QQQQ around the 43.58 area. As you probably know, NASDAQ took a dump after the initial fake rally, or as I like to call it, a bull trap. Had Ive been trading contracts, the play would had been much more profitable. I ended up making around 1600 or so using 5000 shares. Not exactly money efficient in comparison to the futures. Especially after I ran them for nearly 40 points, which is quite the run for an ETF, nearly 1%. Actually, I still am, decided to hold the short over the long weekend. I could had been more aggressive and simply buy QID but for some reason, I didnt;possibly execution speed and liquidity. Still, no comparison to futures. Speaking of ETFs, how similar are they to futures in terms of direction ? My understanding is that futures lead the way, then ETF follow, then the puppet equities following the ETFs. Now, how lagged are ETFs in comparison to futures, if at all ? I already know about slippage, around the clock trading (for the most part) and easier taxing, among other things. Now, do SPY/DIA/QQQ/etc follow the futures to the second or do they lag ? How about IWN ? IWN feels so calm in comparison to ER2. Id say the ETFs lag somewhat, otherwise the futures wouldnt be called futures. Thanks, very interested to hear your thoughts as I have plenty experience trading these index ETFs.
I trade equities as well, but I have also been looking into trading futures myself. The above are good questions. I'll leave them to someone that has experience trading futures. Anyone????
there is no serious lag between future/etf/index. On the other hand you will see a lot of non-symmetrical oscillations between different indexes, sometimes YM will lead, on other sessions it will be ES, ER2, NQ. I, personally, haven't been able to find consistency in following one index's performance that would suggest others will follow suit. I, personally, trade ES (mostly swing now) & FX (intraday/swing). IMO TA is all the same, no matter what market you trade. Just watch that leverage, if you are used to 2:1, this is way different.
Ok, so while my futures account is set I will keep on trading index ETFs exclusively to start getting warm. I suppose 1 YM contract is roughly equal to 500 shares of DIA so in the meantime I'll be playing that. Speaking of correlation on Friday I think ER2 led the way then the rest of the market followed. Neet
Ok, so while my futures account is set I will keep on trading index ETFs exclusively to start getting warm. I suppose 1 YM contract is roughly equal to 500 shares of DIA. Speaking of correlation on Friday I think ER2 led the way then the rest of the market followed. As far as leverage I use 4:1 and do so consistenly when doing index trading, except when shorting, less leverage there. Neet