Transition to Futures

Discussion in 'Index Futures' started by Neet, Dec 29, 2006.

  1. bingo...

    i traded SPY and DIA before I ever traded YM

    it was also testing my setups on DIA vs. SPY that led me to the conclusion that dow was superior for my setups

    note also that DIA and YM have the same spread

    technically speaking SPY has a superior spread to ES, since it trades in smaller increments. thus, it is not (especially for scalping) as close a match as DIA vs. YM

    in extreme news events, the YM will have wider spikes than DIA (usually) but this is extremely short lived (fractions of a second or sometimes a little longer) since arbs will have to bring it in line

    what i would do (and what i did) is trade the DIA in 100 lot blocks and treat each block like 1 YM contract for the purpose of scaling etc.

    this will give you 1/5 the size of your eventual YM trades, with the same movements to play off of

    also note that DIA has inferior fills to YM. so, if your strategy works on DIA, it will work on YM
     
    #41     Dec 30, 2006
  2. Neet

    Neet

    Very well. I will commence my DIA trading journey on 2007 as the futures account is complete. Speaking of accounts, which broker is recommended for futures ? I got some coding background so was thinking Tradestation but I also require basic charting in the same package, if they got that I might just hit TS and kill two birds with one stone. Unless of course, there are better alternatives.

    Once again, thank you for jumping in and helping out.
     
    #42     Dec 30, 2006
  3. Bonpara

    Bonpara

    Hey Neet, Im in the same boat as you i have been tradeing stocks for about 6 months now and was to switch over to index futures and have a sujestion and a question. frist i sujest you read Simple Profitable Meathod alot of good starting ideas in there.

    and for my question i was wondering what the best Emini was the best to learn in and why.

    thanks for your help guys.
     
    #43     Dec 30, 2006
  4. Each e-mini has it's advantages and disadvantages. And each trading system will react differently. Start with the main ones:
    ES - S&P
    NQ - Nasdaq
    ER2 - Russell
    YM - Dow
    EC - Euro

    Spend some time at www.cme.com and www.cbot.com for more info on each.
     
    #44     Dec 31, 2006
  5. JGTrader

    JGTrader

    Check out the book "Mastering The Trade" by John Carter of tradingthemarkets.com

    Somebody on ET recommended it on a similar thread. For me it was a great starting point to transition into futures.
    It talks about psychology, systems, strategies (scalping and swing) with examples on many different markets.

    JG
     
    #45     Dec 31, 2006
  6. volente_00

    volente_00

    The only difference is the speed and the leverage. With futures it is a must to pay attention to key economic news releases as well as the oil report and important speakers. While a bad gdp report may only move a certain stock down .20, ES can drop 5+ points in seconds on the same news. Discipline is key. If you don't believe in a hard stop will lose in the end. The transition was not hard for me because when i was trading equities and options, the majortity of my trades were based on timing reversal points in the dow so I started trading YM using the same approach. After trading YM for a year I then switched to ES for various reasons. ES is not as choppy as YM due to the higher liquidity. I found myself getting stopped out on whipsaws in YM when programs would spike it 15-17 points and at the same time ES would only move 1 point before a reversal would occur. Make sure you trade on a simulator before risking real money. Here is a good starting point for YM.

    http://www.cbot.com/cbot/pub/cont_detail/0,3206,1180+17719,00.html
     
    #46     Dec 31, 2006
  7. AND the spread. that is the third difference

    ES has an inferior spread to YM, and that is an extreme cost measure when scalping

    mebbe when the CME and CBOT merge it up etc. the ES will move to the same spread as on the BIG S&P.

    it kind of sucks that the big S&P has a good spread and the small one doesn't. that's a ripoff any way you look at it.

    note that the big dow and the little dow have the same spread

    otoh, the full size Nikkei has a worse spread (10 pts) than the little one (5pts)
     
    #47     Dec 31, 2006
  8. Neet

    Neet

    V,

    I always keep up to date with economic data when daytrading. Regardless if Im doing stocks or ETF. Now, from past experience I have found that it's better to NOT have a position before these news. Once a pattern is developed, then the odds go in your favor. Taking a position before the news implements too much risk.

    You do the same?
     
    #48     Dec 31, 2006
  9. Neet - I also used to think the same, but in futures, these things can move very fast and by the time you want to take a position, it's too late. Make sure you watch the econ news closely over the next few weeks and see how things look in real-time.
     
    #49     Dec 31, 2006
  10. I personlly love the ym. Much easier to trade for a number of reasons. YM is made up of 30 price weighted stocks. Some days you can find one or two that is really wagging the dow. If they are holding up or moving higher (or lower) while the dow is churning around you can pretty safely bet in that direction at a good entry point, fibinacci, pivot, moving average, time of day etc...... with a good stop.....

    Also maybe because of lower liquidity it over reacts, like Thurday and Fri at close during periods of low volume. If bids are lifted and it crashes 30 or 40pts and dow quickly recovers, it is easy to get long for a real quick 10-20pt scalp.....

    I traded the full s@p in the 90's before the mini and the dow is superior to either for my stye of trading......
     
    #50     Dec 31, 2006