Someone mentioned that most index volume is programs and professional particapants. This couldnt be more true. Index futures are the hardest to trade because IMO they give the best potential for making money, and the best lifestyle. Its a no brainer that it would be very competitive with these attributes. 99% of retail index future daytraders think they have an edge, but in reality it only works enough to keep them in the game so they keep taking money away from them. You incorparate money management etc with these traders and they can stay in the game a lot longer but will never be making consistent, good money. They will always be on the search of a new system etc only to breakeven every month if they are lucky. If you cannot trade like the smart money or the 1% of index daytraders that are consistent, I suggest moving to other instruments or do some serious backtesting on your last 2,000+ trades to figure out if you really have an edge. On the contrary, if you can daytrade the index futures consistently, day in day out and make a good living, I believe you could trade anything on any timeframe.
Try this--when I trade I use this simple strategy--I could be long on a 60-minute signal in the big contract and then take short trades on the five-minute signals in the smaller contracts. This way, instead of trying to stay on top of different markets, I can watch the same market on different time frames and take advantage of the natural ebbs and flows within each time frame. This is also a way to stay hedged when a larger time frame trade is going against you on a five-minute chart doesnât mean itâs time to freak out and get out of the trade. --mjh
Up front disclaimer: I trade prop so leverage is not an issue. I've tried trading the indexes before and I just couldn't make it work. Hats off to those who can. Strong/weak stocks vs the indexes on any given day is kind of a cliche` but it's one of the things I look at on a daily basis. For example, if the spoos are falling and a particular stock is holding support, it's a low risk trade on a bounce. Obviously depends on liquidity and familiarity with the stock, but it's worked for me lately. The only problem is that you need to be very nimble, and it takes your attention away from other things you may be watching. Not to mention the fact that the futures need to make a fairly decent move in order to determine relative strength. Tricky, yes. But it's worked alot better for me than trying to predict a move in the spoos.
"If you cannot trade like the smart money or the 1% of index daytraders that are consistent," i call bullshit on #'s like this that are pulled out of one's arse. I have no idea what %age of index daytraders are consistent, nor i suspect do u. " I suggest moving to other instruments or do some serious backtesting on your last 2,000+ trades to figure out if you really have an edge. On the contrary, if you can daytrade the index futures consistently, day in day out and make a good living, I believe you could trade anything on any timeframe." what i did was i traded DIA for over 6 months before I moved to YM (index futures). this accomplished two things. One, it allowed me to develop and test setups. With 5-10 trades a day, this gave me well over 1000 trades to get a good statistical base as to what works and what doesn't IN REAL TIME. also, since DIA has inferior fills, i knew that what was successful on DIA, will be (and is) successful on YM. like i said, I am not saying index futures are easier to trade. i am saying that, based on MY trading style, *I* find them much easier to trade (intraday scalps) and consistently make a great income day after day after week after month. i never had anywhere near the consistency on an intraday timeframe, with stocks. otoh, on a swing timeframe and a B&H timeframe (months to years), i far prefer stocks to index futures. i hear a lot of defeatism about these evil black boxes, quants, blah blah blah and i just don't see the big deal. develop a methodology with an edge, and trade it with proper risk management. ime, the index futures are much more consistent and predictable than stocks, but again - that's based on my methodology. i don't use ANY lagging indicators, and i hear a lot of talk hear about MACD etc. so, maybe for that type of trader, stocks are a better choice. since i don't use them, i can't comment on that
How many traders have the money to meet the margin requirements for a 1000 contract ES position? And how long have you been able to successfully average 2 ES pts per day? If it were easy, everyone would do it. And what happens when you are long 1000 ES and 9/11 happens?
Here's an answer. Simply try it. I traded ES for over a year, and that was some time ago and in my opinion it has only worsened--lower volatility, bigger orders, etc.--and I had quite a lot of experience at the time. Fact is, I could never make it work. Very annoying time, wasted a bunch of mental energy during my day thinking about those trades and at the end of the day the money coming out of ES just wasn't there. You might have different results, of course. I hope you do; there is just something about that market that makes it very hard to daytrade. Swing it off of the weekly is my advice on ES. And think smaller, you'll get creamed early with those math thoughts swirling in your head.
this is a logical fallacy. it is called extrapolating from the individual, to the whole. just because YOU found ES impossible to trade intraday does not make it so for others. Also, *why* ES? fwiw, i have tested my setups (I trade YM) on the ES. While they still have positive expectancy and profit factor, they work MUCH better on the YM. i have a # of guesses as to why, but that is secondary to the main issue. imo, ES sucks (for intraday scalping). Not being able to trade ES successfully does not mean much, if you didn't try similar methodologies on other indexes. I also get tired (as i said) of this defeatism "if it was so easy, everybody would do it" blah bla bla look, MOST small businesses fail. trading is no different. nobody said it was easy. but i love it, and make a great profit intraday scalping YM, and if i listened to all the naysays, I never would have considered it (which would have been a horrendous mistake). For me, i have found no greater opportunity in the trading world, than those present in index futures. I also really enjoy Corn and Gold, but index futures are the paramount instrument for me.
One of the rules of my system is to never be long when a 9/11 happens. Of course, my rule says to always be short when a 9/11 happens. Why would you want to be long?