Everyone says go with the smart money. Who is the smart money in the YM? I.E. are the traders of the YM mainly individuals or are there alot of institutional players?
This is an interesting question. You might read some Jack Hershey posts. He says that YM leads the ES and that smart money leads the market so I guess he is saying that smart money trades the YM. Maybe he can enlighten us some more. Because of the small amount of volume in YM it doesnt seem to me that there is a whole lot of institutionaly activity but I dont know for sure. Maybe the smart money is not institutions?
I have no idea what the ratio of "small" specs to "large" or institutional traders is in the YM. Just from watching the T&S/volume I think I can safely say there are relatively more large traders involved in the ES than YM. There are some institutional trades printing in the YM though. Watch it closely long enough, particularly at inflection points, and you'll see 100 -200+ lots going off with some frequency. 200 contracts at the initial overnight performance bond of $2,437 is $487,400. I have on occasion even seen 100+ lots print in the notoriously slow overnight session.
I'm just trying to get a grasp on interpreting volume. Meaning when is the smart money buying and selling and how can you tell?
I didn't quite phrase that properly. Obviously when you see the large prints off you can see the big money moving. I guess what Im trying to figure out is if you see price moving up, or down, and then you see some huge prints go off on both the bid and the ask, which way do you go?
"He says that YM leads the ES and that smart money leads the market so I guess he is saying that smart money trades the YM" ime, the opposite is true. i follow the ES, and trade the YM, because (ime) i can increase my edge by knowing what the ES is doing. ime, on numerous occasions, i see pushes in the ES precede those in the YM by a small margin (even a fraction of a second provides an edge). it doesn't matter whether big or small money trades the YM. the YM is fungible with the pit contract and the full size big dow ($25 per point), so as long as big money is trading *a* dow complex, the rest have to move in concert or arb opp's present. personally, i find the YM to be a much more efficient and easy trader than the ES, but that's me. several of my setups have a much higher profit factor on YM vs. ES. and NONE are better with the ES.
i see what your trying to figure out conr but i think even the big prints you see can be deceiving. i work for a mm firm (options) and often trade 100 lots. ive had up to 600 to sell at one time.scary cause there is obviously not that type of liquidity. i am just hedging option trades and not really making a bet on direction so you cant really say " oh, size sellers we must be going down". plus it is really tied to what the spus are doing. bring up a spread chart and watch how closely they track the spus.at times i will also do a delta swap ...for instance buy sp and sell yms. buy 40 spus(big size=200 es) sell 220 yms. so again this is a fairly neutral trade. you'll see size sellers in the yms but im also lifting the offer in the spoos at the same time.i think i general you are better off not paying much attention to the size of the prints and just trading your system.now im sure someone out there feels like they can read the tape and get a feel for direction. im just telling you my experience in the yms. good luck and good trading. jim
I trade the YM and watch ES too. My experience is that there is no consistent lead anywhere. Sometimes YM leads sometimes ES takes the lead. However it is not wise to go long on YM if ES seems to want to go down and vice versa.