High Volatility and Long Liquidations

[Soultrader]

Volatility has been insane in with the US index futures and each trader needs to adjust their money management accordingly. 10 lot YM traders can make the same amount with 5 lot. It does seem like ER2 traders have shifted into the YM and I personally congradulate any intraday trader making money in this current condition. There is alot of noise and I would feel alot more comfortable staying away from any intraday trading. There are plenty of other markets that are easier to trade at the moment. Longer timeframe participants have been liquidating over the the last 2 weeks followed by slight short covering. Nervousness, fear, panic... all these emotions have been expressed over the past 2 weeks by the bulls. While shorts have been gaining further confidence since early this week.

For traders who are struggling with the index futures, perhaps look for a less volatile market to trade in. This market condition is not ideal for new traders and traders with small accounts. (it will easily wipe out your account!) Anyways, been reading some of the trade logs and has been great. Keep it up guys and congrats to brownsfan who takes 30 plus ES pts a day. Freaking amazing. Seems like US traders are having a lot of fun now :woah: Out here in Japan is like....

[brownsfan019]

I feel the exact opposite James. This has been great. Getting 5+ pts on an ES trade in minutes is killer. I know it will stop, but hopefully not soon!!!

Kill or be killed is appropriate for the current daytrading environment.

[GCB]

	Quote:	Soultrader
	For traders who are struggling with the index futures, perhaps look for a less volatile market to trade in. This market condition is not ideal for new traders and traders with small accounts. (it will easily wipe out your account!)

I recommend soybeans. I could have made bank today on beans but I didn't have time to take the trades I was so focused on YM. (Plus my little sons kept knocking on my office door. Gotta love 'em now though because when they get bigger you never see 'em.)

Anyway. Soybeans. They breakout and trend better than the indexes.

[notouch]

What timeframe are you thinking of in terms of breakouts and trends in soybeans? Daily, hourly, 5 minutes?

[cooter]

WARNING: Do not hold any of the grains overnight unless you are fully capitalized.

These markets can and do routinely open limit-up or down. Which means you may be stuck in a position moving 50 cents AGAINST you with no way out until the next trading day.

NEWBIES, beware.

[brownsfan019]

I don't know... I guess if you JUST trade volatility (or lack thereof) then you could look for something new to trade. That doesn't make much sense to me though. I mean, you can try to be a jack of all trades or an expert in a few. And if you plan to be an expert, you NEED to watch and learn your market(s), regardless of conditions. I'm having a hard time seeing how you can become good at trading something if you jump from one contract to another b/c you don't like the current conditions. Why not study and learn, so when this happens again (and it will) you can make money?!?!?!

[notouch]

We've had this argument before brownsfan and I've got to disagree with you again. It depends totally on your trading style. If you want to microtrade a single market then of course that market needs your undivided attention. If on the other hand you like to swing trade a few markets or just look for one or two set ups per day per market then you're better off looking at different markets. You need to stop thinking "my way of trading is the right way of trading" if you don't mind me saying.

[Dogpile]

YM was routinely moving 40 ticks in under 2 minutes today.... these are truly abnormal times -- I am definitely adjusting size... for example, today I was adding YM contract size 'around' my entry point. my usual 15 tick stop loss just doesn't make sense in this environment -- it can move that much in literally seconds. so I found myself 'averaging into' a position -- just 2 measly contracts at a time.... picking spots over the course of a 2-6 minute timeframe rather than lumping full size on at one arbitrary moment. much easier to ride out that first 40-tick range 2-minute bar when you only have a few contracts on...

I am having big week but today was the least profitable day of the week for me. Made a lot on YM but gave a chunk to others on NQ. hope somebody here was the recipient of my NQ donation. NQ patterns today were needless to say --- 'highly complex' -- I couldn't interpret them until well after the fact.

[brownsfan019]

	Quote:	notouch
	We've had this argument before brownsfan and I've got to disagree with you again. It depends totally on your trading style. If you want to microtrade a single market then of course that market needs your undivided attention. If on the other hand you like to swing trade a few markets or just look for one or two set ups per day per market then you're better off looking at different markets. You need to stop thinking "my way of trading is the right way of trading" if you don't mind me saying.

Yes, swing trading is a different animal; however it appears most here are daytrading futures. Maybe I'm wrong there, but the majority of posts are about the ES, YM or ER2. Those are daytrading vehicles primarily. Look at charts posted here, most (if not all) are daytrades and most are for minutes.

So, working under the assumption that most are daytraders of the US indexes, then focus on these market(s) is necessary to become successful. I doubt many here are swing trading US index futures contracts.

It would probably be useful to take a poll to see what types of traders are here.

[notouch]

I wouldn't say they were day trading vehicles. Just look at the open interest and you can see that a lot of contracts are held overnight. Big moves like today are caused by longer term traders liquidating not by scalpers (who are active every day). Of the day traders I think a large proportion must be people who just make one or two trades per day.

I would agree though that if you actively day trade a single market you don't want to be running away from volatility. You need to learn how to trade it.