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StevenSJC

Why the S&P E-Mini Stinks

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I read that article ages ago when Austin first wrote it, and thought it was a nice summary of what I had observed. Thanks for posting it, it might help some who are struggling!

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I previously stated that I don't care if people insult the SP e-mini, complain about it, are frustrated by it, or even think it's a conspiracy to take all your money. That doesn't mean that I personally have anything against the SP e-mini. In fact, that is really all I care about as far as trading goes. I personally feel that there are aspects of the SP e-mini, that can actually make it easier to trade. With an index, I know, (at least superficially) why the index does what it does. The SP e-mini follows the overall market. I has to, . . . it's an index. With a single stock, I'm not necessarily sure what is affecting that individual stock.

And what affects the market overall? Just basic news. And they tell you exactly when the news is going to come out. Most of the price move has to do with speculation before the news, and then how the actual news release plays out relative to the speculation, and expectations. That's 90% of the "game" right there. That's not "rocket science". Don't misunderstand me, even though it's not "rocket science", it's just tricky enough to be a little confusing at times.

I'm not saying it's easy. I'm not saying it's difficult. It's both. It depends what you know, and how well you can execute actions from what you know. I choose not to tell anyone what I know. Sorry! :rofl:

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Not sure why anyone would scalp the ES, unless they need to trade a hundred at a clip. The granularity is awful (each tick is too big). Not only that it is so thick at each level you will need to pay the spread to get filled. Also it's range isn't that great (which coupled with the large tick size) means that there are not that many ticks high to low in any particular time frame (compared to some indexes). That forces you towards slightly longer swings (or more contracts). Oh and if you zoom in to 'fast' charts they are damn ugly and 'boxy'.

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Not sure why anyone would scalp the ES, unless they need to trade a hundred at a clip. The granularity is awful (each tick is too big). Not only that it is so thick at each level you will need to pay the spread to get filled. Also it's range isn't that great (which coupled with the large tick size) means that there are not that many ticks high to low in any particular time frame (compared to some indexes). That forces you towards slightly longer swings (or more contracts). Oh and if you zoom in to 'fast' charts they are damn ugly and 'boxy'.

 

The S&P 500 has become far too saturated. The more ways you can take a position in an instrument, the less reliable the data of one instrument, like the emini S&P is.

 

There are now countless bull etfs bear etfs double and triple bull and bear etfs, options on these etfs, index mutual funds, etc.

 

Volume means less when it is harder to see all of it.

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I agree with MM there are better options out there for the shorter time frame trader. While the ES may be extremely technical, the ranges make for slow trade at times. I look to the Euro (6E) for technical + large range trade.

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The 6E is indeed one of the best instruments out there, and at times the 6A and all of the other major currencies have excellent trends to follow as well, especially the last few months.

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It is not that ES is difficult, it is because it does not fit your style or psychological profile. For example, I traded ES and failed. But when I applied the same strategy to crude, it suddenly work like magic.

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It is not that ES is difficult, it is because it does not fit your style or psychological profile. For example, I traded ES and failed. But when I applied the same strategy to crude, it suddenly work like magic.

 

What strategy are you using on CL?

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If you can trade ES you can trade anything... the problem relies at people how get suckered in to trade for ticks..... as far as slow movements in ES is particular why i love the product because of the probes and the "boxiness" of the moves you can easily scratch and manage positions easily

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If you can trade ES you can trade anything...

 

Several years ago I heard Mark Cook's talk at a conference, he talked about new traders coming to his farm in Ohio for personal training. He reported most everyone that came to him wanted to trade the S&P. He went on to say he would take them out to his barn and ask them if they ever rode a horse. He had two horses, a lazy old nag and a prancing Thoroughbred. Then he would ask, "IF you wanted to learn how to ride a horse, which horse would you choose?"

 

I agree with AuctionMarket_Trader, IMO the key word is IF. This is a great thread with a great debate, dreams are hard to quiet in most people.

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Most people who start trading futures start with the YM because its only $5 a point but most of them you see switching very fast to the ES why? Because all over the Internet everyone only talks about the ES this and ES that. Its the big boys place to be and so on. So people would love to belong to the big boys and think when I can make a profit out of the ES I am a BIG boy...

 

What's the real reason most people stick with the ES, because it's a very hard fight to make any money and they don't have the energy to look around anymore, they got stuck and frustrated (even when they make money). But to be honest the ES sucks :haha:

 

Yes I can make money in it, it's a big battle but I do! But why should I put my money in the ES, what good reason is there?!?

 

Why fight my battle in a market with such a small range a day, with just a couple of good setups (the ones I look for) that you shouldn't mis otherwise you wouldn't make money that day! Why not fighting your battle on other markets with a much wider range, and one that gives you your setup multiple times a day, missing one doesn't matter because there will be a dosen of them in the remaining day! Enough oppertunities to make/loose money:) and a good possibility to recover! And I am not talking about trades of 4 ticks, I am talking of trades where I take with ease 14 ticks multiple times a day!

 

And what about big volumes?! Every one starts with one contract and as soon as they make more money you will add up, add the time you get to volumes that are to big to get a good fill you just scale up in the timeframe and then you can put in bigger volumes because you a tick more or less wouldn't matter anymore because you play bigger moves.

 

The only reason I can think of that people aren't playing other future markets is because they sound scary, people haven't tried them!

 

I have seen multiple people who had a hard time to survive in the ES and moved over to other contracts made money without a problem because the moves are bigger and their setups occur more often!

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Great post I agree 100%. The fact is most people will look at their "scalping" trading system and assume if their number it touched it is filled, to add to that most paper trading programs will give the trader the fill when their number is touched.

Then the trader goes live and they find 3 of 10 trades they hit their target on reverses and hits their stop. It can be very difficult to get that extra .25 movement during live conditions and what looked on paper to be a profitable trading system suddenly becomes unprofitable. Most of the "daytrading" systems I have seen are set-up that way. They have very high win rates with very small profit targets, be wary of any vendor who is claiming 85-95% win rates as these numbers are not realistic in the real world.

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By the way, if the original poster wants to check out a different approach, they might want to read my thread titled "an institutional look at the S&P Futures"....If I can be of help...just PM me..

 

Steve,

Looked but could not find your thread. Can you post the location please?

 

Thnx

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Surely, there are a lot of traders losing money trading SP500 futures. After all, it is a zero sum game.

 

Conversely, however, for every poor sucker you talk about, there IS somebody who is winning.

 

But guess why some people can continue to make money indefinitely? It is because those who get "blown up", have left the scene after losing money which will stay permanently with those who can last in the market.

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Steve,

Looked but could not find your thread. Can you post the location please?

 

Thnx

 

At the top of the home page, go to "forums"

 

Scroll down to "Emini Futures Trading Laboratory" and click on it

 

Scroll down until you see my threads (here are the links)

 

"An Institutional Look at S&P Futures"

http://www.traderslaboratory.com/forums/f32/institutional-look-s-p-futures-8859.html

 

"Trading Adverse Events"

http://www.traderslaboratory.com/forums/f32/trading-adverse-events-9488.html

 

and

 

"Ideas for Struggling Traders"

http://www.traderslaboratory.com/forums/f32/ideas-struggling-traders-4333.html

 

So of the three threads, the last one "Ideas for Struggling Traders" is the oldest..and some of the information is out of date...

 

I hope this helps you, but if you need more up to date info simply PM me..

 

Good luck

Steve

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It's all about personality. The ES fits some traders' personalities and doesn't fit the personality of other traders. Someone else mentioned they went from ES to CL and the transition worked perfectly for them. I know traders who have gone from the YM to the ES and haven't looked back, some who have gone from the ES to NQ or TF and have found success.

 

Everyone trades to make money not to continuously lose money. If the ES didn't work for me then I would leave my ego at the door and 1) find another instrument to trade or 2) develop strategies that work for trading the ES with proven results.

Edited by TheNegotiator

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Interesting thread everyone. I have been trading the ES Emini for quite some time and have consistently heard the argument made that it cannot be traded or that it isn't the best market for trading. It is true that everyone has their own market that they should trade that fits them; certain people are just better suited for certain markets. I have been training people to trade the ES for a little over a year now (and trading for over a decade if you care) and have seen people who try to enter a market because of the positive things it has to offer without the proper tools. It is like the construction worker trying to build a house with no hammer and nails, and instead trying to glue the boards together with Elmer's glue. That isn't a strategy with any long term success. Sure, I learned how to swim in the shallow end of the pool before I moved to the deep end, because I wasn't fond of drowning. But the ES is the first futures market I traded, because I watched it before I traded it and felt comfortable with it. I guess I am trying to say, trade the market that you feel closest with, because what one successful trader says to another isn't that my market is better than yours. That is only what amateurs say to other amateurs, and usually ones that are losing money.

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Well said Matt. I have to say that the ES does tend to separate the wheat from the chaff though. You have to prepare properly and work hard. But if you want to succeed, is that different from anything else in life?

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Well said Matt. I have to say that the ES does tend to separate the wheat from the chaff though. You have to prepare properly and work hard. But if you want to succeed, is that different from anything else in life?

 

No it does not.

 

The difference being that a half arsed attempt will get you through a lot of socialised

ventures in life, but the ones that really matter require 120% or more every day.

 

If you are not playing outside your skin every working day, then you are not trying hard enough.

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If you can trade ES you can trade anything... the problem relies at people how get suckered in to trade for ticks..... as far as slow movements in ES is particular why i love the product because of the probes and the "boxiness" of the moves you can easily scratch and manage positions easily

 

Isn't there a bit of a contradiction hidden away in there? I too like backing and filling so you can manage and scratch trades but again there are markets where that backing and filling is profitably tradeable in it's own right. Again ES's poor granularity works against it here. Chances are by the time ES has up ticked to allow you to scratch (an no one gets filled on limit in the ES unless they are on the wrong side) you will have taken $50 out of the Russell (for example).

 

Several years ago I heard Mark Cook's talk at a conference, he talked about new traders coming to his farm in Ohio for personal training. He reported most everyone that came to him wanted to trade the S&P. He went on to say he would take them out to his barn and ask them if they ever rode a horse. He had two horses, a lazy old nag and a prancing Thoroughbred. Then he would ask, "IF you wanted to learn how to ride a horse, which horse would you choose?"

 

I agree with AuctionMarket_Trader, IMO the key word is IF. This is a great thread with a great debate, dreams are hard to quiet in most people.

 

ES is the lazy old nag of course by any objective measure. Try trading Crude, or the Russell or the DAX or the 6E or the 6J.Tthey are wild stallions in comparison, you will be in the next county on any of those nags before the ES has left the stable. This is not really hyperbole sadly.

 

It's not that it is 'hard' it's just that it is not great to trade using anyone of a variety of objective measures. One of the (few) exceptions is that it will take size but you actually need to trade size to make a decent return. (well in comparison to other instruments).

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Don't use ES for trading, use it for holding long term :)

 

Don't have to pay tax on distributions and not as easy to get margin calls as a leveraged SPY. Can also get the leverage at the "risk free rate" and not whatever your brokerage happens to charge you.

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I like the S&P Emini because I make more money trading it than the other eminis. Period.

But just because I make good money with it, does not mean it is for everybody. I have been trading professionally for over 10 years and got started on eminis about five years ago.

Anyway, if the S&P doesn't work for you, for pete's sake, don't trade it. Of course some people should not be trading at all.

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