Which contract should a beginner trade?

[brownsfan019 17]

  The Bear said:

I say you start with YM - one of the other benefits is the data feed is still free. If you start paying data fees, that's just more money you are going to have to make just to break even.

 

I don't think data feeds are that expensive...

 

In other words, I would not trade a contract purely based on saving 100 bucks a month (emini package thru DTN).

[Guest cooter]

  brownsfan019 said:

I don't think data feeds are that expensive...

 

In other words, I would not trade a contract purely based on saving 100 bucks a month (emini package thru DTN).

 

I agree.

 

If the cost of data and charting is a make it or break it proposition for you, then perhaps you shouldn't be trading futures to begin with.

 

Just my two ticks' worth....

[tim4 10]

  TinGull said:

Soul...this is the one time I've got to disagree with ya. I've been trading NQ the past few days now and I wish I started out on this one. It's a great contract for beginners because the tick value is the same as YM but the range is less, so the risk ends up being less. You can find great setups that could use a 2 point stop on the NQ based on what the market tells you, and that equates to 8 YM points. Is the reward going to be smaller? Absolutely! BUT it gets your feet wet with real money without having to risk AS much. This is a contract I've been testing a new strategy on and instead of risking play money and not getting that emotional thing that we all love...I'm risking real capital and seeing how my emotions play into the strategy. So far, so great

 

I vote for NQ or YM, with preference to NQ.

 

I'm brand new here, but have a question on using YM v. NQ. It would appear that a particular move on YM is maybe double the number of ticks as the same move in NQ. Since you pay 1 tick to get in and 1 to exit, that cuts the profit disproportionately in the NQ, right? Example: a 20-tick scalp on YM may yield a net of 18 ticks, whereas the same corresponding move in NQ would net only 8. So instead of being half the profit, it's actually 44%

 

In addition, the commission of, say 4.60 RT is actually halved on the YM trade, since the profit is only half of the NQ trade.

 

Does this make sense? Or are there are other factors I'm not aware of, like better fills on NQ? Seems like there's more volume on YM, though.

 

I plan to do a lot of this trading, scalping for 5-20 ticks, so I'd appreciate any thougts. Many TX.

[Guest cooter]

  tim4 said:

I'm brand new here, but have a question on using YM v. NQ. It would appear that a particular move on YM is maybe double the number of ticks as the same move in NQ. Since you pay 1 tick to get in and 1 to exit, that cuts the profit disproportionately in the NQ, right? Example: a 20-tick scalp on YM may yield a net of 18 ticks, whereas the same corresponding move in NQ would net only 8. So instead of being half the profit, it's actually 44%

 

In addition, the commission of, say 4.60 RT is actually halved on the YM trade, since the profit is only half of the NQ trade.

 

Does this make sense? Or are there are other factors I'm not aware of, like better fills on NQ? Seems like there's more volume on YM, though.

 

I plan to do a lot of this trading, scalping for 5-20 ticks, so I'd appreciate any thougts. Many TX.

 

You need empirical data to support your assertions, IMHO.

 

The daily volume on NQ is far greater than YM - and that's a fact, supported by the data.

 

As for the range on the NQ vs the YM, if you are trading size, you'd probably want to use the NQ, due to the risk of slippage on YM.

[darthtrader 10]

tim, I think if you just look at the reasons you posted upside down it will make more sense from a beginner stand point. I believe what you posted is true as a rule of thumb but you would also lose less when your wrong. NQ you can have a tighter stop if your wrong dollar wise.

They are close enough though starting out that its not going to make or break you, your strategy will do that. If your totally wrong with your strategy overall NQ though should be able to give you some extra trades on your roll.

[tony1d 10]

Great posts, all make perfect sense. I trade the ES first, then the YM, er and nq in that order, basically whatever is moving the most. I like the ES as i can watch the tape and follow the pros slamming multi thousand contracts and ride along for a few ticks to an easy point. The YM spreads are friendlier and you can have wider stops plus you can look at the 30 individual stocks in the cash market and use that as a guide on another monitor. the ER is wild and if you trade tight stops you'll most often be taken out but when its running you can make a bundle fast. Not really an NQ fan but the NQ follows technicals really well, it loves to test the POC almost daily unless its a big trending day. Moves a bit too slow for me. Only gripe on the ES is that at $12.50 per tick, any slippage and your playing catch up. on 5 contracts you're -62.50 from the beginning. I use limit orders on 95% of ES trades to avoid that. Market only when its flying.

[tim4 10]

Thanks to you both for good, considered replies. I actually have more success with ES than any other of the eminis. When you're scalping for a few ticks, I've found it's important to be able to buy the bid and sell the ask, which I can do more frequently on ES. If you have more patience than I do, and trade for points instead of just ticks, no doubt you could do quite well with either NQ or YM. I do think that strategies should be tested on a simulator until you get some consistent results. I know to my regret how easy it is to lose real money no matter what is traded if you've got a shaky strategy.

[tim4 10]

Related to the question of best contracts is one about best brokers. I use TradeStation and seem to get decent fills, which is very important when trading ES. But I hear that since they clear through another house (RJ Obrien) that that can slow the process a little. I like their charts and the matrix trading platform.

 

Anyone have any comparisons?

[Bird of Fire 10]

  tim4 said:

Related to the question of best contracts is one about best brokers. I use TradeStation and seem to get decent fills, which is very important when trading ES. But I hear that since they clear through another house (RJ Obrien) that that can slow the process a little. I like their charts and the matrix trading platform.

 

Anyone have any comparisons?

I also used TS but dropped it for Ninja/Zenfire which is faster and is server to server direct. The trading strategies options are also out of sight. I still use TS charts--Ninja's are lousy.

[tim4 10]

Thanks. I'm not familiar with server to server term; what is TS? And is Ninja enough faster to warrant the hassle of switching over? Also, I do like the ability to see the order lines on the charts; I only wish you could trade from the TS charts by moving the lines directly.

[brownsfan019 17]

  tim4 said:

Thanks. I'm not familiar with server to server term; what is TS? And is Ninja enough faster to warrant the hassle of switching over? Also, I do like the ability to see the order lines on the charts; I only wish you could trade from the TS charts by moving the lines directly.

 

FYI - you can 'trade from the chart' with Open ECry as well.

[Bird of Fire 10]

  cooter said:

Unfortunately, the OpenECry OEC Trader simulator is one of those that is so "loose" that it triggers limit orders as if they were "market if touched" orders.

 

Pretty poor and shoddy implementation, IMHO. It suckers newbies into thinking that real world trading would match this performance - which, of course , it won't.

 

I did like the Transact AT simulator (same as Infffinnity) since they actually recognized this limitation and made certain that it either trades thru the level on the sim or sits in the queue for a period of time.

 

Your real-world expectations and experience may vary either way.

I find NinjaTrader's sim mode very conservative and probably the most realistic to live trading. In fact, I have entered orders simultaneously--real and sim--and the real get filled before the sim, so if you're having success in sim, you will have more in real mode.

[bunkerdoo 10]

I have a related question, namely slippage. What would you say is a reasonable value in terms of ticks to attribute to slippage on each of ES, NQ, ER2 and YM

Is 1 or 2 ticks satisfactory when designing a system?

[Guest cooter]

In a word, yes.

[Bird of Fire 10]

  bunkerdoo said:

I have a related question, namely slippage. What would you say is a reasonable value in terms of ticks to attribute to slippage on each of ES, NQ, ER2 and YM

Is 1 or 2 ticks satisfactory when designing a system?

Design a system that only uses limit orders and slippage isn't an issue.