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Soultrader

Big Dow?

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  Soultrader said:
Has anyone traded the Big Dow? The tick increments are 5 times the YM but is anyone familiar with the price movements of the BIG DOW?

 

I did trade the DOW some years ago

 

Nowadays, it usually (not always) move slower than futures. New money are comming into futures especially e-mini's I used to track them(DOW/SPX) against other instruments. Like for instance, If futures were moving but DOW/SPX were quiet, usually that movement won't last. It can be used the other way around.

 

Still have them on my charts, but I include them on my sector's list. I prefer to track them by price better than charts.

 

As to trade them, well if you have the money. Personally I don't recomend it.

 

A friend of mine told me about 2 years ago that futures and e-mini's are the "future" Now I think he's rigth

 

Still, the "big boys" pour insane amounts of money into the DOW/SPX

 

Only time will tell.

 

Raul

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Thanks Raul. Very interesting, I treated the ES when trading the YM just like you treat the DOW. This will be a new addition on my scanner and will see how handy it will be.

 

Is liquidiy still low on the DOW?

 

  Quote
A friend of mine told me about 2 years ago that futures and e-mini's are the "future" Now I think he's rigth

 

I completely agree with this comment. Since I trade futures mainly, I can never go back to trading stocks. I feel like futures is the only fair playing field for traders like myself.

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  Soultrader said:
Thanks Raul. Very interesting, I treated the ES when trading the YM just like you treat the DOW. This will be a new addition on my scanner and will see how handy it will be.

 

Is liquidiy still low on the DOW?

 

 

 

I completely agree with this comment. Since I trade futures mainly, I can never go back to trading stocks. I feel like futures is the only fair playing field for traders like myself.

 

 

Trading the big DOW is kinda tricky, well at least back in 93-95 Voulme used to be somehow erratic. Used to be a safe-haven for fund managers to cover their cash. Back in the day of stock's daytrading golden era (90's) the dow was mainly used as a tracking device. Speculators never looked at the dow as a daytrading vehicle and I don't think that has changed. I traded the DOW via Datek in 1997 and I got screwed couple of times due lack of fill

 

As I said, I still have use for it and to me still is a wondeful way to track the market. Besides, is probably the most watched index as everybody is waiting to break 12,000.

 

I have the big dow as part of my sectors. I also noticed not too long ago that Dow trasnport ($TRANS) moves faster than the DOW but not as fast as the futures. I hav no idea as to why but I've been trackin them for some time now and it happens very often. I have it on my sectors too.

 

James, I will suggest to keep an eye on the S&P retail index ($rlx) has been putting some buying pressure on the market lately. New money is coming to this sector, fueled by the decrease of crude oil pirces, therefore consumers has this extra-money (new money) to spend. Yesterday RLX went up as high as 3:50%

 

Raul

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I thought the BIG DOW futures is relatively new?

 

The Dow has been definitely the index to watch breaking above key resistance points and now testing the critical 12000 mark. Technically I am still bullish with the Dow.

 

Watching the $RLX makes alot of sense now... I always had trouble identifying which sector money was flowing into and which index to watch. I usually watch the bank/brokerage indexes as well as crude and gold. Will add $RLX to my scanner.

 

Thanks for the info Raul. What have you been trading lately? From what I recall you also trade the futs?

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I've been in love with crude oil for some time now. To me, crude oil works good on the pivot play as well S/R, but more on pivots. Sometimes I trade silver and gold. T-Bills 30yr I look at them from time to time. I also trade ES. I am looking to trade YM or at least watch it from next week on. Seems like ES moves a little faster sometimes don't you think? Sorry I was talking about DJIA is that we used to call it the BIG DOW back in the day. Dow futures is fairly new.

 

Tracking YM and ES is a good idea. I am definitely going to incorporate that on my trading

 

Raul

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  feb2865 said:
I've been in love with crude oil for some time now. To me, crude oil works good on the pivot play as well S/R, but more on pivots. Sometimes I trade silver and gold. T-Bills 30yr I look at them from time to time. I also trade ES. I am looking to trade YM or at least watch it from next week on. Seems like ES moves a little faster sometimes don't you think? Sorry I was talking about DJIA is that we used to call it the BIG DOW back in the day. Dow futures is fairly new.

 

Tracking YM and ES is a good idea. I am definitely going to incorporate that on my trading

 

Raul

 

Im looking forward to trading crude in the future. I think Im going to stick with futures for some time... just never was attracted to stocks or Forex. The ES does indeed lead the YM but a few seconds. Not always but fairly common. For example, when the YM is testing the low but the ES has broken its low... I will anticipate a break in the YM as well. For YM traders this is a small edge.

 

I was completely mistaken with the futs not the cash. Im the new breed in day trading so I still need to catch up with the lingo :)

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  Soultrader said:
Im looking forward to trading crude in the future. I think Im going to stick with futures for some time... just never was attracted to stocks or Forex. The ES does indeed lead the YM but a few seconds. Not always but fairly common. For example, when the YM is testing the low but the ES has broken its low... I will anticipate a break in the YM as well. For YM traders this is a small edge.

 

I was completely mistaken with the futs not the cash. Im the new breed in day trading so I still need to catch up with the lingo :)

 

Seems like energy sectors in general are hot nowadays. Crude oil mini's has $500.00 per contract/per dollar movement P/L. I've been trading Crude since it start falling from $76.00 (not swing just in-out - intraday)

 

I think energy sectors are just the flavor of the moment and sooner or later oil(who's leading the pack) is going to start a long period of consolidation once it settles on a fair price. It's been part of a cycle.

 

Something like MSFT in the 90's Traders and investors were dumping funds in Microsoft like chickens with the heads cut-off and the the infamous "antitrust case" came into play. Not only they lost a lotta money but a new cycle began in the Mircosoft history(Equity-related).

 

All equity markets, including Forex, runs in cycles.

 

When a new cycle begins, there's a shift between new and old participants in the market. It's a good time to review you strategy/system/method and be on the lookout of market behavior (this is the main reason why indicators are useless in my opinion) hope it makes sense.

 

It's good to play cycles but you better have the foot on the brake.

 

I can make this whole post about market cycle but let's get back the Dow

 

Traders/investors/ CNBC/ The Boy Scouts of America/The Undertakers Anonymous Society/Barney/Hilary Duff...everybody was waiting for the DOW to break the 12k range on Friday....yes this past Friday. Didn't happen...why??

 

Very simple ....Oil went up and retail went down...these two animals are putting a lotta weigth in the market recently

 

Keep an eye on them.

 

My morning routine for years has been looking at the sectors and the dow (quote boards) before anything in the morning. Is the first thing I do. If the dow is down/up but sectors are mixed, that's a warning sign. Especially if is bewteen 10:00-11:00AM. Not trading on days like this, keep me out of the "choppy monster" very often

 

Sometimes I look for any gaps - to fill(on choppy days) and maybe I go on and put a trade, but is on a case-by-case basis

 

 

As to the YM - I have a confession to make. I never put any weigth on. I watched ocasionally the YM tracking the ES but that's it. Please correct me if I am wrong (maybe I read it somewhere else) but you have a post comparing ES vs YM and the value on axis advantage the YM represents, other than is $5.00 per point vs $12.50 per tick. I am going to look into that very closely.

 

Thanks

 

 

Raul

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  feb2865 said:
All equity markets, including Forex, runs in cycles.

 

When a new cycle begins, there's a shift between new and old participants in the market. It's a good time to review you strategy/system/method and be on the lookout of market behavior (this is the main reason why indicators are useless in my opinion) hope it makes sense.

 

It's good to play cycles but you better have the foot on the brake.

 

I can make this whole post about market cycle but let's get back the Dow

 

Traders/investors/ CNBC/ The Boy Scouts of America/The Undertakers Anonymous Society/Barney/Hilary Duff...everybody was waiting for the DOW to break the 12k range on Friday....yes this past Friday. Didn't happen...why??

 

Very simple ....Oil went up and retail went down...these two animals are putting a lotta weigth in the market recently

 

Keep an eye on them.

 

One of the things I am working on right now is to have a better understanding of money flow and sector strength analysis. Your comments are going to save me alot of money. Thank you Raul.

 

Ive been a big fan of John Murphy's work with intermarket anaylsis but always felt that past cycles are not repetitive. With new technology and the ever changing supply and demand of natural resources, I feel there is always some new sector that I need to be updated on. Still trying to understand this better.

 

Your comments on crude and the retail sector adding weight to the markets inspired me on a new breakout/breakout failure strategy. This information will add further confirmation on S&R/market profile strategies that I currently use.

 

I highly doubt the YM will ever become a "popular" contract. I dont think its necessary to apply too much weight on it either. The ES usually leads the YM.... and its rare to see the YM lead the ES.

 

I use a similar analysis method by watching my scanner. I have about 80+ sectors, futures, and stocks that I place on my scanner and anytime I see mixed signals of green and red, this is a warning sign. Hence, I try to apply a rangebound strategy and aim for singles and not homeruns. I also like to analyze overnight action as well as any pre-market volume on the SSF's. The opening play is probably my most profitable and favorite setup. The opening price can act as the dead low/high for the day and offers an excellent entry point.

 

And yes.. indicators are useless. Im always shocked to see new traders being in love with them and asking indicator questions. They are asking the wrong questions without even knowing it.

 

Regards,

 

James Lee

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3 tick spread so the cost of getting in and out at the market will be $75, much like the SP (pit traded)

 

There is a good chance the best bid will be lower than the YM bid and the offer will be higher than the YM offer.

 

example

 

DD 12000 bid 12003 offer

YM 12001 bid 12002 offer

 

The products are fundgible, or something like that so I think you can offset a DD position with YM contracts, but you need 5 YM's to offset the 1 DD when your position is cleared at the end of the trading day.

 

I tried trading the DD when it first came out, just too my cues off the YM but just over coming that 3 tick spread is tough and you need to get out when you see better bid/offer.

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  Soultrader said:
Has anyone traded the Big Dow? The tick increments are 5 times the YM but is anyone familiar with the price movements of the BIG DOW?

 

Soul - I haven't looked at it in awhile, but I think the volume is anemic. I was kinda hoping it might take off, but guess the interest is not there (yet).

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Hey brownsfan,

 

Yea I can totally see that... I think big traders would rather go with the S&P's instead. If the BIG Dow does take off in the near future, I think alot of YM traders will have a decent edge over others. It could also change the price action of the YM. Alot of traders rely on the S&P as the YM moves very similar. But if they start following the Big Dow... should get interesting.

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  torero said:
wsam, how's the liquidity? fills are quick even on the bid or ask?

 

 

liquidity...just think 3X3 on the bid/offer 3 ticks wide so if you wanted to trade size, its gonna be tricky.

 

its mostly 1 lot trades here and there.

 

DD would be lucky to get 100 lots traded for the day.

 

But like all new products being introduced, it takes time for the trading community to accept and trade the product.

 

When the SP was first introduced, it had the same problems like the DD, not much volume and the spreads were wide and to make matters worse, it had no other index to track because it was the first of its kind.

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Hey there - I trade the big dow. I can say liquidity is good but I don't trade alot of contracts so I don't know if it would apply to you.

 

It usually is like wsam said 1 tick wider than YM...but I've seen it go even wider sometimes. However it does track YM and it does have market making...so there is almost always at least 1 contract on either side.

 

I learnt the hard way about my stop loss getting blown because the spread widened more than usual once...so use a bigger stop.

 

Even on the BIG DROP day we had recently, the big dow was still tracking YM very tightly. It would be nice to see the spread match the YM, but I doubt this will happen. Some days DD only does 60 contracts..IN THE WORLD.

 

All in all, I like the big dow...great leverage.

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The one thing that I can think of the DD never matching the YM in terms of the bid/offer, the pros that make a market for the DD need to off set their trades with the YM.

 

Just think.

 

DD 12000 bid

YM 12001 bid

 

if the market maker gets hit on the DD bid, he can immediately offset his risk by selling 5 YM and pocket 1 tick. One thing I learned about how market makers think, is how they can offset their risk ASAP.

 

The SP and ES are the same, from what I heard its pit traders offsetting their risk with the ES. Just imagine, an instutution comes in with a big order and to keep their business the local would fill the order and offset his risk with the ES in order to keep that "client".

 

They do play favourtism in the pits from what I hear as well.

 

Because its a "pro" or local making the market for DD and SP, their spreads will always be wider than the YM and ES for that reason alone.

 

Heck if I had the speed and ability, I'd pocket 1 tick all day long and just do volume to make all those ticks.

 

Just a totally different train of thought for locals.

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Guest cooter

There is a misconception here.

 

The DD Big Dow is a recent entry into the futures world at the CBOT. It is ELECTRONICALLY traded, not pit traded.

 

The pit traded Dow product remains the $10 DJIA contract, also traded electronically after hours.

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  cooter said:
There is a misconception here.

 

The DD Big Dow is a recent entry into the futures world at the CBOT. It is ELECTRONICALLY traded, not pit traded.

 

The pit traded Dow product remains the $10 DJIA contract, also traded electronically after hours.

 

Nobody ever said the DD was pit traded.

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