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brownsfan019

The Euro FX (EC) Contract

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I have visited the chat room recently and was surprised that no one was familiar with or trading the Euro FX contract. For information purposes, thought I would start a thread here for current and future use.

 

In a nutshell, the EC is similar to the Eur/Usd in Forex trading. The obvious big difference being that the EC is traded at the CME and is under the same regulations as the other contracts being traded there. I personally do not touch Forex due to the lack of regulation currently there. The EC provides a way to trade in currencies with the same futures brokerage account you currently have and diversify into currencies.

 

Here is a link to the CME site on the EC: CME Euro FX Futures & Options

 

In my trading, here are my observations on this contract:

 

• It has the potential to trend much more than the US indexes.

• Each tick is $12.50, so if you like the ER2 at $10/tick, this may be of interest to you.

• It does not move in conjunction with the indexes, thereby providing an instrument to trade that is ‘independent’ of the US indexes. For me, this has provided trading opportunities when the indexes are not providing much action.

• The volume is good – approx. 150,000 contracts per day currently. This is more than YM or ER2.

• Commissions are slightly higher than on the indexes since this is a full-sized contract, not a mini. There is a mini-EC; however, the volume there has never taken off. While the commissions are higher, any good broker will negotiate based on your expected trading volume and they ARE NOT that much more than indexes, regardless of what your broker may tell you.

• Depending on your charting platform, you may already have this feed or need to turn it on.

 

I have traded the EC for well over one year now, and it is a perfect addition to the indexes that so many of us trade. While the Forex arena is not for me, this contract provides a way to enter the currency market without entering something so unregulated. Now, once the CME FX Marketplace is up and running, that may be a different story (Reuters and CME To Create FXMarketSpace).

 

Good Trading!

 

Note: Some charting services do not use EC for the ticker symbol. When you do a symbol lookup, make sure to seach for the Euro FX contract, not the mini.

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I hear that FXMarketSpace is not going to be available at all to retail traders. There are a couple of good options for trading spot FX. I use IdealPro from Interactive Brokers. Orders go straight to interbank liquidity providers like Deutsche Bank and Bear Stearns. Whatever you do don't use a retail FX bucketshop. Cable (GBP/USD) is more tradeable than EUR/USD. It's great for swing trades - one position every week or two. Look at Tuesday's inverted hammer candlestick on the daily chart and tell me you couldn't have spotted that as a reversal.

 

CME has a $5 a point GBP/USD contract but liquidity is not great. I don't see any benefit to using it over IdealPro.

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brownsfan, I traded EC a little in the past but was not getting much results until I found GBPUSD and little by little other pairs, a whole new world of uncorrelated instruments you can trade just in the forex alone, so US indices have no influence on these animals.

 

I think the bucketshops (dealing desk) are there and changing as well. I've been using MBtrading FX (ie. non-dealing desk), quotes and orders go straight to spot so most of the major pairs are 1-2 pips max. It's true there are some unscrupulous brokers out there but there are many traders who found the right brokers and have no problems with forex at all. So I think the idea of lack of regulations should not hinder anyone from trading forex, it's a matter of doing proper research before committing your money.

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Looking at the GLOBEX GBP contract this morning liquidity seems alright and spreads are the same if not lower than IdealPro (seems to be 1 pip most of the time) so I might go with GLOBEX in future. It should be fine for my swing trades and $5 a pip is ideal for me.

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Obviously we have different views of forex, but I really started this thread as a way to discuss the EC. I guess that could probably be another thread in itself - forex vs currency futures.

 

Good trading.

 

You can't separate the EC from EUR/USD spot. It doesn't have a life of its own at all so I can't see what sort of discussion you expect to have about it. Sorry to be blunt.

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You can't separate the EC from EUR/USD spot. It doesn't have a life of its own at all so I can't see what sort of discussion you expect to have about it. Sorry to be blunt.

 

 

Well, there's plenty of discussions about the ES, YM, ER2 and NQ, so why should this be any different? This is a futures contract, posted in the futures forum; therefore, I assumed the discussion could revolve around the EC futures contract.

 

As for your comments, the EC does in fact have a life of its own. Every day about 150,000 contracts trade through it. Traders like myself trade the EC and don't touch the spot, so it does appear to have a life of its own.

 

I apologize for taking time to write up a post about this contract and trying to discuss it. It was purely done to help educate and stimulate discussion on this futures contract that many traders overlook. That's it. As I said, if you want to start a futures vs. forex thread, go for it and I'm sure people will chime in.

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Well, there's plenty of discussions about the ES, YM, ER2 and NQ, so why should this be any different? This is a futures contract, posted in the futures forum; therefore, I assumed the discussion could revolve around the EC futures contract.

 

As for your comments, the EC does in fact have a life of its own. Every day about 150,000 contracts trade through it. Traders like myself trade the EC and don't touch the spot, so it does appear to have a life of its own.

 

I apologize for taking time to write up a post about this contract and trying to discuss it. It was purely done to help educate and stimulate discussion on this futures contract that many traders overlook. That's it. As I said, if you want to start a futures vs. forex thread, go for it and I'm sure people will chime in.

 

What I meant was, the moves in EC are identical to the moves in EUR/USD so any discussion of technical or fundamental influences on EUR/USD apply equally to EC. There are even CME "e-quivalents" which convert their EC price to the EUR/USD spot price. EC is just another way of trading EUR/USD. What sort of discussions did you have in mind?

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What I meant was, the moves in EC are identical to the moves in EUR/USD so any discussion of technical or fundamental influences on EUR/USD apply equally to EC. There are even CME "e-quivalents" which convert their EC price to the EUR/USD spot price. EC is just another way of trading EUR/USD. What sort of discussions did you have in mind?

 

notouch - As my original post states, I simply wanted to provide a post that summarizes trading the EC futures contract since after I entered the TL chat room and found out that noone was trading the contract there. I've been trading it for well over a year after I found out about it and it's been a critical addition to my trading instruments. If I had to pick just one, I would probably take the EC over anything else - indexes included.

 

As for discussions, that's up to anyone here that is interested in discussing the EC contract. Like I said, this thread is not the place for EC vs. Spot - Buk already pointed out another thread that deals with that topic. This thread is all about the EC and the EC only. If noone else wants to discuss it, so be it, but at least it's here and available for future reference to traders.

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Brown and notouch...let's keep the thread about the EC and how we can become profitable on it.

 

notouch, EC is a futures contract on it's own, while it does have correlation to price swings that spot would have as well based on news details, am I right? If so, then let's keep the discussion on the immaculate way the EC respects pivots and how you can profit from that. It's really a technical traders dream!!

 

So...brown, do you use pivots with your trading on the EC? And if so, how often are you noticing that it does in fact trade to the pip on the pivots? I know MrPaul has been noticing this and taking some sweet sweet trades.

 

Love to hear the info.

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This will be my last post on the subject. The "correlation" between EC and EUR/USD is almost 100%. There are arbitrage programs run that ensure the two are never out of step except for maybe a split second after news releases. The apparent difference in the price of the two simply reflects interest rate differentials. The futures price follows the spot price exactly. If EUR/USD goes up 27 pips then EC goes up 27 pips. If EUR/USD goes down 106 pips then EC goes down 106 pips. I'm not trying to start a discussion about spot v futures I'm just pointing out that anything you can say about the EC charts applies equally to EUR/USD charts. Most EC traders use EUR/USD charts though so that they can see the big psychological levels like 1.30. There is no meaningful separate discussion you could really have. That's why you never see anyone discussing EC separately. Good luck to you anyway. :)

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That's why you never see anyone discussing EC separately. Good luck to you anyway. :)

 

I have found that the EC is not discussed by itself simply b/c traders do not even know it's there! Which was exactly what happened here when I entered the TL chat room.

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So...brown, do you use pivots with your trading on the EC? And if so, how often are you noticing that it does in fact trade to the pip on the pivots? I know MrPaul has been noticing this and taking some sweet sweet trades.

 

Love to hear the info.

 

tin - I personally do not use pivots. And w/o getting into another 2 page discussion on something off topic, I can see how it could react around pivots and round numbers like 1.3, which we saw this past week. The 1.3 was respected intraday a number of times and then a fairly decent collapse came through and 1.3 was blown away.

 

It would be great if the 'regulars' here posted about the EC and how they are trading it as well. I trade 'micro' trends and this is why the EC works so well for me. I am looking for 10-15 tick profit targets on average, and when the EC wants to move, it can move!

 

It also provides great trading opportunities around econ news. Any day there is an 8:30am release, I am looking for setups starting around 8:00am. On a nice day, I can make more money trading the EC from 8-9:30am than trading the indexes all day. Just makes you wonder... :)

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brown, you trade around news time then? Do you trade or hold it overnight?

 

tor - I think you have to watch the EC before, during and after news if you want to catch some moves early. I usually start watching it around 8am EST when there is 8:30am econ releases. And of course you always see setups in hindsight at 3am or so when other world markets are moving.

 

I do not hold any futures contract - EC or not - overnight. It would not be surprising to see a fairly large gap on the EC if you walk away at 4:15pm and return at 8am the next morning. The contract is moving all night, but just looking at those timeframes can show a substantial 'gap'.

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It's been a few months since this thread saw some life, but thought I'd give it a friendly bump since we've had a number of new members and discussions going on since then.

 

As I mentioned in another thread today, I've given some serious consideration today to adding the Euro back into my trading mix. In a nutshell, I honed in on the ES for most of this year and while that has worked well, you sometimes revisit your past 'flames' and see how she's doing... ;)

 

The Euro is a very nice futures contract that can add a way to diversify your day-trading dollars. I'm a big believer that if you are going to trade in multiple markets in an active day-trading biz, that finding markets that are not highly correlated is essential. In other words, markets that do not resemble the ES, YM, NQ and/or ER2 if that's what you are currently trading. We mind as well through the Stoxx and Dax in there as well since those charts resemble the ES during US trading times.

 

When this thread was initially brought up and I was in the TL chat room a few days (not sure if that's being used currently or not), the Euro got some interest from the Pivot guys and the Market Profile guys as well. I think that's b/c it has decent volume (see screenshot) and decent moves. One thing that you will see if you watch the EC (also referred to as 6E on some charting platforms) is that it can get into some nice, intraday trends. Depending on how you trade, that can yield some impressive results. For example, today (8/31) I had one trade that dropped and netted out approx 42 points. That's nice. :D After that, it was some small gains, small wins, but after a +42, it would be hard to have a down day.

 

I also mentioned in another thread to MrPaul that the EC could be a possible substitution for the ER2 traders that are losing trading access with the ER2 move to ICE. @ $12.50/tick, it's actually worth more!

 

An EC/6E daily chart for your viewing pleasure...

attachment.php?attachmentid=2601&stc=1&d=1188583005

5aa70df881c27_ecdaily.png.d6cde25f7968e1bac5fa9716edd869c1.png

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