I've been getting REALLY pissed off with the ES (S&P 500) price movement lately. The swings are getting messy, the choppy backfill is getting ridiculous, it goes comatose for huge amounts of time, and the overall price ($/contract) movement there is always fairly tame.
I talked to a trading friend of mine who trades 100 lots in the EURUSD, JPYUSD, and GBPUSD on a longer time frame setup. He used to trade a short term (3 min) chart in the ES around 5 years ago. He asked me what kind of intraday swings were on a normal day... when I told him around 10-15 ES points on a good day he was astounded. Apparently back when he traded it 50 pt days were the norm, and when that dried up he left the market to trade FOREX because it had bigger price swings and greater movement.
Looking back through charts last night I was ASTOUNDED by the clarity of the charts, the swings, the lack of fakeouts, choppy backfill, everything. And the moves were big enough to make some damn good money. So i'm working towards moving into trading currencies and dumping the S&P all together.
So theres the novel... heres the question. After doing some mock trading today with my NinjaTrader account and TS data feed and looking more into the normal spread in the FOREX markets, 1-2 pip spreads are a huge amount of "commissions" when compared with a normal e-mini futures contract. How in the hell can you guys justify this?
Trade the Markets has been releasing a couple free videos this week in their newsletter talking about currency trading and the advantages of Currency Futures over FOREX. I'm really considering opting to trade the futures contract rather than deal with the FOREX bullshit. Here is my reasoning... please correct me if i'm wrong.
The TTM vid (go to about 6:31 into it) http://www.tradethemarkets.com/public/1370.cfm
and this one... http://www.tradethemarkets.com/public/1371.cfm
- Futures have quoted volume, FOREX doesn't.
- Less commissions (TS quotes 2.82 per side, or 5.64/contract)
- Higher $/Pip in most cases (EURUSD = 10.00/pip, @EC = 12.50/pip)
- Regulated Market
- Smoother Bid/Ask spread
- Market Depth available in Futures
- Size is quoted in the tape
So the way i'm looking at this is... Futures cost less for commissions (5.64 roundtrip vs. 2 pips or 20.00?), they have volume quoted, prices can be filled at bid and ask, not just the bid...
Why don't more people trade the Futures contracts? Same price movement, less cost, more profitablilty, why the hell is anyone trading the Forex market over currency futures?
My guess is a lot of people aren't aware of the differences and they follow the herd. But i'm new to FOREX and I don't know the ins and outs. I suspect for some big players there isn't enough volume to support dropping 500 contracts without slipage, but for the rest of us joe-smoes, <30-40 contracts shouldn't have significant slipage...
Thoughts?!?!
Currency Futures?
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traderjeffb
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"Why don't more people trade the Futures contracts? Same price movement, less cost, more profitablilty, why the hell is anyone trading the Forex market over currency futures? "
Correct me if I'm wrong(honest:)) but...isn't the minimum pip on the CME FX $12.50?- for $100,000 contract
yet at EFX Group one can trade as small as $1000 for a pip of approx. 10 cents
....and the minimum deposit for a futures account is $3000?($5000 at TS) yet the minimum account at EFX Group is $400
most "joe-smoes" can "afford" to trade Forex.....
but I believe everything you say is true- and there probably a following of the "herd".... but that's because the Forex industry is ringing the "supper bell" via advertising
....I'll be in the barn if you have any more questions
Jeff
Correct me if I'm wrong(honest:)) but...isn't the minimum pip on the CME FX $12.50?- for $100,000 contract
yet at EFX Group one can trade as small as $1000 for a pip of approx. 10 cents
....and the minimum deposit for a futures account is $3000?($5000 at TS) yet the minimum account at EFX Group is $400
most "joe-smoes" can "afford" to trade Forex.....
but I believe everything you say is true- and there probably a following of the "herd".... but that's because the Forex industry is ringing the "supper bell" via advertising
....I'll be in the barn if you have any more questions
Jeff
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traderjeffb
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daedalus wrote:Well... if you have 5k in a trading account hypothetically... which would you trade. Futures, or the Forex contract?
Here's my logic in trading Forex instead of Futures-
If one only has 5000K risk capital and wishes to trade Futures I believe that person is totally underfunded for currency Futures and will almost certainly fail. Especially if that person has limited trading experience.
I traded currency futures in 1993 and blew out a 30K account. That's pretty normal for a trader-If you read Market Wizards you'll see that blowing out an account is almost a right of passage to becoming a good trader. You'll even hear a similar story from many traders here.
If you follow a minimum standard Money management rule of risking no more than 2% on a trade. (I say minimum because many full time traders risk much LESS than 2%) 2% of 5K = $100
so if one were to risk $100 and a sigle pip is .0001 =$12.50 take a look at any bar on a chart. How many pips did it move? I believe that you'll see that it would be difficult to make a trade(not impossible) with such a small amount to risk. -right?
So if I had 5K ....I would trade Forex with EFX Group and only use $400 to start an account and trade dimes until I made dollars...a quarters until I made dollars and $10 dollars until I made $100's then I will KNOW USDJPY and I could trade effectively. (this is what I am currently doing) I believe The Rumpled One would say the same thing. (I've read it on this website) Again-Yes everything you mentioned earlier is true
...but with 5K I don't believe one can trade effectively . On the other hand if I had a 100K account I could risk $2000 on a trade-you can see that would make it much easier to trade-you actually could use much less than 2% risk and still trade. With 5K one "could" trade the YM -DOW mini($5 a tick) but I doubt the Currency market would work well with only 5K -the risk per trade is just too high...
I'm headed to FL in Dec. to see John Carter (and others)at a siminar---who knows maybe I'll change my mind --I'll let you know.......
Jeff
Don't let the post count fool ya; i'm a fairly weathered trader simply in search of a more profitable market.
I get what you're saying and I agree with you completely, but thats not really the point of my question. The point is given the two MEANS of placing a position into the same market, which is the better, more efficient position opportunity? I.e. why is everyone trading forex contracts with pip spreads when there are currency future contracts sitting around with what I believe to be superior advantages?
I get what you're saying and I agree with you completely, but thats not really the point of my question. The point is given the two MEANS of placing a position into the same market, which is the better, more efficient position opportunity? I.e. why is everyone trading forex contracts with pip spreads when there are currency future contracts sitting around with what I believe to be superior advantages?
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traderjeffb
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ahhh...I thought maybe you were a newbie ...sorry ....often someone that asks about $5K they are relatively new to trading....it wasn't the number of your posts....my posts are limited too
With a reasonable account size and some experience ...it's a no brainer - the Futures market is much better
....as to the "why" ....I think it's a very "inexpensive" way to trade for those that have limited capital ...which as you know makes up a large % of traders....
...I am trading Forex right now (before the seminar in Dec. ) for entertainment and just to get a feel for the market....I find that paper trading never really worked for me....but I can trade pennies and I get the "feel" for the market....
...but that's me....I don't know why others trade it....maybe they'll add to this post....maybe it offers benifits I am not aware of....
Jeff
With a reasonable account size and some experience ...it's a no brainer - the Futures market is much better
....as to the "why" ....I think it's a very "inexpensive" way to trade for those that have limited capital ...which as you know makes up a large % of traders....
...I am trading Forex right now (before the seminar in Dec. ) for entertainment and just to get a feel for the market....I find that paper trading never really worked for me....but I can trade pennies and I get the "feel" for the market....
...but that's me....I don't know why others trade it....maybe they'll add to this post....maybe it offers benifits I am not aware of....
Jeff
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eudamonia
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On a somewhat unrelated note, have you looked at the Russell eMinis or perhaps the Dax? Both of those have much larger momentum moves than the S&P mini. I trade the Russell and definitely wouldn't want to trade the mini S&P. I haven't traded the Dax yet but I'm looking to.
Good points on Futures vs. Forex. Although there is a mini Euro Futures ($6.50 per tick instead of $12.50) market it doesn't have enough volume for my tastes.
Edward
Good points on Futures vs. Forex. Although there is a mini Euro Futures ($6.50 per tick instead of $12.50) market it doesn't have enough volume for my tastes.
Edward
Eudaimonia (pron.: you-die-moan-e-a) (Greek: εὐδαιμονία) is a classical Greek word commonly translated as 'happiness'. The less subjective "human flourishing" is often preferred as a translation.
I would make the move to the ER2, but frankly with it being put on the ICE platform in the coming months I think that symbol is going to change A LOT, and I don't want to have to deal with it as it morphs into what it will become.
It already has started drying up in its movement. Used to be a normal day it would make 2X's the $/contract swings than the S@P, it doesn't happen that much anymore and more often than not it is making identical $/contract moves, which for me negates the benefit of it over the S&P.
I'll look into the Dax though. Yea, the mini sized contracts really don't have enough volume for me either.
Thanks for the replys and continued discussion here folks.
It already has started drying up in its movement. Used to be a normal day it would make 2X's the $/contract swings than the S@P, it doesn't happen that much anymore and more often than not it is making identical $/contract moves, which for me negates the benefit of it over the S&P.
I'll look into the Dax though. Yea, the mini sized contracts really don't have enough volume for me either.
Thanks for the replys and continued discussion here folks.
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