There are so many different instruments available with futures and each comes with certain information that must be known in order to trade an effective strategy. The following is what I think is needed:
Value of each contract
Instrument expiry date All in cost of a single trade (broker fees etc)
And then there are the things I don't know about yet, but that I need to know when choosing an instrument. Can you point out any other obvious things I need to be aware of? Also..would I get the above information from my broker?
For day trading, you want to look at the daily trading range in terms of dollars. You also want to look at the liquidity. The instruments with the largest dollar ranges and the highest liquidity will be best candidates for day trading. You can create an indicator to do this, simply multiply the Range or High-Low*Point Value to create a histogram. The liquidity will help you determine the risk. An instrument with a large range but gaps will be more risky. The best instrument will thus be highest dollar range that trades smoothly.
On the other hand, you might want an instrument with a smaller range if you have a smaller account to reduce the risk.
The following 2 users say Thank You to tpredictor for this post:
Thanks Xplorer. I think I will be sticking to day trading, I really dont like the idea of leaving trades open overnight.
I am busy going through some of the instruments to see what suits me best. I think the most important thing right now is something liquid that wont gap past my stop. So far NQ is looking pretty good, I quite like the way it moves.
I haven't been through all the jigsaw videos ... thanks for reminding me, Ill spend time tomorrow on that.
Thanks for all your help so far
The following user says Thank You to Grantx for this post:
Liquidity, as represented by relative volume, is probably the most important aspect. Low liquidity leads to nasty slippage. But if you really know what you're doing, low liquidity can sometimes work in your favor.