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M6E Session Changeover
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M6E Session Changeover

  #11 (permalink)
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There are plenty of reasons to trade M6E, almost all of which would have to do with account size and risk. Spreads are fine, and commissions are low. So I disagree with everything Fat Tails said above.

Mike

I agree on the account size required for trading 6E. The question is, whether you are not better off trading FOREX with a smaller account. Compared to 6E the smaller contract M6E has a number of inconvenients

-> liquidity (# of contracts traded) is about 40 times lower, the market is 200 times smaller than 6E
-> spreads are wider, they are only acceptable during the US morning session, see charts below
-> the contract size is one tenth of the larger contract, so if you pay $ 1.66 per round turn, it is the
equivalent of $ 16.60 per round turn for 6E, and I do not think that this is cheap...

To summarize: higher bid-ask spreads and bad liquidity do not allow you to use market orders, slippage and commissions are both double the amount you would expect for 6E.

I do not think that it is a good deal. And most traders do not think either that it is, which explains that the liquidity is bad.

So let me happily disagree.....

Attached Thumbnails
M6E Session Changeover-us-morning.png   M6E Session Changeover-european-morning.png  

Last edited by Fat Tails; February 10th, 2012 at 08:03 AM. Reason: false information corrected, see post of @ddouglas below
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  #12 (permalink)
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Fat Tails View Post
-> the contract size is one fifth of the larger contract . . .

So let me happily disagree.....

Disagreement is what makes the world go-round.

However, the contract size is 1/10th of 6E (12,500 v. 125,000).

Granted, this makes it look even MORE expensive @ $16.60/RT at comparable size (not to mention the additional spread).

But hey, if you want to shave your transaction cost down to the lowest possible, then you should be trading the $1M Euro contract, rather than wasting time with the little 6E.

Not trying to be sarcastic - just pointing out that everything is a trade-off, and you get some big benefits for that $16.60. Namely, risk control.


The reason not to trade the forex equivalent (even though it probably is a few cents cheaper) is because forex brokers are totally unregulated, do not have segregated accounts, and have a long track record of being corrupt.

If you feel safe with your money in a forex account, and are trading in $10,000 notional values, then forex is definitely the better way to go.

Once you get into $50-100k notional values, futures are MUCH cheaper, not to mention safer.

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  #13 (permalink)
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Let me clarify that there is a built-in assumption here that the M6E is only useful for less than 5 contracts.

At that point, the E7 is the next logical choice, and if you're contemplating trading 10 M6E's (or 2 E7's), then a single 6E would be a better choice.

So the inherent argument is that if you're opening positions with 12,500-50,000 Euros, (which is not possible in the 6E), then M6E is a valid instrument in which to do so.

At increments of 62,500 Euros, the E7 is the logical choice, and likewise 125,000 Euros for the 6E.

I'm not advocating taking a 500,000 Euro position in the M6E. That would be foolish. Four 6E's would be the clear choice for that.

But if your risk management plan/account size doesn't allow for the risk that goes along with a 6E or E7, then M6E is a great alternative to overtrading (or, IMO, putting your money in a forex account).

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  #15 (permalink)
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ddouglas View Post
Correct me if I'm wrong, but this just sounds like the mark-to-market process. If you hold a position a few days, your daily statement and your platform will not show your entry price from 10 days ago. It will show your entry price for today as yesterday's market-close settlement price. .... Again, forgive me if I'm misinterpreting this, but it sounds totally normal to me.

Appreciate the detailed explanation. It happened to me first about a year ago when I got into futures, and it was very disconcerting to see being in profit hundreds of dollars and then a flip to negative numbers (or even vice versa) somewhere between 10-11am EST. Multiple calls to the Amp helpdesk offered no explanation, and they usually insisted on liquidating if something was wrong. I then found references to this being "normal" bad behavior, blaming NT. But importantly, I'd learned to live with it, as, upon final settlement, it was "righted." I had even called my assigned account manager/broker on it multiple times - and clearly articlating the scenario - he offered no knowledgeable explanation. He of course blamed my machine, and, did remote control troubleshooting, resetting this and that (wiping out my Ninja settings each time) yet offering no wisdom, thinking I was the "crazy blonde" (woman) type bringing her car in for service, for a problem that doesn't exist. (And this broker was the technical office contact). Your explanation simply reaffirms to me how "useful" helpdesks are, as well as those who are the office "tech gurus." I am of a technical and programming background and have since learned much about NT's operations, but alas didn't realize there was an explanation for my going negative overnights. I'd be willing to bet many others don't know this.



ddouglas View Post
You're either having data-feed problems, or only looking at the LAST price. The bid/ask on M6E is NEVER more than 1-2 ticks away from 6E.

Again, as I said in a different thread on this topic, I wish it lagged the 6E by as much as everybody says. If so, I'd be retired by now . .

Bad wording on my part. It follows it around pretty well, but with the wider spread 6E/M6E simultaneous entries and subsequent exits usually do not profit similarly. And I believe the spread gets worse outside of the NY timeframe. And in case of a news/event price spike, I'd not expect M6E's lower liquidity to react the same way. not to mention the RT cost is silly expensive.


ddouglas View Post
The reason not to trade the forex equivalent (even though it probably is a few cents cheaper) is because forex brokers are totally unregulated, do not have segregated accounts, and have a long track record of being corrupt.

These are generalizations that I will respectfully disagree on. Yes, this can be applicable to some brokers, but as long as a trader does proper due diligence, trading conditions can be as good as with a futures broker. Problem is too many people dive in wanting to turn $1K into $50K with their Mauritius, Cyprus, Belize selected MT4 broker with the nice web page, not knowing they chose to locate there because US/residence law means nothing in these remote locals. Throw in dealing desks, price smoothing and spread alteration, and sure it can be the wild west. But there are a decent amount of spot shops that operate on proper liquidity, fair spreads and decent principle. And, they're still around, even though most of John Corzine's former customer accounts are not.

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Thanks to all for the input.

I am trading the M6E simply to get accustomed to trading live money and keeping
my wits about me in such circumstances. It is more for training than earning money.

I am at BE after a week or so and I think that is perfect. The mistakes I am making,
I didn't make when I was SIMMING. So this shows that my only enemy is me.

I'm already starting to forget that it is live money and just focus on the Price Action.


AJ
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  #17 (permalink)
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ddouglas View Post
Disagreement is what makes the world go-round.

However, the contract size is 1/10th of 6E (12,500 v. 125,000).

Granted, this makes it look even MORE expensive @ $16.60/RT at comparable size (not to mention the additional spread).

But hey, if you want to shave your transaction cost down to the lowest possible, then you should be trading the $1M Euro contract, rather than wasting time with the little 6E.

Not trying to be sarcastic - just pointing out that everything is a trade-off, and you get some big benefits for that $16.60. Namely, risk control.


The reason not to trade the forex equivalent (even though it probably is a few cents cheaper) is because forex brokers are totally unregulated, do not have segregated accounts, and have a long track record of being corrupt.

If you feel safe with your money in a forex account, and are trading in $10,000 notional values, then forex is definitely the better way to go.

Once you get into $50-100k notional values, futures are MUCH cheaper, not to mention safer.


@ddouglas: Thank you for correcting me. I have replaced the information on the contract size.

I agree with your analysis. It is better with a small account to trade appropriate size than using high leverage, which is the fastest way to blow the account.

When trading $ 10,000 notional values, a FOREX account will get be better liquidity and lower spreads/commissions than M6E. Of course, you carefully need to select the FOREX broker, as there are a lot of black sheep.

Also agree that the futures markets are cheaper and safer to trade, if you trade full lots. So I cannot see any disagreement now. And the world is no longer round, but looks like an egg.

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Session Template

I'm just getting back around to this instrument. I haven't used it in awhile and want to try my hand at swing
trading longer term positions.

Would this be the correct Session Template for overnight / multi day use ?

CME FX Futures ETH


AJ
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  #19 (permalink)
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tderrick View Post
I'm just getting back around to this instrument. I haven't used it in awhile and want to try my hand at swing
trading longer term positions.

Would this be the correct Session Template for overnight / multi day use ?

CME FX Futures ETH

Yes, that session template should reflect the contractual trading times of the instrument.

You can further subdivide it in case that you use any indicator which require a subsession (such as the SessionNoiseBands, if you apply them to the London or New York FOREX session). Otherwise that template should just be fine.

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I like to use a weekly session to draw my key levels of S/R:

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