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M6E and volume for beginners
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M6E and volume for beginners

  #11 (permalink)
Elite Member
Milwaukee, WI
 
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Leon of Pizza View Post
I've never traded spot but I suspect that the micro lots will also have relatively similar spread widths as the various futures products. And why make the hassle of opening another book? I would suggest that its possible to adapt most futures strategies from one product to the next. Run your numbers and include the aforementioned commish ratio and an estimated slip. You can increase the risk and reward ranges with the smaller leverage, and then see what the commish and slip expense looks like in the larger range. Slip estimates should be approx twice as large for stop orders. Think in terms of converting a 1-2 tick slip expectancy on the full size to a proportional value on the micro.

Also, you can use the 6E chart and volume for planning trades. They exhibit a tight correlation in most conditions, but be careful at news time. Use the DOM to get a read on the micro's spread. Not just the width, but excursion of the bid ask in relation to the full size product. And use charts that plot bid, ask and mark to get a feel for it.

My account is not big enough to be trading other instruments.
Great tips though. Thank you!

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  #12 (permalink)
Elite Member
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Tymbeline View Post
Please forgive me if I'm stating the obvious, but it varies greatly from country to country (I mention it only because this is such an international forum): over here, forex (and other) trading is entirely tax-free - no income tax and no capital gains tax - if it's done via spreadbetting. Which makes a huge difference to us, of course.

Sorry, I forgot to add "in USA"...

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  #13 (permalink)
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If you want do scalp in euro future. I recommend you use a 6E symbol with range bars (4 range bars for example) or renko bars. Your SL will can be limited easily below and above this bars. And your risk will remain in control.

Using 4 range bars and put your SL below/above two bars of 4 ticks. Then your risk is 8 x 12.5$

For example, long at breakout 4 range chart

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  #14 (permalink)
Trading Apprentice
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MaxT View Post
My account is not big enough to be trading other instruments.

My broker requires $390/contract for a M6E, which is no great deal. If yours is substantially higher then you might want to consider moving your account.


Last edited by Leon of Pizza; December 20th, 2015 at 11:47 PM. Reason: change of mind
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  #15 (permalink)
Determined
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Leon of Pizza View Post
My broker requires $390/contract for a M6E, which is no great deal. If yours is substantially higher then you might want to consider moving your account.

I'm really not being sarcastic - just 'throwing it out there' before I posted my question in this thread
My broker only requires $26 margin on a micro lot (1 pip = $.10) for $.16 RT, and currently has a .3 - .4 pip spread (pretty slow out there, right now).

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  #16 (permalink)
Determined
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How is volume useful when trading the 6E/M6E?

Disclaimer - I'm VERY new to all of this and hoping that this is a good place to put this question.
I'm still working on The Course - The Art and Science of Trading, if that's any indication of the state of my education

I've been (slowly) learning to trade using Forex (I'm losing slower, anyway) and thinking of MY future so have been looking into the M6E and 6E.
I haven't done any exact measurements, but it seems that the 6E chart is a mirror of the EUR/USD chart.

1) If the the price of the 6E is a reflection of the EURUSD pair, then is there any way a futures trader (large or small) can affect the price?

2) I've been thinking that volume was an element of price (or at least buying vs selling pressure that drives price), but if the price is 'fixed', what good is volume (or volume analysis) in trading the 6E?

The only thing I can think of is liquidity.


Thanks in advance for your help.

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  #17 (permalink)
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LDog View Post
I haven't done any exact measurements, but it seems that the 6E chart is a mirror of the EUR/USD chart.

1) If the the price of the 6E is a reflection of the EURUSD pair, then is there any way a futures trader (large or small) can affect the price?

I'm almost certain the futures market has little impact on the spot at all. For currencies, the spot market is way larger than the currencies future market. This is different in a sense from the stocks futures or commodities.

The value of Euro is also affected by other pairs eg EUR/CHF EUR/JPY beside EUR/USD; those others pairs are not traded in the futures market. If you trade Euro long enough, you would realized the other pairs have impact on EUR/USD as well - much more than what is happening in 6E.

If you see a spike in volume in 6E, most likely this is a lagging response to what is happening in the spot market and not because big players are accumulating

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  #18 (permalink)
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LDog View Post
it seems that the 6E chart is a mirror of the EUR/USD chart.

Yes, it is - so closely that occasional, brief, tiny differences are very hard to find.


LDog View Post
If the the price of the 6E is a reflection of the EURUSD pair, then is there any way a futures trader (large or small) can affect the price?

To all intents and purposes, not really: not a "private trader". Unless your name's Soros, or something (and he's not a "private trader", anyway?) ...


LDog View Post
I've been thinking that volume was an element of price (or at least buying vs selling pressure that drives price), but if the price is 'fixed', what good is volume (or volume analysis) in trading the 6E?

As you say: volume isn't "an element of price", but it's an element of the imbalances between buying pressure and selling pressure that drives price (as in any market).

By "fixed", I think you mean "effectively pegged to the spot forex price"?

I think I understand what you're asking - about the apparent contradiction between the fact that spot EUR/USD and the nearest 6E future are two different markets, with the price movements of each apparently driven just by their own imbalances between their own buying pressures and selling pressures, and yet they still "move together" all the time?

There are huge institutional traders with automated high-frequency trading software continually doing arbitrage trades (effectively), and that's why the disparities between the two markets (which you'd otherwise expect to find) are so tiny, brief and occasional that you can't really notice them, most of the time.

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  #19 (permalink)
Determined
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Thanks!

I appreciate both of your responses!

I should have done a better Google search before asking. I just searched for 'FX Euro basis' and found a good explantion - page 10 on Fair Value and Arbitrage

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  #20 (permalink)
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Cheaper RT costs?


1. You might find June 12th Webinar @ CME Group: Exploring FX Futures Using CME E-Micros - Trading Live | FuturesTrader71 of interest. Not watched it myself as I'm a 72 model and I don't listen to old men. Seriously though FT71 is well respected here and its probably worth a look. I shall later tonight.

2. I'm not trying to be contrarian as experienced heads have already given good advice, the M6E is indeed ideal for learning swing trading as one can hold overnight on smaller margins however... it can be scalped if your a limit order scalper (use ATM always) and have good RT retail commission.

I have been investigating M6E for my new assistant to muck about with live. $12.50 an ES tick for a Colombian is like a European/USA ES e-mini trader facing down the barrel of $50+ a tick or $200+ a point (single contract). A touch too psychologically daunting for him just now, regardless of it being my money.

With a better retail commission than @tturner86 referenced e.g. http://ninjatrader.com/PDF/ninjatrader_futures_contract_details.pdf

M6E round trips range from $1.40 (Ninja Lifetime with NT brokerage) so its reasonably limit order scalp-able at this price?. $1.80 (lease..hmm) and $2.24 - too much.

At $1.25 per tick of movement, it takes only 2 ticks to make a profit (assuming $1.40 RT Commission).

It can be fairly said that a swing starts with a good scalp so though scalping on the micro seems tougher than the mini.. scalping is a required skill and it needs lots of live practice. I agree that staying far out and trading less is ideal risk/reward but how many beginners every listen to this wisdom and don't they need real exposure (and a few smacks on the nose) to learn anyway?

Another way to see it is spend a grand on the NT lifetime licence or lose at least grand anyway learning to scalp on an e-mini? I expect the e-micro was created to help with lower budget traders SIMming forever or being killed by draw-down in transition to live on the e-mini contracts.

I don't think the capital cost of 1k should deter a serious beginner who grasps money management. If there is a cheaper way to access ~$1.40 Micro RT commissions via another platform/broker deal I'd be very interested.

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