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ES vs NQ/YM


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ES vs NQ/YM

 
 dloomis514 
NORTH ATTLEBORO
 
Experience: Intermediate
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Howard Roark View Post
Hi all,

My main instrument for a long time now have been the ES, but I often see people saying NQ/YM are much better trading vehicles. Common claims seems to be that NQ/YM offers more bang for the buck and that the price action is smoother or less noisy.

I have only taken cursory looks at the other index futures, but to me, the price action appears very similar on all three indices. That is, visually, it appears very similar and turning points typically happen at the same time. If anything, it seems to me as if NQ is just as whippy and retraces just as much as the ES?

It does however seem like if you compare the daily range and similar moves, the NQ does offer more $ per contract/per move. I plan on doing a study on this and will share my findings here.

Anyway, I'd be happy to have some input from someone with experience to share here.

I know this is a subject which have been discussed a bit in the past and it does seem to be a topic where people ain't quite in agreement. At least in terms of preferences and such.

Thanks in advance for your input on the subject.

Howard

Juuu

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 dloomis514 
NORTH ATTLEBORO
 
Experience: Intermediate
Platform: nt
Trading: 02760
Posts: 12 since Aug 2011
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Thanks Received: 7

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 CSC1 
Vancouver, Canada
 
Experience: None
Platform: IB
Trading: Futs
Posts: 59 since May 2013
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Howard Roark View Post
Hi all,

My main instrument for a long time now have been the ES, but I often see people saying NQ/YM are much better trading vehicles. Common claims seems to be that NQ/YM offers more bang for the buck and that the price action is smoother or less noisy.

I have only taken cursory looks at the other index futures, but to me, the price action appears very similar on all three indices. That is, visually, it appears very similar and turning points typically happen at the same time. If anything, it seems to me as if NQ is just as whippy and retraces just as much as the ES?

It does however seem like if you compare the daily range and similar moves, the NQ does offer more $ per contract/per move. I plan on doing a study on this and will share my findings here.

Anyway, I'd be happy to have some input from someone with experience to share here.

I know this is a subject which have been discussed a bit in the past and it does seem to be a topic where people ain't quite in agreement. At least in terms of preferences and such.

Thanks in advance for your input on the subject.

Howard


YM has a very thin order books when compared to the ES, which is a double edge sword. You'll have a much easier time getting to the front of the queue at good prices in the YM, but you'll also experience significantly more slippage on your stops/market orders. A big reason why people trade the YM is that that you can lease a CBOT IDEM membership for 25$/month which gets you $0.26/contract exchange fees, or buy a membership for 1500-2000$ and get down to 0.11$ (And you can trade fed funds with IDEM too).

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JohnJo
Mexico city
 
Posts: 15 since May 2019
Thanks Given: 4
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Just to add my two cents

I think it also depends on:
1) Your Trading style:
I'm a scalper, so I just need a few pips a day to be happy. So the wider is the ATR, the better. YM or NQ are perfect for that. They are like the German DAX30, when it moves it really moves. ES to me is very shy and heavy, it's like trying to eat a steak with chopsticks.

2) Psychology:
Price per tick impact: psychologically a wrong move in ES hits you much harder. A 50 usd per tick can "peel off your balls" very easily jajaja !!! (you know what I mean). Although with Micro-futures this issue is resolved.


JohnJo.

 
 rb55 
Manchester England
 
Experience: Intermediate
Platform: NT8, Tradingview, mt4/5
Trading: RTY, ES, YM, NQ, CL, DAX, FTSE, GC, NG
Posts: 49 since Oct 2016
Thanks Given: 8
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I started out many years back trading the Dow and the Ftse100 and did really well. The Spoos never interested me whatsover until about 3-4 years ago when I met some guys who traded the ES. We became friends and I ended up trading the ES with them.

I have a love-hate relationship with it. It really depends on so much whether it's worth trading or not but I find most of the time it really isn't. Some days I honestly think it's one of the worst instruments out there to even try and trade. The buybacks and rotation days really mess it up and you are better trading the sector ETF's than the index itself. Plus just a handful of big caps can keep the thing elevated if they don't want to let it drop. It can become very frustrating.

I had a good spell of trading the NQ which is great for Vol Compression setups but when the volatility rises and it can become quite untradeable. My favourite US index to trade is the Russell 2000. It was so good to trade when it was just the RUT before they moved it over to the CME and it became the RTY where it became much less volatile but it's starting to become really nice again.

I still watch all 4 indices very closely but mainly for divergences whilst concentrating on the RTY. Even today the ES has barely moved whilst the RTY offered a nice short setup and is down .75%

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 tr8er 
Europe
Market Wizard
 
Experience: Advanced
Platform: TradeNavigator, BookMap
Trading: ES, CL, 6E, 6B
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Hi rb55,

yes the Russell2000 is really a nice contract and is always worth to watch. I traded it mostly as it was at the CME (R2K) years ago, before it switched to the ICE-exchange (TF), at this time it was $ 10.--/tick. with nice trend moves. A while ago they changed the tick-size to $ 5.--, but it is still ok.

 
Howard Roark
Oslo Norway
 
Posts: 438 since Aug 2018
Thanks Given: 389
Thanks Received: 529

Hi,

Thank you for your post.


rb55 View Post
I started out many years back trading the Dow and the Ftse100 and did really well. The Spoos never interested me whatsover until about 3-4 years ago when I met some guys who traded the ES. We became friends and I ended up trading the ES with them.

Did these guys do well trading the ES?


rb55 View Post
I have a love-hate relationship with it. It really depends on so much whether it's worth trading or not but I find most of the time it really isn't. Some days I honestly think it's one of the worst instruments out there to even try and trade. The buybacks and rotation days really mess it up and you are better trading the sector ETF's than the index itself. Plus just a handful of big caps can keep the thing elevated if they don't want to let it drop. It can become very frustrating.

I had a good spell of trading the NQ which is great for Vol Compression setups but when the volatility rises and it can become quite untradeable. My favourite US index to trade is the Russell 2000. It was so good to trade when it was just the RUT before they moved it over to the CME and it became the RTY where it became much less volatile but it's starting to become really nice again.

I still watch all 4 indices very closely but mainly for divergences whilst concentrating on the RTY. Even today the ES has barely moved whilst the RTY offered a nice short setup and is down .75%

Nice comment. I understand what you mean. Today, ES have not been a nice vehicle for day trading for sure. But is there an instrument which is always a good trading vehicle? Maybe the RTY then?

ES have been very good lately, IMO. But then you get days like today and maybe more to come in the near future if volatility contracts during summer. If/when average ranges drop to 10,0 points and below - ES becomes 'untradeable', IMO.

Seems like the RTY moved really nicely today. For some reason I never really looked at this index. Probably due to a lot of comments similar to what you're saying here (ended up a bad contract after moving from ICE) and also since I don't have heard that many people trading it?

Comparing with ES today:

RTY $ range = 50 * 24 = $ 1200

ES $ range = 50 * 11,25 = $ 562,50

NQ $range = 20 * 27,25 = $ 545

So, today it offer pretty much twice the amount of $/range.

I just took a quick look at it and it appears to trend a little better and more smoothly.

Thanks for bringing this to my attention.

Regards.

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Howard Roark
Oslo Norway
 
Posts: 438 since Aug 2018
Thanks Given: 389
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Getting back on topic it's interesting to note that it can happen that the dollar value of the daily range can be higher on ES than NQ (see prior post).

And today is just another day where I feel that NQ is just as noisy and choppy as the ES.

 
 
mtzimmer1's Avatar
 mtzimmer1 
Upstate NY
Recovering Method Hopper
 
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As @bobwest and others have said I prefer the YM due to the smaller tick value and less erratic moves than the NQ. Charting the ES bothers me sometimes because the candles are not as granular as the YM and NQ.


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 bobwest 
Western Florida
Site Moderator
 
Experience: Advanced
Platform: Sierra Chart
Trading: ES, YM
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mtzimmer1 View Post
As @bobwest and others have said I prefer the YM due to the smaller tick value and less erratic moves than the NQ. Charting the ES bothers me sometimes because the candles are not as granular as the YM and NQ.

When I started in futures I began with YM, not for any big reason other than I had seen it being traded by someone I was following at the time. You've got to start somewhere.

Then I read a lot on FIO and decided I would graduate to the big boy's contract, and went to ES for a long time. I wanted to be cool.

Recently I started to think about this granularity thing, and went back to YM. As a personal matter, I wish I had never left. Someday, when I am a multi-billionaire trader (and when pigs fly ) I will need to be in ES because nothing else will be able to handle my enormous trades. But for now, the smaller tick size in dollar terms of YM is suiting me just fine.

ES was designed for the big players, and in fact was originally a cut-down version of the original S&P contract, which had a point size, if I recall correctly, of $500. That's why they still call ES the "emini" -- it was a miniature of the big contract. (Also, it was electronic and the original was only in the pit.) Now, I don't think they trade the original any more, and if they do, the volume has been shifting heavily to the ES for a long time, and of course there's no pit any more.

The big players still dominate ES, which is fine with me. I'm liking little YM a lot better. Just a personal preference.

Bob.

-----------------

Update: @tr8er just corrected me on the big contract size: it's $250, not $500.


 



Last Updated on January 9, 2024


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