Trading the new CME E-Micro's (E micro) MES, MNQ, MYM, M2K and other micros
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I would imagine commissions for the Micro ES would be quite similar to the CME FX Micro products like M6E.
You can certainly argue that commission structure is "poor".
But, you an also argue commission has little to do with what I view as the objective of the micro's. Micro's are a good instrument for traders new to futures to cut their teeth on. And facts are, most of those traders lose money. Facts are also that commission costs are not a majority percentage of those losses.
So newer futures traders would be well served to trade a Micro product, even if the commission structure seems expensive. It will still almost certainly be a better learning instrument, allowing their account funds to go a longer distance and thus provide them with more education and a higher chance of overcoming the odds before failure.
Once you have a positive expectancy then a Micro product isn't the most appropriate instrument in most cases. No one is arguing this point.
Mike
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I agree with @Big Mike -- the whole premise behind a micro product is to take small risks. Who cares if the commission as a percentage is much higher, if the risk as a percentage of account is much lower? But it's not surprising, given that many people will argue over $0.10 per R/T per contract on commissions on the emini when a single tick per contract costs 125X that amount, and then make a preventable mistake that costs 8 ticks per contract, or 1000X that amount they fought so hard for. For high volume trading strategies with a net profit of < 1 tick per contract where the money comes from thousands of RTs per day, then commissions become important. Unless that is the case, the trader should be more concerned with the bigger picture.
The following 4 users say Thank You to josh for this post:
I think a micro ES would be fine, but if the commission and fee structure is the same then I think it's only useful if you want to trade larger moves with smaller cash risks/rewards than the ES. However, if that's the case then you may as well trade SPY, which is extremely liquid with tight spreads, but then you lose all of the advantages of trading futures.
The following 2 users say Thank You to shodson for this post:
and then what's next? 1/10 and then 1/100. and after that maybe we can have some options on top of that? I have a hard time to find good reasons to create such an instrument. the derivatives we have today are already way too big. creating probably the biggest threat for financial markets.
who would trade such a thing anyway? somebody new to futures to reduce the risk? I say sim trading the "normal" es would achieve the same or even more realistic results (liquidity concerns). for retailers to hedge a position? buy a cfd, etf or options. there're already more than enough possibilities out there.
to be honest, the only one I see who would profit are the brokers.
The following 3 users say Thank You to Silvester17 for this post:
Best piece of advise I got when starting out was to use SPY before touching the ES and this is an ideal alternative.
In fact it's better because of the trading hours, also less tax reporting hassles of SPY as a bonus. I realize that a large number of folks are scalping for a few ticks and this won't interest them.
The following 2 users say Thank You to Kona for this post:
I agree that traders should probably start swing trading equities. It's slower, less leverage, and a good way to get a grasp of trading.
The problem with SPY and equity trading is of course the Pattern Day Trader rule. So most new traders are small traders, and they will immediately move to something else since they don't want to fund with 25k. If they would swing trade it would be fine.
Most of the focus from "trading educators" these days... aka rooms, signal services, etc, seems to be on scalping. So unfortunately a lot of newbies think that scalping is what they should do. Combine that with leverage on ES, and brokers that let people open accounts with low intraday margins, and really the trader is being setup to fail.
Mike
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
I voted no, because I think the NQ at $5 a tick is pretty close to a micro ES at $2.50 a tick, and has pretty good liquidity. If I wanted a smaller tick size, the M6E would be better at $1.25 a tick.
I would think it would be a good contract for those wanting to start out (!!) trading the ES. You could steer them to the micro-ES in the beginning.
Math. A gateway drug to reality.
The following user says Thank You to traderwerks for this post:
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
