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Even with higher commissions, don’t the e-micro nasdaq futures make more sense for scaling into and out of positions as a day trader? All insight is welcome
Absolutely for some traders!
Absolutely NOT for other traders!
Considerations: Laws of Averaging, patience, comfort level of drawdown.
Example: Friday 6/10/22 @9:50-10:26 the MES dropped approx. 43 points. 43x5=$215.00. If you went long at 9:50 and rode that drawdown to 10:26, you would have been down -$215.00.
If you believed it was getting oversold and came back in with 5 long contracts, your breakeven would be 8.5 points (less commissions). The MES retraced about 21 points. Max profit on that trade would have been 12.5 points x 6 x $5.00 = $375.00.
Of course that's in a perfect world and a perfect maximized trade. But you can see the point. This is only one type of strategy. I have traded this way in the past. It can be very stressful to me. The size of your trading account can ease that stress if it is large enough.
There are other ways of trading with less stress. For me, I had to ask myself why I was getting in on the wrong side of the trade. Getting on the correct side of say a 20sma did help.
One benefit of micros is that when price decides to break down and my TickStrike starts firing off RED, RED and more RED, I will sometimes hit the sell button as fast as I can (numerous times) with the ATM set at 1 contract, then close at a profit or scale out for a larger profit.
There are traders that would not touch the above with a 10ft pole. I understand that. I personally have found that traders are like musicians. They all like to play their unique style. The whole purpose of this work is to produce profits and only the individual trader can figure out his/her own way of doing that.
You can also use Micro's to hedge an E-mini position or vice versa.
Micro Strategies are only limited by what goes on between one's ears!
Trading: Swing and Day Trade Index Stocks, Options and Futures
Posts: 16 since Sep 2020
Thanks Given: 44
Thanks Received: 21
I don't see commissions as a concern at all, it's the cost of doing business. Micro futures are a great way to learn to trade futures. If you survive and make money, scale up to multiple micro contracts, you can make plenty of money that way. Still surviving and want to scale up again, go mini futures, one or more contracts.
MNQ futures are so volatile at the moment that I don't think the proportionally higher commissions should be too much of a consideration.
I'm not quite clear whether you're asking whether they make more sense for scaling into and out of than other futures do, or whether they make more sense for scaling into and out of than simply trading them AIAO? Or maybe both/either?
For myself, I like adding to winning positions (when I can do so without increasing the risk beyond what it was when I opened the original position) if the "entry criteria" are still at least as valid for me to "add" as they were for me to "open" - and sometimes they are, because my trading tends to be trend-following.
I tend not to scale out, but to "close fully" when I no longer want to be in the trade. But I'd do the opposite, if testing showed that overall it had better outcomes. So (as so often?) I think it depends on what you're doing and how you're doing it?
