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ES ponential Journey
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ES ponential Journey

  #11 (permalink)
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Quoting 
Some questions:

When I buy a contract, am I buying a position in or a portion of a contract or am I buying the whole thing?
If I bought the whole thing for $2000 and it settled at $2100. Do I get $2100*50? That would be wonderful so I rather think not.
If I buy a position in/portion of for $2000 and it settled at $2100. Do I gain $100? If so, why talk about the 50* thing at all? This is exactly what happens if I buy and sell before settlement.
Did I miss it entirely? Thus the reason to ask for math to elucidate my understanding (or lack thereof).

- In futures, you control a contract (as defined by the exchange). For the ES contract specifications, see http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_contract_specifications.html

- I recommend thinking about the ES as price points, not dollar values. The ES contract size is $50 x the index value (which is currently around 2100.00 points). So, if the ES is trading at 2100.00 points, the value of one contract is $105,000.00

- So, in your example, if you buy the ES at 2000.00 and sell at 2100.00, your profit would be the change in the contract value, which is (2100.00 points - 2000.00 points)x$50 per point = $5,000.00. Keep in mind, that if you had first bought at 2100.00 (not sold) then exited (sold) your position at 2000.00, you would have a loss of $5,000.00.

- For the ES, volume and open interest tend to roll from the current contract month to the next contract month roughly one week prior to the contract expiration. The June contract is the current "front month". The June contract expires on Friday, 6/19/15. So, volume and open interest will likely roll from June to September around 6/11/15.

- As a "speculator" (as we all are), rather than a "hedger", you will need to roll your position (if holding overnight positions) to the next contract month, rather than hold to expiration.

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  #12 (permalink)
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Thank you @Coastline. I appreciate your informative post & helping me shed light on my Grey areas.


Coastline View Post
So, in your example, if you buy the ES at 2000.00 and sell at 2100.00, your profit would be the change in the contract value, which is (2100.00 points - 2000.00 points)x$50 per point = $5,000.00. Keep in mind, that if you had first bought at 2100.00 (not sold) then exited (sold) your position at 2000.00, you would have a loss of $5,000.00.

Looking at the above and then re-reading my post I clearly goofed up the statement. Yes, 100 pt difference would be * 50 so it would be $5,000.00. Thank you for taking the time to make sure I wasn't totally off base. That would have been real painful. So much for typing a post when I've got customers around needing my attention.


Coastline View Post
For the ES, volume and open interest tend to roll from the current contract month to the next contract month roughly one week prior to the contract expiration. The June contract is the current "front month". The June contract expires on Friday, 6/19/15. So, volume and open interest will likely roll from June to September around 6/11/15.

Yes, If I understand correctly, Settlement is the Third Friday of the Quarter End Month. In June that would be 6/19. On the Thursday eight days prior to the settlement at 5pm (6/11), the next contract (ES 9-15) would become current. If I have an active overnight trade going that went from before 6/11 @ 5 pm to after 6/11 @ 5pm the trade would still stay in the (now old) ES 06-19 contract.

Is that correct so far? Particularly the time. The "Day" starts at 5pm in my understanding (Monday's Day starts at 5pm Sunday, Friday's Day ends at 4:15pm Friday).

I believe the Settlement refrences SOQ and so it's not really a Close or Open price.


Coastline View Post
As a "speculator" (as we all are), rather than a "hedger", you will need to roll your position (if holding overnight positions) to the next contract month, rather than hold to expiration.

I also understand that volume is going to drop to near zero and staying in is not a good idea.

But supposing I did hold to settlement? Do I have just the $5000? (50*2100)-(50*2000)? In otherwords a forced Sell at 2100?


Thanks again to all here ! -g

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  #13 (permalink)
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Quoting 
Yes, If I understand correctly, Settlement is the Third Friday of the Quarter End Month. In June that would be 6/19. On the Thursday eight days prior to the settlement at 5pm (6/11), the next contract (ES 9-15) would become current. If I have an active overnight trade going that went from before 6/11 @ 5 pm to after 6/11 @ 5pm the trade would still stay in the (now old) ES 06-19 contract.

Is that correct so far? Particularly the time. The "Day" starts at 5pm in my understanding (Monday's Day starts at 5pm Sunday, Friday's Day ends at 4:15pm Friday).

I believe the Settlement refrences SOQ and so it's not really a Close or Open price.

The September and December contracts are currently trading now, but the volume and open interest in these contracts are much lower than the current front month (June). My reference to the week prior to expiration was just to highlight the fact that the highest values for volume and open interest tend to move to the next contract month around this time. So, one week prior to 6/19, you will see volume/OI falling in June and rising in Sept as traders roll their positions from June to Sept. The Thursday eight days prior to the settlement is not a hard date. It is just usually around this time when you see most of the roll activity. However, the June contract will continue trading up until expiration on 6/19. In response to your specific question about the overnight trade on 6/11: Yes, you could remain in the June position (since it will still be active up until expiration on 6/19). However, longer term traders who intend to hold positions often like to stay in the contract with the most volume/OI, so some traders will decide to roll their position from June to Sept when they see the OI transition from June to Sept. It depends on how you plan to manage the trade.

Regarding time, the ES sessions for one day are as follows:
- Globex night session, 18:00 ET - 9:30 ET
- Globex day session, 9:30 ET - 16:15 ET
- Globex session, 16:30 ET - 17:15 ET
Note the breaks in trading from 16:15 ET-16:30 ET and from 17:15 ET to 18:00 ET. The electronic trading open for the day is at 18:00 ET. The "day session" open is at 9:30 ET. The official settlement is as of 16:15 ET.



Quoting 
I also understand that volume is going to drop to near zero and staying in is not a good idea.

But supposing I did hold to settlement? Do I have just the $5000? (50*2100)-(50*2000)? In otherwords a forced Sell at 2100?

I don't have direct experience with holding a position into expiration, so I suggest asking your broker to get more clarification. But, if you bought at 2000.00 and sold (exited - due to expiration) at 2100.00, then I think your profit would be $5000 (less any fees that your broker charges you to un-wind the mess created by holding to expiration). As you noted, staying in is not a good idea, and there is no reason for it since the ES is very liquid and rolls are easy.

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  #14 (permalink)
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Coastline View Post
The official settlement is as of 16:15 ET.

@Coastline I thank you again. I thought that was when based upon reading. Thanks for confirming that. Also, I should have mentioned my times were CT so we have equivalent times.

I don't actually have a broker yet but I'm in talks (if you can call email "Talks") with a couple.

-g

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  #15 (permalink)
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Bit the bullet

All Right!

I bit the bullet and opened a funded trading account. The focused month of sim trading had been profitable. There is still much that I would like to know, but I have enough to start dabbling I believe. Many folks say you don't really learn until you have skin in the market.

Last Monday (6/1) was to be the first day of trading, but some setup issues got in the way so only Wed. & Thur. actually saw trades. I made some, lost some, overall profit. A good beginning. Friday was a bleh day. Except for the intial open area, not enough movement, price-wise, for me so I never got in.

Today is much the same as Friday. In fact it's an "Inside Bar" to Friday as I type this.

Markets:
I currently only trade the ES and I am not yet tracking any other markets. Got to digest this one first.

Setup:
I currently run a VWAP indicator and two Keltner Channels (10/1.5 & 20/2.5) and a 100 period SMA. I focus on a 5 min chart with the 15 min chart beside it watching the price action. I also have some long charts off to the side monitor (a daily for several years and a 2-hr) for ease of history reference and a pair of really short (1 min, 5 sec) on the side monitor for looking back at if I've had my attention pulled away from my 5-min.

I also have a Volume Bar panel and a Range Bar panel below the main charts.

Trading Style:
I guess I would class myself as a day-trader. I am funded enough to hold several contracts overnight if necessary. I'm nowhere near knowledgeable enough to be a Swing (multi-day) trader and don't have pockets for that. Conversely I'm nowhere near snap decision-able to be a Scalper - just doesn't fit me. That, I guess, makes me a day-trader.

I have a good start funding wise. I am comforatable with a 2 contract entry and can hold up to 6 comfortably. Beyond that I can hold more but it gets really uncomfortable and I won't do it - just not enough wiggle in the overnight if things don't go well. I have set out account boundaries for when I'll be able to enter with 3 & 4 contracts. We'll see what actually happens.

OK, that's enough for this post.

Anyone want to offer some advice for a newb?

TIA & Blessings,
-g

Blessings & Good Trades
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  #16 (permalink)
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Great job in going live.

I wouldn't worry about the trade size as of yet. Having the ability to fund an account that allows you to trade multiple contracts puts you ahead of many of the beginning traders out here.

It isn't a bad idea imo to infact trade smaller then you have too when first getting going - ie: lets say your normal trade size is you enter with 2, add 2 and add 2 for a total of 6.

Sometimes cutting your trade size in half (1+1+1) is not the worst thing as it allows you to now feel what it is like to be in the market with real money but not feel like you are 'risking your account' on every trade.

Your decision to not scalp is admirable I think. What is your definition of scalping, what kind of targets are you swinging for?

One thing about the markets is that their are alot off intermarket correlations. A good start to understanding these things would be too make one chart with an indicator called "showmethemoneyflow" by SrgTroy.

This allows you to make a single chart and put things on their like bonds / some forex futures / and different equity markets to see how they function. Check this thread out here: https://futures.io/elite-circle/31905-showmethemoneyflow-indicator-srgtroy.html

I guess I would say in the long run now that you are live it would be more important to trade a smaller size and become comfortable with being live then maxing out your contract size right from the beginning.

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  #17 (permalink)
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DeadCatBounced View Post
Great job in going live.

Thank you. I'm both happy to be moving along but still very cautious. There is SO MUCH that I don't know. Heck I'm having trouble understanding some of the questions, much less the answers.


DeadCatBounced View Post
Your decision to not scalp is admirable I think. What is your definition of scalping, what kind of targets are you swinging for?

To me, there is a continuium from Swing, thru Day-trading to Scalping. Where the points are between them probably depend upon the personality of the one making the judgement. I see Scalp as the intentional get in and get out quickly for a few ticks. Tight Stops and close profit targets. Day-trading is outside that. Perhaps one could call it "Intra-day" swing trading". Swing trading (to me) is larger still in that the swings are multi-day in scope.


DeadCatBounced View Post
One thing about the markets is that their are alot off intermarket correlations. A good start to understanding these things would be too make one chart with an indicator called "showmethemoneyflow" by SrgTroy.

This allows you to make a single chart and put things on their like bonds / some forex futures / and different equity markets to see how they function. Check this thread out here: https://futures.io/elite-circle/31905-showmethemoneyflow-indicator-srgtroy.html

I've seen that one mentioned several times. At this point I wouldn't know what to put in it. I want to get a High-Beta/Low Volatility chart up next now that I have the data. Any suggestions on what to put in the ShowMe indicator?


DeadCatBounced View Post
I guess I would say in the long run now that you are live it would be more important to trade a smaller size and become comfortable with being live then maxing out your contract size right from the beginning.

Many have said here, Good Account, Small Size, No Margin, & start sooner than later with real funds. I'm am right in the middle of that and cautious to boot. So I'll probably miss several opportunites while I get used to the whole thing.

Hopefully I'm looking for advice in all the right places - but there is so much chaff!

Blessings,
-g

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  #18 (permalink)
Greenhorn Trader
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A full week of live trading later

I must say, live trading does bring in a load of baggage probably best left at the door.

I had Sim traded for the entire month of May. Journaling every transaction along with the Whys & Wherefores in copius detail on a paper journal. Discussed the ins and outs of each decision with my wife of 30+ years (she will also be a live trader in the relatively near future) and tried to come to a serious understanding of what I did and why I did it each and every trade.

I ended up (undoubtedly beginners luck) trading a small package of between 2 & 4 contracts with an occasional stretch of 6. The account is sized well enough to carry 10 overnight if it was required, but that would be way too tense for me so I just won't go there. I did manage to make a fair profit (admittedly on the strength of two outstanding days where everything just worked) for the month.

Because of that, because of the careful investigation, because of the extensive reading and watching of material and because of the community here, I decided to give live trading a go.

I got started in the first of June but due to technical difficulties (and dare I say stupidity on my part) I didn't actually make a real $$ trade until Wednesday. Wednesday ended well.

And I nearly goofed a trade on Thursday so bad that it gave me the spooks. It ended well enough, but I did get spooked.

And Why? Well because the money was real. I was, I guess, as prepared as I could be about the matter of real $$ going on the line, but education and reading notwithstanding, I still wasn't able to keep that baggage out of the door. I think, because of the reading here, I handled it better than I could have, and managed to stay calm enough to turn a sizeable loss into a reasonable loss. But I was still spooked.

I laid off Friday. Nothing obvious presented myself.

Monday I missed a great trade on opening becasuse I was, you guessed it, spooked. I also missed the next one and by this time I knew what it was. I went ahead and made a trade knowing that it might go wrong and, sure enough it did, I bailed on it more intelligently than Thursday and got back on the train going the other way. Monday ended well.

Today was also a day full of learning. I learned that its very difficult to win on shorts when the trend is up. I will confess that I was thinking the day would be mostly down and made my moves accordingly. I did pull the chestnuts from the fire before they got burned, but it took all day.

It's my understanding that for a new trader, beating the cost of commissions is considered good. I have made 10 round trip trades in the last week, some with mutiple legs. Some were loss, most were wins (0.01 over commissions is a win) and my account balance is up 1.48%.

I am well satisifed and fully cognizant that I'm probably a victum of good luck.

Blessings & Good Trades

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  #19 (permalink)
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Opened Journal

Oh, and I've opened a Journal to document my trade progress. You can find it here:

Greenhorn Greg's ES Foray

I'll still post non-journal type stuff in this one as the case arises.

Blessings & Good Trades
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  #20 (permalink)
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GregLGTP View Post
Anyone want to offer some advice for a newb?

Slow and steady wins the race.

Plan that your education will take a long time, and you need an alternative primary source of income to cover all living expenses as well as fund your trading education (aka losses).

Spend as much time as you can watching the webinars on futures.io (formerly BMT), I believe the majority of them are extremely useful.

Journal. It's not about a spreadsheet of entries and exits. Take 2 minutes and write down a sentence on why you entered, and why you exited. Then go back each weekend and read the last two weeks of entries. Each month read the last two months. It is this process that will allow you to see patterns and improve upon them.

Trade with cash, not sim. If you are a 'newb', this means you shouldn't be trading futures. Start with swinging stocks for example. But put some real cash on the line so you can start the real learning process. You'll need to decide the amount of money that doesn't jeopardize your living but also is sufficient enough to make you work at it.

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.
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5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
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