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From a day trading perspective, trading multiple Instruments allows for more setups occurring.This is especially so for swing traders. Having said that, trading only one lets you become very
familiar with the best times to trade it and when not to. etc. I started off only trading the ES, then moved onto CL, NQ, YM etc.
Can you help answer these questions from other members on NexusFi?
Bottom line: it depends simply on your time horizon.
The longer you hold your position, the more important is diversification.
For daytrading, generally (imo) it's better to focus on a single individual instrument but with an eye on related/correlated instruments.
The reason for this is that the character of a particular instrument is more apparent on short time frame, which benefits the person who focuses rather than diversified.
My thoughts.
Edit: wanted to add this video with David Pavlatos (husband of Linda Raske) speaking; he discusses some of the thoughts/principles that are relevant to this thread. He doesn't specifically discuss whether to focus or diversify, but he does talk about looking to related markets and (at least initially) learn a particular instrument and its behaviors. Take it fwiw. I think he's been trading for longer than I've been breathing.
The number of ways to make money trading is unlimited. The key is to find the way that suits your personality best. And once you have found that, stick with it... any approach will have periods when it doesn’t work as it should, otherwise everyone would do it. When the approach that best suits your personality goes through one of its ineffective periods, you must resist the urge to find something else. The something else likely won’t suit your personality, will lose you money, and will leave you in the wrong place to take advantage of your favored approach when it starts working again.
For example, one trader may prefer to trade very frequently with tight stops. For that trader, the possibility of a large loss on a position is too stressful. Another trader may prefer to trade much less frequently, with a higher target and bigger stops. For that trader, the concept of having to make constant decisions all day about whether to be in or out is more stressful. Figure out which trader you are, and stick with it.
One word of caution. Although I believe that trading multiple markets is a valid approach for some percentage of traders, I would beware of and approach or “edge” that claims to work “in all markets across all timeframes.” I think approaches that have applicability across many markets, like long term trend following, only “work” if the trader has tolerance for wide swings in equity across long timeframes. If you can’t handle that, and want to trade multiple markets, you should take time to learn some of the idiosyncrasies of each market, and not trade them the same way.
This question hit my email, as I was putting together a training program for a new trader I'm working with. I do believe multiple, non-correlated instruments in a basket up to one's ability and comfort level is the most successful, consistent way to systematically trade. BUT, the market is made of people (and computers programmed by people), and though there are individual differences in instruments, the "move and flow" of markets have a rhythm. Learning market rhythm and the intrinsic "feel" is imperative to successful trading AND investing (there is a difference...).
Depending on the abilities and previous knowledge one brings to the table, I find beginning on one market, multiple time-frames &/or ticks, and different indicators, helps someone notice and recognize patterns. Then plugging in systems and decision'ing trading platforms, and one can synchronize what they see in the patterns to the buy/sell signals they are producing with their systems. I love the "click" that occurs with folks realize the similarities in markets between different instruments' movements, as they introduce different instruments to their mindset.
Thank you for your excellent timing! I'm new to this site, and love to learn and teach. My First Post...Take it for what it's worth...free.
When I first started with trading I was just on the equities side scanning for stocks. I moved to futures within a few months of that and have pretty much exclusively scalped and day traded the ES and MES since then. I do look at correlated and inversely correlated markets, particularly in the premarket to get a sense of whether the overall market is more risk on or risk off but that is relatively a small part of what I do.
I know of some prop traders who trade large intraday positions and trade a few different instruments simultaneously, paying a lot of attention to correlations and inverse correlations particularly around geopolitical events. I personally just structure trades based on where the market is in the spectrum between extreme trend and extreme trading range and adapt to the market conditions rather than looking for very specific setups or events. There's plenty of opportunities right in the ES and MES throughout the session so I don't look at other things. I make my decisions based on market generated information and want to minimize potential distractions as much as possible. If I were looking to hold for longer periods of time then I'd diversify to a greater extent (probably emphasizing equities and ETFs over futures for overnight positions), likely incorporate some fundamental analysis, and apply hedging strategies when appropriate.
as a new trader, you probably want to start with one future symbol and trade that until you have developed a profitable way to trade. if your trading process works across other futures, you can add as many symbols as you can manage at one time. More symbols give you the advantage of picking the best setups versus trading one symbol where you might force some trades. it will take a lot of experience and a good trading process to manage more than one trade at a time.
i've been day trading for 25 years. stocks for 10 years and now futures for 15 years. I have worked up to trading across 13 futures at the same time. but i have the right process and my trades are managed automatically. I have tried trading 17 futures and 21 futures and feel that my 13 is the maximum that i can daytrade at the same time. note that i'm not in more than 4-5 trades at the same time..
Thanks for sharing the experience you had at Bear Stearns. Would you also consider making another thread containing other stories from your time there? The pro trading world is quite interesting to me. I've only been able to learn about it through the teachers of courses I'm taking but I am always curious to learn more from those who've had first hand experience.
As for trading one market or more, right now I'm finding I do best with just one. I definitely think expansion is possible with more experience and discipline, but right now I'm finding I start to overlook important things or wrongly just assume certain conditions are holding when my attention has to be split between multiple markets.
