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Hello, could any of you be so kind and share the experience and give me some suggestions regarding the instruments to trade/screen for a setup?
I have been using one intra-day strategy on some futures instruments (ES, NQ, YM, 6E, 6A, 6B, 6C, 6J, CL, GC etc), but unfortunately the setups are not very frequent. The idea would be to screen a lot of instruments every morning/day and only choose the best looking ones for the strategy and trade maybe one or couple of them. Would you suggest the instrument pool to look at? Thank you in advance guys/gals!
P.S. I am using TransAct futures, Sierra Charts.
Can you help answer these questions from other members on NexusFi?
I don't want to discourage you from doing anything you're having success with, but what I've noticed is that most people who are very successful tend to only trade 1 or a small handful of instruments, but know them inside and out, they have a feel for them, they know the statistics of retracements stone cold etc. I feel like I have been down the path of trying to apply what I believed to be a high probability single strategy or setup across a number of instruments and/or timeframes with limited success. One of the big reasons being is that most strategies are very effective in a certain environment and not at all effective in others. Screening may or may not achieve choosing the right instrument in the right environment for your particular setup.
I would argue a few simple setups for a single instrument may be a better approach. For example, I have a couple setups I like to trade and refined them on the ES but if I try to trade them on the NQ or other instruments, I usually get smoked, because those other instruments don't really "act" the way the ES does. Most instruments seems to have their own personality- most likely because the big boys who move size on an instrument day in day out tend to only trade that one instrument so those groups of traders interacting with each other regularly forms a certain behavior on each instrument. I think trying to trade a single setup across many instruments that behave so differently is a pretty difficult task, though I'm sure there are people who are successfully doing it.
Would you say the same is true of MES and ES? I assumed that those could be traded interchangeably. I have been paper trading and studying the ES the last couple months and thinking I would go live with the MES to start. Maybe that's not a good idea.
Put them side by side on two charts, or better yet, one above the other so you can see if they move the same way at the same time.
Arbitrage is going to keep them pretty well together, as very similar instruments will be.
Sometimes people will use the emini (ES) to make decisions, and the micro (MES) to enter the trades, which seems a little complicated to me, but it is sometimes done.
Just give them a look and see what you think. Use whatever tools you plan to use in your trading, and see if they respond differently. You'll know pretty quickly what you think about it, and let that guide you.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Anecdotally they seem to "act" the same to me. I tend to backtest and do studies on ES as more data exists, but trade the smaller size of MES. I suppose there may be differences on volume and order flow or tools based on them like cumulative delta and vwap. I agree with Bob, you should compare them yourself for whatever you're doing or trying to do.
I think you should paper trade an account that is the same size as your real money would be and trade the same product you would trade to make it as realistic as possible. I personally like being able to trade multiple contracts of MES and having the ability to scale out of a trade instead of holding or folding the full size of 1 ES contract. It allows for capturing some profit and leaving on runners. I'm no expert... it's just what suits me, you might be different.
@bobwest, I have noticed they're almost identical. I was assuming arbitrage would make any difference insignificant. It really hadn't occurred to me that maybe that wasn't the case.
@bgraham I appreciate your suggestion. I'll paper trade MES first. Smart advice.
Thank You for participating in this thread, but maybe You have an opinion or some insight about the original thread question? Or You could point me in the right direction or to the right person? Thank You in advance!
Yes, and thanks for bringing things back to the actual topic. It got a little sideways there for a bit, although not in an unrelated way.
I am going to pretty much agree with @bgraham on this. Screening a number of instruments per day will get you looking at a lot of things that may act entirely differently. It is possible that you will just get overwhelmed with so much you have to look through that you will miss things that are more important for a given instrument, even though they may not be like the one setup you are looking for.
It is entirely possible that your setup won't even be a good one for some particular instrument, ever, but that it may be perfect for another.
Also, the very, very last thing a trader should do (or one of them, anyway ) is to be looking at and trying to interpret too much information. The more complex your task becomes, the more it will make it harder for you to be attentive to and respond properly to what is happening in the market in front of you.
So, while it isn't exactly what you asked in your original question, I would simply not try to do it. I would get familiar in a rough way with a few instruments to get an initial understanding of how they normally act, and would then pick one and work with it until you knew how you wanted to trade it, and whether you wanted to at all, for that matter.
For instance, ES is usually kind of slow and ranging (recently it has shown its wild side though ), but NQ, also an equity index, is wildly swinging and notoriously hard to trade unless you are very quick to change your position. CL is the same way, except sometimes more so. Bonds are the kind of things where if you fall asleep during the day, you won't miss anything. They are all different, and you should first want to be sure you recognize the particular character that each has. You definitely cannot treat them as all the same, and only look for your particular setup. How your setup plays out, if it does, will be different in the different instruments and under different market conditions, which will also affect them differently.
So my advice and suggestion is to look at what is the most reliable general character of the different instruments, and start to narrow your view down from there. Some may never be suitable for a particular setup, while others may be a natural.
And remember that times always change, and what is true today for a given market may not be tomorrow, so be alert to how things are shifting. The war news, inflation, the Fed's response to inflation, the world economy and particularly its energy economy, are all in turmoil now, and things are shifting around, sometimes rapidly.
Don't make the job of trading harder than it will be anyway by trying to follow and trade many instruments. The complexity of the task will likely make everything much harder.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Thank you, I appreciate your response. I totally agree that one has to get familiar with each instrument/character before doing anything further. But I have to mention that during my trading experience (could be over 10 years now) I have tried to approach the market from different angles (also tried reading and following only one particular instrument) but I have noticed that I personally make less mistakes if I follow very simple but strict rules using one method over multiple instruments to avoid guessing. The problem is that I am not satisfied with the frequency of positions which means the importance of each positive position is too high (for example, I miss a positive position), therefore I would like to increase the number of total positions per month (hence more instruments to look at) in order to balance the importance of each trade.
) is to be looking at and trying to interpret too much information. The more complex your task becomes, the more it will make it harder for you to be attentive to and respond properly to what is happening in the market in front of you.