Sunday, March 08, 2009

e-mini futures trading

Dear fellow trading buddies :

It's been quite a while since I blog.

After attending Mr Michael Woo's e-mini futures trading course back in Dec 08, I have been paper-trading this instrument till today.

During the past few years, I've been trading mainly US stock options. Those trades were mainly swing trading; although at times when I traded options for earnings gapping, I only held the options overnight.

Trading the e-mini futures is mainly a day trading affair - a totally new ball game for me as compared to what I've been doing for the past few years. I understand that there are many traders who trade e-mini futures via swing trading, but what I was taught by Michael was mainly on day trading thus I would stick to what I've been taught in my paper trading for the moment.

I've been paper trading mainly the S&P 500 e-mini (ticker : ES) for the past few months. In his class, Michael taught us how to trade the e-minis purely using indicators, candle stick price action & profit target/stop loss templates. But he did reveal that over the years he don't rely overly on indicators to time his entry & exit. He relies sometimes on his "intuition" to time his trade but he warned that it would take years of experiences to develop. For beginners, sticking to indicators for entry/exit and setting a disciplined profit target/stop loss level would do.

During these few months, these were the things that I've observed trading the S&P 500 e-mini (ES).
1) The 1st half-hour when the cash market opened ie. 9.30am to 10.00am EST is a "crazy" time to trade the ES, where the ES price movement is very volatile. If you don't have clear signals for entry, don't jump in. If you don't know where the next candle stick is pointing to, you "lagi" don't jump in.
2) In a trending day, you have a high probability trade buying or selling during retrace-ment.
3) If you have a choppy trading day, switch off your pc and don't trade the e-mini once you encountered 2 consecutive losses; provided that you trade after 10am EST.
4) Indicators are just indicators, there are never 100% accurate. Be prepared that indicators are sometimes lagging, especially during choppy days, where you could very well go long when the rally has peaked & short the e-mini when it has bottomed out.
5) You need to keep upgrading your trading skills with additional reading materials. Currently, I'm reading a book "Mastering the Trade" by John Carter, which provides me further insights into the world of day trading.

I would blog my e-mini trading paper trades at times, winning as well as losing ones. But do remember that they would be paper trades, where the emotional barriers would be vastly removed. This would be an important aspect that I would need to control once I switched to live trading with real money.

Yours sincerely,

Tony Chai

2 comments:

Futures Trading said...

i agree with Michael that futures trading is more suitable for day trading.

Tony Chai said...

Hi :

So are you a student of Michael's class too?

Tony Chai