E-mini S&P 500

[ES YM]

My friend has recommended me to this forum and advised me to create a journal for my trading. I've 'ghosted' around for a bit looking at various threads and learning from the more experienced members, now i'm going to concentrate on writing a journal which will hopefully be helpful for everyone, or atleast enjoyable to partake in.
I'm relatively new to the world of trading and financial markets and i hope i can learn alot from the traders who are willing to share...

My market:
E-mini S&P 500

My aim for this journal is to share my;
Ideas
Research
trades

In the hope that i can develop myself as a trader by doing so.

 

[wh92stang]

Looking forward to seeing your trading style. I always enjoy when an Emini trader comes on these forums. One of my favorite markets.

 

[ES YM]

First Journal entry
11th November 2009

E-mini S&P 500

Commodity: E-Mini S&P 500
Symbol: ES
Exchange: CME (Chicago Mercantile Exchange)
Tick: 0.25
Tick Value: $12.50
Size Value: $50 x S&P 500 cash index
Months: H, M, U, Z, (March, June, September, December)
Settled in cash on the 3rd Friday of expiration month.

What is it?
The E-mini S&P 500 is a futures market, that is a smaller electronically traded version of the S&P 500 stock index and it is 1/5 of the size of the larger institutional pit-traded contract (SP). The E-mini S&P 500 is traded on the globex exchange on the chicago merchantile exchange (CME)
You can visit their website @
http://cmegroup.com

Why trade it?
1. Leverage and volatility - This gives the trader the opportunity to gain larger profits with less amounts of margin requirements and therefore makes it ideal for day trading.
2. Broad market exposure with low commision costs
3. The ability to hedge with alternative contract months, hedge portfolios and hedge other e-mini's
4. Opportunity to be profitable regardless of market direction.
5. The ability to trade options
6. Volume and liquidity is very high due to popularity and this reduces the risk of trading
7. Practically a 24 hour market makes it easier to exit trades

Volume/Liquidity



Trading Advantages
- Fast efficient fills
- Low commisions
- Spread of risk
- Less markets to watch
- Low margin requirement

This is the market i'm trading and i hope others do too so we can help eachother,yesterdays volume was 1,833,896 contracts, so i hope a few of you were included in that.

 

[ES YM]

The Basics of the The Trading Plan
The charting i'll be using is eSignal http://esignal.com
This gives me free CME globex products (under special conditions which are easy for me to achieve) and i also have a subsciption to NYSE, AMEX and NASDAQ stocks.

Here is a sample/example of Esignal charts.



I like having a plain white background and use a variation of candlesticks and line-charts.
Esignal charts are very flexible and easy to manuvoeur and thats the main reason i like them.

Here is the same chart with a line chart applied.



Esignal allows me to easily manage my charts and observe the market that is important to me; it also allows me to view lots of other important information that i will come on to later; i find it a proffesional tool that does exactly what i want it to do.

Broker
My brokerage account is with Infinity Futures;
http://InfinityFutures
I also have an account with Interactive Brokers for my potential equity trading;
http://Interactivebrokers.com

Both these brokerage accounts were recommended to me by a friend who has used them since he started trading.

Execution Platform

Infinity Futures comes with the Infinity AT platform which is a very fast data feed and very fast execution, its very easy to manage orders quickly and this is especially helpful in day-trading. The customer service is also absolutely excellent and i talk to my broker over the phone, skype and email so its very easy to contact him quickly.

InteractiveBrokers i have limited experience with so i won't comment until i've developed my swing trading plan towards completion point.



With Infinity AT there is many ways of automatically managing positions, with scale ins, scale outs, profit targets, stop losses etc etc

Here is a sample of the Infinity AT



Account size:


I'm going to be trading 1 E-mini S&P 500 contract for every $10,000 in my account.
I'm from the UK and therefore there is a currency exposure, while i had the opportunity to hedge this, i decided not to on the basis of laziness.

--------------------------------------------------------------------------------------------------------
Thats the basics of my trading plan;
Next i'll go on to talk about my methodology, the tools and indicators i will be using on a discretionary basis and the news/fundamentals that i will be paying attention to.

 

[ES YM]

Looking forward to seeing your trading style. I always enjoy when an Emini trader comes on these forums. One of my favorite markets.

Yeah that sounds good... You can post your setups and charts too to discuss certain topics and subjects and ideas if you want and i'd appreciate that too

I hope this can become interactive; with everyone posting their ideas/charts about the E-mini S&P 500 (And other futures/markets, any infact) and discussing the news/fundamentals so that we can all learn.

Cheers

 

[wh92stang]

Are you a full time trader or do you do other work during the day? Do you trade after hours, or only during the US Market?

 

[ES YM]

12TH November;
Pre-market employment data was faded after better than expected results by traders.
11.00pm (US) we saw crude oil inventories with significantly more barrels were held in inventories than previous... Although this didn't carry massive volatility, the market has been going down since the announcement.
11.30 We have the Treasury secretary speaking so i'll be keeping a close eye on that.
Finally the federal reserve budget balance is being reported at 2pm

The Vix showed a low-test bar/doji yesterday, despite the equity markets having an up-day and this would suggest that traders are locking in gains (as we approached the new highs) and hedging their positions = This is bearish for the S&P because it means that the existing buyers are fearful and therefore i'd also expect new buyers to be fearful too, with the dominant emotion in the market place being fear rather than greed. Therefore i'm expecting a pullback in the S&P 500 over the next few days/weeks or atleast sustained range-bound activity.

Heres my trade from today;

Simple triangle setup @ the open, the open usually carries alot of emotions and momentum, so if the market chooses a direction or a breakout, this usually carries some good momentum behind it...
Entry short @ 1094.75
Stop loss was placed @ 1095.75
Exit manually @ 1093.00
$87.50 gain per contract - commisions

My current context assessment is RANGE-BOUND/CHOPPY and therefore i won't be doing many trades as its my non-prefered market climate.

Also i'm paying special attention to yesterdays low and the S1 pivot for scalps.

 

[ES YM]

Are you a full time trader or do you do other work during the day? Do you trade after hours, or only during the US Market?

Full-time trader.
I trade US (RTH) market session.

What about you?

 

[wh92stang]

I've been full time since March of this year. I mostly trade individual equities, and recently have gotten into futures (E mini and oil mostly). I also trade the Forex markets.

 

[ES YM]

I've been full time since March of this year. I mostly trade individual equities, and recently have gotten into futures (E mini and oil mostly). I also trade the Forex markets.

QM or CL ?

I'm currently planning to swing trade equity markets (As well as some ETF's and futures) but thats all under-development and for now i'm just concentrating on trading the E-mini S&P 500 on a day-trading basis.
Which equities do you trade?
I watch a number of US stocks that have a high weighting on the S&P 500 index intra-day.

 

[wh92stang]

Here is my daytrading setup/style:

In the morning I scan for big news pre-market individual equities. I put 6 of them on my watch list (3 that will open gap up and 3 gap down). I watch them on 1 minute charts and try to scalp a portion of a big move. The action dies down about 30 minutes after open and I'm usually flat at that point. I periodically check those stocks throughout the day as well as some Nasdaq staples such as RIMM, QCOM, AMZN, AMGN, and a few others. I have eSignal and also subscribe to the TotalView so I can better time entries and exits. This method comes from a T2W member (Mr. Charts) who has a few threads that are worth reading on here if you are interested in the style. Just do a search for his name.

On a second screen I have a block of four charts: ES, NQ, CL, and EUR.USD. I also subscribe to Traders Audio's S&P pit broadcast so I can get a feel for the energy level in the pits. I scalp moves in these four instruments as I see opportunities. I'm just getting used to this style so I am not very active doing this yet.

 

[ES YM]

Here is my daytrading setup/style:

In the morning I scan for big news pre-market individual equities. I put 6 of them on my watch list (3 that will open gap up and 3 gap down). I watch them on 1 minute charts and try to scalp a portion of a big move. The action dies down about 30 minutes after open and I'm usually flat at that point. I periodically check those stocks throughout the day as well as some Nasdaq staples such as RIMM, QCOM, AMZN, AMGN, and a few others. I have eSignal and also subscribe to the TotalView so I can better time entries and exits. This method comes from a T2W member (Mr. Charts) who has a few threads that are worth reading on here if you are interested in the style. Just do a search for his name.

On a second screen I have a block of four charts: ES, NQ, CL, and EUR.USD. I also subscribe to Traders Audio's S&P pit broadcast so I can get a feel for the energy level in the pits. I scalp moves in these four instruments as I see opportunities. I'm just getting used to this style so I am not very active doing this yet.

Awesome
Yes i think things like totalview are essential to day-trading and scalping, obviously with the E-mini S&P500 its just market depth.
Esignal is very good for things such as scanning for stocks too so i think that must suit your style alot.
I haven't seen that thread, would you give me a link? Although i'm not sure watching lots of equities is my style, i prefer to try know my market really ell...

Why have you dismissed the YM for the NQ?
The reason i like equity markets is because of the cash session, whereas forex, the EUR/USD for example, alot of behaviour happens over night and i like each day to be a fresh start, rather than coming in late and figuring whats going on...
Similarily i use TradersAudio... I've got a lot of uses for it and i'll go into detail with that later but really, currently i use it to confirm momentum. When you say scalp; what exactly do you mean? How many points/ticks and how big a move?

I would appreciate it if you posted for example setups, that would be interesting.

 

[wh92stang]

A link to Mr. Charts thread. It has gotten a little choppy lately with some hecklers, but he posts screen shots of a lot of his setups and discusses what he sees. Very good read:
http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets-97.html

I watch NQ instead of YM because I feel the Dow Jones and S&P moves are a lot closer than that of the Nasdaq. The Nasdaq tends to move a lot sharper, so If it's a slow day it may be more interesting. Really I haven't been trading any futures contracts for more than a month. I've probably only done about 10 trades total on futures.

When I scalp stocks in the first 1/2 hour of trading I wait for them to form a small range (maybe 5 minutes or so), then I enter a position if the setup looks good. I immediately set the stop loss, but I do not have a target profit point. I watch the Level 2 until it appears that momentum is drying up and I exit the position. I'll post a setup in a bit.

 

[ES YM]

A link to Mr. Charts thread. It has gotten a little choppy lately with some hecklers, but he posts screen shots of a lot of his setups and discusses what he sees. Very good read:
http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets-97.html

I watch NQ instead of YM because I feel the Dow Jones and S&P moves are a lot closer than that of the Nasdaq. The Nasdaq tends to move a lot sharper, so If it's a slow day it may be more interesting. Really I haven't been trading any futures contracts for more than a month. I've probably only done about 10 trades total on futures.

When I scalp stocks in the first 1/2 hour of trading I wait for them to form a small range (maybe 5 minutes or so), then I enter a position if the setup looks good. I immediately set the stop loss, but I do not have a target profit point. I watch the Level 2 until it appears that momentum is drying up and I exit the position. I'll post a setup in a bit.

Interesting stuff
I'm glad your posting so i can get a view more viewers and potential repliers so that the thread can get active and therefore more productive so thanks for that.

Similarily i don't use profit targets but yes to stop losses.

 

[wh92stang]

Example from this morning:

JRCC gapped down because it announced it was going to offer $125M in senior convertible notes. I was looking to go short. It formed it's inital range of the open and I went short on the crosshairs (confirmed on Level II that there wasn't a whole lot of buying pressure). My stop loss was at 20.42, just over the high of the day, so worst case would be getting stopped out and losing about 10 ticks. Best case is it drops through the low of the day, below 20, and you make a lot of money. As it dropped though it became evident there wasn't a whole lot of downwards pressure, and when buyers started to step in I exited (at the time of the screenshot) for a 15 tick profit. Not a great trade, but not bad.

Using this method, I'd say about 50% of the trades are like this, about 25 % are losses (keep it small with the stop loss), and about 15% are break even as you move your stop down. The remaining 10% are very large gainers where it breaks through the low/high and runs for quite a while.

 

[wh92stang]

No problem, thanks for doing your posting. I am looking forward to getting into futures more and hoping to learn from this post about eMini trading. You seem to have a good, well-disciplined style that is similar to mine.

I think it's funny how much of the same software we use. Interactive Brokers, eSignal, and Traders Audio... haha.

 

[ES YM]

No problem, thanks for doing your posting. I am looking forward to getting into futures more and hoping to learn from this post about eMini trading. You seem to have a good, well-disciplined style that is similar to mine.

I think it's funny how much of the same software we use. Interactive Brokers, eSignal, and Traders Audio... haha.

Really interesting post; Your exit seems like a good long to me, because its like a flag formation and its at the supportive level. Its interesting that the opening 10-minute breakout was faded but the market continued lower anyway... That seems to be a lot of the 'game' with stocks, the great thing though is that momentum can be so apparent, especially on gaps where emotions are high and particularly when a news story is involved...

Yeah it definately is because i've noticed (I'm new to the site though so its not a valid point) that the majority of posts i have seen that include charts are from free charting websites, so its interesting that we both pay for ours...

With E-mini's, your focus should be on what happened the previous day and then some specific levels that are important to you (For example pivots) but in general its all about context. Which is hard to display, but before i take a trade i take a lot of previous considerations into hand but its hard to show that with just a chart, which only shows the simplistic setup; but actually alot of work goes into each setup...

I'll post a lot of charts on the weekend of my weekly analysis.

 

[TAjammy]

are you using time and sales/tape? just wondering . i tried it a couple of months ago on the ES and man was she fast

 

[timsk]

I was looking to go short.

Hi wh92stang,
I'm glad your trade went well - but this is something Richard does not do and actually advises against. He lets the market dictate the direction of the trade as opposed to his view of the market. If I'm interpreting your comment too literally, I apologize. Be that as it may, can I suggest you open your own journal as I'm sure there would be a lot interest in it as you clearly have a lot to offer?

Welcome ES YM - good start to your own journal; I'm enjoying it!
Cheers,
Tim.

 

[ES YM]

are you using time and sales/tape? just wondering . i tried it a couple of months ago on the ES and man was she fast

I do have it on my screen; however the ES is so liquid that its hard to get a proper perspective of the time/sales because there are so many orders coming through; so even when you see 20+ trades go off at the bid in one second, in the context of the E-mini S&P500, 20+ trades could then easily go off at the ask, so its hard to identify momentum as of my experience yet. However it can be good for identifying whats going on at the highs and lows, but i'm yet to 'master' it in any sort of way. Another way i use it is to compare it to the orders on the market depth to see if there are orders coming in at a frequency that would suggest a big bid would break.... So for me Time/sales is only really useful in conjunction with the use of the market depth window to compare against whats happening there - Which i find much more useful than T/S.

Cheers.