Q. regarding YM AND ES (trading the Dow)

[justyn]

I have some general questions regarding ES which I have never traded before (please excuse what may be stupid questions!)

I am used to trading the Dow using YM but realise that to increase the number of contracts I trade it would be better to use ES as there is far more liquidity.

1. I understand the ES contracts are $50 per point compared to $5 per point on YM - is this correct?

2. The ES moves in quarter points so a 1 point move of 1291 to 1292 represents a profit/loss of $50 not 4 quarters x $50 = $200?

3. How many points does the ES move in comparison to the YM? For example the Dow rose 302 points on Friday and so did YM (approximately) - I am assuming ES didn't rise 302 points. I need this ratio to help me calculate how many ES contracts to trade.

4. Lastly, I will be charting ES to see how it moves but what are other people's experiences with ES - is it largely the same as YM or more/less volatile etc etc?

Edit ... 5. One thing I forgot to ask - is the margin requirement for ES the same as YM (using Interactive Brokers)

Many thanks in advance!

 

[frugi]

1. Yes

2. Yes. ES = $12.50 a tick / $50 a point

3. 100 YM points ≈ 10 ES points ($500 per lot) but remember you're comparing 30 stocks to 500 so allow +/-2 ES especially if one or two of the Dow heavies are doing their own thing.

4. If you can trade one you can trade the other but I'd watch ES for a while to get used to the blockier ¼ point movements. Also don't forget the ES order book is much thicker so (if you use limit orders) you won't usually get those limit fills when a price is nudged for a few seconds like you often do on YM.

5. ES requirement is a little higher. Look on the IB site under margin. In USD:
YM 1751 / 1401 : 3503 / 2802 intraday initial / maintenance : overnight initial / maintenance
ES 2250 /1800 : 4500 / 3600

Commission is a tad higher for ES too.

 

[justyn]

Thank you very much Frugi,

that was just what I was after

Kind regards,

Justyn.