Scalping - Forex or Eminis

[Agro]

Hey guys

I currently scalp/intraday trade (entries come from 1m, 5m,15m or 1h charts) the forex market and I am interested in peoples opinions as to which is the better market to scalp/intraday trade - forex or eminis.

The problem I have in forex is that my stops must be set 5-20 pips (depending on market conditions and the pair I am trading) below my stop out zone (and even more for entries from the 5m and above) . This is because faulse breaks tend to go very far and fast before spiking the level.

In fact, it seems to me that more often than not a level that is destined to be held will be spiked. (This is not all bad, I often trade against a breakout knowing that it will probably be a spike. This gives a great risk/reward ratio. Also, if spiking a pattern line (such as a triangle formation) I have found it to be a good indication that a breakout in the opposite direction is imminant.)

Just wondering if the eminis are the same ball game? I have read some stuff recently that suggests that maybe they are less noisy that forex.

Any opinions welcome...

 

[charliechan]

when you say e-minis, do you mean fx mini contracts or equity index? assuming you mean equity minis, it depends. the thinner eminis like er do tend to be more prone to stop running than es. obviously its easier to run stops in a less liquid market.

perhaps you may want to look at several index minis when trading. if say er is breaking out, but es is holding, chances are it's a false breakout - and an opportunity to fade. having said that, the thinner contracts like er and nq often lead es. therefore, it may be better to see if say er does flip after breaking out or hold. then take your position accordingly in es.

just an idea. i dont personally trade like this at the moment

 

[Agro]

Ok, guess I should have been a bit more specific

Hey charliechan

Ok, guess I should have been a bit more specific. It is the equity eminis I am interested in - the ym, es, er, nq, FTSE etc.

The corrolation between the instuments sounds like a handy indicator to me. How strong is this correlation, between say the er and es. THere are many corrolations in the forex market - gold and AUS, EUR and CHF, USD and DOW etc - but I have not found much consistancy.

Also, you said sometimes the smaller instrument leads. Is there any data/indicators that can give an idea as to which will be taking the lead at any given time?

Cheers
James

when you say e-minis, do you mean fx mini contracts or equity index? assuming you mean equity minis, it depends. the thinner eminis like er do tend to be more prone to stop running than es. obviously its easier to run stops in a less liquid market.

perhaps you may want to look at several index minis when trading. if say er is breaking out, but es is holding, chances are it's a false breakout - and an opportunity to fade. having said that, the thinner contracts like er and nq often lead es. therefore, it may be better to see if say er does flip after breaking out or hold. then take your position accordingly in es.

just an idea. i dont personally trade like this at the moment

 

[charliechan]

Hey charliechan

Ok, guess I should have been a bit more specific. It is the equity eminis I am interested in - the ym, es, er, nq, FTSE etc.

The corrolation between the instuments sounds like a handy indicator to me. How strong is this correlation, between say the er and es. THere are many corrolations in the forex market - gold and AUS, EUR and CHF, USD and DOW etc - but I have not found much consistancy.

Also, you said sometimes the smaller instrument leads. Is there any data/indicators that can give an idea as to which will be taking the lead at any given time?

Cheers
James

correlation will change. it also depends on time frame of study.

often, the leader may well be the one who has more exposure/relevant to the news. if tech news is out, say about apple, then nq could lead. if oil, then maybe the dow, if interest rates, possibly er and dow. etc.

just like cable will lead ec when the boe releases interest ratse, or gold moves. swissy may also be influenced by gold, or relevant news about its economy. both are more twitchy than ec - or were when i traded them a year ago.

there is no indicator that will tell you this - only your own observations. the leader will be your indicator in terms of correlation. you just have to sort the valid signals from the false - respecting that you will still get it wrong sometimes. thats life. we're only human!