Should I start trading the E-mini?

[johntherevelato]

I’m trying to develop my understanding of the S+P Futures market with a view to using it to help me in daytrading stocks.

I was instructed to understand how to use the PREM to assist me in daytrading. However, I’ve now been advised to ignore daytrading stocks because of the risks associated with it and that I should look more into trading the e-mini.

I’ve been told that it’s great to trade because of its predictability; however, I don’t know much about it and I’m reluctant to start investigating it now that I’ve developed a strategy for day trading stocks.

[jbooke]

John are u saying that you were advised to not "day trade" stocks but that its ok to "day trade" e minis?

[buhrmaster]

The e-mini is about as unpredictable as they come -- mainly because its underlying reflects the net random movement of 500 stocks, so in general whatever your intuition tells you to do, do the opposite. Not an easy thing to do for most people.

However, like any large portfolio its volatility is going to be less than many of its components so in that sense it is less risky than trading stocks, given reasonable leverage. Of course there is always corn or eurodollars. . . .

As for PREM, there is no magic bullet and if there were, the marketplace would soon reduce its benefit to the cost of commissions. There are so many indicators to look at: TICK, TRIN, ADV-DECL, etc., as well as a plethora of indicators, if you are so inclined. You really have to develop your own style.

One thing you might consider is picking a handful of stocks that aren't so volatile and just learn their behavior really well. That may be a better learning tool than opening that hornets' nest that is the S&P market.