How to Successfully Trade the Russell 2000 E-mini Futures, Part 2

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To read part 1, click here. A pretty big inflow of questions, comments and concerns regarding Russell e-mini futures were received. A market which is working higher from point A to B or lower from point B to A can do so in more deliberate fashion if it has less sideways pressure.

When volume and open interest fall below certain zones, methodical price action turns spastic and erratic. Questions on volume and open interest are something I get plenty of on a regular basis. Block orders to start or end a session will send the tape absolutely haywire in split seconds. That of course is due to big block orders being filled across several strikes which then dominos other resting stop orders that trigger others in tsunami fashion.

These violent whips happen in mere seconds, with absolutely no time to react for trade entry or management decisions when they go day trader options 2000 futures. One of many reasons to ALWAYS have resting stop-loss orders in place when trading e-mini futures, regardless of market optionfair binary options brokers for usa simple and symbol.

For example, a short trade at Said another way, price movement back and forth through a 2-tick spread can just as easily result in a market ticking back in your favor when stopped instead of pushing further for greater than expected loss. The assumption is day trader options 2000 futures stopped-out trade being one sided event. Keep in mind there are orders resting at every strike going the opposite of yours.

If your buy stop at Two sides to every order on each strike. When trading less liquid instruments, slippage can go either way depending on which size is greater at the strike.

If your trade happens to be within the bigger size collectively, your slippage if any will be negative. If your trade happens to be within the smaller size collectively, your slippage if any will be favorable. Many times there day trader options 2000 futures be no slippage in TF at all… positions entered or exited are filled on the mark. Of course there are day trader options 2000 futures size limits to how many TF contracts can be traded before persistent slippage becomes an issue.

Someone trying to fill 20 contracts opened long or short on limit orders will experience numerous partial fills on profitable trades. Losing trades will always fill complete orders because the market is moving against you. Heck, you can fill hundreds day trader options 2000 futures contracts between entry and stop if the market is On the other hand, if the same scenario sees TF price action trade to Market orders to open will completely fill, with some degree of slippage involved.

What commonly happens with bigger orders will be for example Remember, there is never a problem getting complete fills in any market on all losing trades when price action moves against.

There is often a problem getting complete fills in the TF specifically when price action works out in favor of the trade. If trying to turn contract lot positions short for example at If the market is trading below there and expected fill happens with a price rise from below into the Therefore, if price day trader options 2000 futures stalled out just below If price action rises through The net average fill would be If day trader options 2000 futures action is trading above and falls thru your trigger on a breakdown sell, the entire position would fill as price action dropped in favor of momentum lower.

Staging orders across spread tick strikes to enter on pullbacks lessons the occurrence of partial fills, within reason. No one is going to fill TF contract lots regularly without significant slippage or partial fills needing to be dealt with. However, I highly doubt anyone here in this conversation is stumped with dealing through lot TF flips anyway. This is what keeps large spec and commercial traders out of the arbing business with TF futures. Too small for big-money manipulation, plenty big enough for retail traders to aptly profit from.

During that time the intraday ranges were rather wide and usually directional, be it up or down. Compare that to average volume traded during the first four sessions of A total of 75k to k contracts were turned, inside four rather narrow-range sessions. At a time when traders would expect normal to high volume and expanding price action, TF futures have begun in a funk. When volume returns to that k daily average or above, we should expect normal price behavior to follow suit.

For this moment in time day trader options 2000 futures TF is too thin for trading any amount of multiple contract size consistently on fills. All day trader options 2000 futures these varied markets have some influence on the day trader options 2000 futures stock market at times.

All of them fail to have any effect on leading the broad market at other times. Relationships like that are always temporary and usually fleeting. Whereas the price of crude day trader options 2000 futures rising once pushed stock prices lower, rising crude prices now signal stock markets going the same direction. Well, when crude oil prices were briefly at nosebleed levels, it was considered inflationary pressure on the overall stock market.

It was also used as a quasi-hedge for USD prices versus other currencies as well. The same has been done for gold futures at other times. None of those temporary market-influence tools can be relied upon for years of unchanging, dependable leading indications of what the general marketplace i.

Nasdaq futures NQ may be considered the smoothest overall e-mini to trade, relatively speaking. Dow 30 futures YM have their fan base as well. TF futures seem to be in a state of development towards stability and consistency of performance.

They blossomed well from September sole listing through mid-December in volume and open interest. Since the start of a few days ago, traded size has taken two steps back from earlier peak. When volume and open interest reaches prior average highs or beyond, a return to normalcy should follow. Austin Passamonte is a full-time professional trader who specializes in E-mini day trader options 2000 futures index futures and commodity markets.

Austin trades privately in the Finger Lakes region of New York. At Connors Research, we are using it as an overlay to day trader options 2000 futures of our best strategies to make them even better -- now you can, too.

You can find more of Austin's work at his website CoiledMarkets. The Connors Group, Inc.

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More traders work that symbol than all other e-mini index futures combined. But, popularity as measured by volume does not always mean superiority of profit potential. Other e-mini markets exist for valid reasons… some darn good ones at that. ES futures are most liquid, most popular, and most churned by blackbox computer programs of all. That fundamental truth is due to professional-level players working big orders with varied agendas which have absolutely nothing to do with accumulation or distribution patterns.

In addition to that, numerous blackbox computer programs exist solely for the purpose of scalping sideways profit potential from ES markets versus something else. In other words, a lot of big money positions trade inside the ES with absolutely no regard to direction.

Matter of fact, these program types work to keep price action sideways by arbitraging price discrepancies between different symbols. Some retail traders develop strategies to take advantage of that predictable sideways behavior the ES has, to a degree, that no other e-mini index market does. There are also periods of time where the ES is directional and trending, too.

Overall it is the most congested e-mini symbol with the least amount of straightline price movement on a consistent basis, for the reasons described above amongst many others. Russell Futures By far the most dynamic e-mini index future of all is the Russell TF contract.

In other words, the TF contract is a leading indicator for all. More importantly, the TF futures contract is a highly tradable instrument itself. In the past from inception to September it traded on CME exchange. Russell e-mini traders worried that the ER2 leaving its home base at CME in exchange for a different exchange would ruin the contract.

It did result in lower volume traded, for a couple of reasons. Part of that was the usual uncertainty that any change in life creates. That shifted many would-be TF traders into other symbols or sidelined cash until the dust settled. Now that the dust has settled, we learned that the TF futures are a bit more extreme on both ends of behavior than former ER2 was.

When the TF is going directional, it is a straight arrow with nil pullbacks or counter moves. When TF is going sideways, it will roll through a wider hi-lo pattern now than it ever did before. Whereas before the old ER2 was easily cross-margined in spreads that arbed price variances between the symbols, now the margins required are much higher for such spreads between ES or NQ and TF. That type of sideways throttling relationship no longer exists between them, because margins are fractional within CME products spread.

Furthermore, when spreads within the CME were active and exchange went offline for trading access, it was no big deal. But spreads open across two different exchanges where one of those may go offline exposes the other open leg of that trade to unlimited potential loss.

Spread traders abhor risk, which is part of why they trade spreads instead of linear positions in the first place. For those reasons and more, e-mini spread traders pretty much leave the cross-exchange spread arbing alone. Which is one major reason why the TF is considerably smoother and more directional than other e-minis… lack of sideways arb position pressures.

TF futures are trading about half the overall volume that ER2 did before the change. The average daily volume in TF is roughly , contracts, whereas the ER2 did average somewhere around , to , contracts daily. Compared to many futures symbols, the present TF volume is substantial. For most retail traders, it offers enough liquidity to fill five — ten contracts with nil to minimal slippage.

Larger orders will regularly clear as well, but partial fills on a single strike limit-order are possible during lulls in the tape intraday. An initial stop of These numbers are pie-in-sky randomness. Higher lows from 1 pm through 2 pm est line 1 left little doubt that price action was working its way upward. Compare that to the same price structure in ES chart lower chart, line 1 where lower lows stabbed through resting stops clustered there before lurching higher.

Big ES players purposely push through recent highs or lows right before immediate reversals are planned. Then again, trying to play that pattern every time will result in stopped-out trades when in fact those moves are bonafide directional breaks instead of trap reversals. Russell e-mini markets are not gamed by the big players trapping retail traders on the wrong side ahead of planned surge moves.

In other words, TF trades purer and more directional than ES. Less directional guesswork is involved. December 23rd was a trend day lower. TF futures upper chart rolled over soon after the open and posted lower highs all the way down. Short trades took nil heat, there was no doubt which way the trend was headed at any time. Compare that to the ES lower chart where higher-highs preceded each significant price break.

Blatant bull traps that fake-out buyers and stops out sellers at the same time, one fell swoop before lowering the boom with planned sell programs. Sometimes those counter-trend spikes and slams are traps. Sometimes they are legitimate directional moves. Can you ever tell which is what? Do you really care to guess which is what? Easier to follow a visible trend than it is to guess where the false moves and landmines are.

Summation Russell e-mini futures are back, and imo better behaved than ever. They do have their limitations and pitfalls, it goes without saying there is no perfect or superior all-around symbol. If there was, everybody would trade the same thing. Austin Passamonte is a full-time professional trader who specializes in E-mini stock index futures and commodity markets. Austin trades privately in the Finger Lakes region of New York.

At Connors Research, we are using it as an overlay to many of our best strategies to make them even better -- now you can, too. You can find more of Austin's work at his website CoiledMarkets.

The Connors Group, Inc.