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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.