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Tuesday, March 13, 2007

Trying to Figure out ER2

It's hard to figure out the Russell 2000 Futures...

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The futures typically trades sideways with a lot of noise within a given trading range. But today the ER2 was actually trending, and trending well. Unfortunately, I manage to not only give back my half point gain, but lose another couple of points. I have to step back a bit and take a look at why I cannot make good trading decisions with the Futures.

4 comments:

Lord Tedders said...

Phileo,

I hear a lot of stocks traders talk about having difficulties with the stock index futs especially the ER2.

The key is the recognize it's inherent volatility and plan your stops and targets accordingly.

There are four basic ways you can play the Russell - scalp, momentum reversal, trend breakouts, trend pullback. You need the widest stops for trend breakouts - like say 3 points. You can have small stops of about 7 ticks for scalping, and about 1.5-2 points for momentum and trend pullback plays.

Also, if you follow the Russell closely you'll see when the market is acting in a way that your method will work well on. For example, yesterday morning was a tight range and really only good for scalping. After taking a single small loss trying to make a momentum play I went immediately to scalping. Later in the day the market broke out and headed south - which would be a great time to look for a trend pullback.

Anyway, I hope this gives you some ideas.

Tedders

Phileo said...

Hi Tedders,

Thanks for the suggestions.

john said...

have you considered playing a commodity such as oil...the only day i play the index futures are on trending days...imho, 5' charts may be better suited for futures than 15' setups...fwiw, i have found that the ym and nq offer nice reward:risk ratios on the smaller time frames

Phileo said...

Hi John,

I'm not familiar with Crude Oil futures, but will start investigating them.
Thanks for your input and suggestions.