Sep

12

 What are the best markets to trade? Many futures markets trade differently. Some have a lot of depth and intraday gaps are infrequent (I consider these the best to trade). Others have ample liquidity but are prone to gapping. Others still are downright scary. E-minis and 10 years seem like very "safe" trading markets. Eurodollars as well. Crude oil has a lot of liquidity but can gap. Gold seems prone to fast and erratic moves. Grains seem like they can get a bit dicey. Less trafficked softs seem rather risky. Commodities in general appear to have more erratic price risk than stock index futures or financial futures. FX is fairly liquid and seems ok. I am largely making observations based on personal experience and in some case I have none so I am curious for thoughts from seasoned specs.

Bill Rafter writes:

Ask yourself, would I rather trade an extremely efficient market in which information was digested immediately and most of the fluctuations not related to new information were due to randomness, or would I prefer a market that was less so. As you gain experience you will learn that one of these mutually exclusive choices is more profitable to trade than the other. One of these requires virtually no expertise to trade, and indeed expertise would not appear to be helpful, whereas the other requires considerable expertise. One is the frequent choice of novices, whereas the other tends to be avoided by novices. Then ask yourself, how do novices typically fare?

Jeff Watson writes: 

Grains are impossible right now. The 30 cent daily ranges make it too much of a gamble. Even trying to predict, or have a gut instinct of where the carry spreads, the corn/wheat/bean spread, the crush, are going….Oy Vey. To play the grains, to coin a surfing analogy: You better be in really good shape, you gotta see the wave (move) coming toward you, then paddle real hard, pop up and catch the wave. You better either be quick to bail or commit to the wave, make a bottom turn, then ride it until it's over. Determining when the ride(trade) is over isn't as simple as it sounds, and many dangers exist on and below the surface that can still mess you up when you bail the trade. The most important decision a grain trader can make right now is whether he wants to gamble a lot for a potentially big reward, or hunker down and reduce risk.

 


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3 Comments so far

  1. CupolaJo on September 12, 2012 8:13 pm

    Intermarket analysis on:
    NYBOT: DX (dollar index)
    NYMEX: QM (emini crude oil)
    NYMEX: YG (emini gold)
    CME: ES (emini sp500)
    CBOT: ZN (10y)

    five simple numbers
    that accurately capture
    the state of global risk

    all very liquid
    and consumable in
    small quantities
    ;)

    bill, your koan is enlightening, but this moreso:
    http://www.ashidakim.com/zenkoans/31everythingisbest.html

  2. Ron Armany on September 14, 2012 1:02 pm

    It’s not the market or the strategy–it’s you. Some like it fast, while others like it slow. The market is an evolutionary social beast always adapting to its ecosystem–just when you think you have a strategy others will emulate you. Pick your pet strategy and master it. You cam’t win the war if you are constantly losing all the battles.

  3. Sanjay Kohli on September 17, 2012 12:52 am

    orderly movement is more desirable for a not so aggressive trader.

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