It seems that if you ask hundred successful e-mini traders what style of trading they employ you might well get 100 different answers. For whatever reason, e-mini traders often employ highly individualistic styles. There may be a number reasons for this, the e-mini contracts have not been around for decades and decades, and the contracts themselves have grown exponentially over the last 15 years. In short, the e-mini contract is relatively new.
Which contract should I trade, YM or the ES?
I have very strong feelings on this topic and start all the students in my room on the YM because it is my opinion it is an easier contract to learn on. The YM tends to move in better trending patterns and is frequented primarily by smaller traders, though there are a decent number of professional on contract.
I have a number of trades on the YM that are among my favorites and on most I’ll trade with the trend. I am particularly fond of finding an important support/resistance line and setting up three ticks past that particular support/resistance line. I prefer to set-up inthe direction of the trend and let the price action hit my buy order with a bit of momentum. The idea that you are trading with trend is an important one and I strongly recommend that 90% of your positions are with the trend. I can’t tell you how many times I have taken a boneheaded set-up and have the fact that it was a boneheaded set up with the trend save the trade and my futures account from disaster.
Odd as it may sound, one of my favorite places to trade is in equidistant continuation channels with at least 15 ticks at the boundaries. I can’t explain why I enjoy trading this odd configuration, especially when the vast majority of trading educators strongly recommend avoiding trading in channels (and rightly so.) In any event, I developed an interest in trading in channels at the onset of my career and 30 years later I enjoy trading in channels as much as ever.
One thing I noticed early in my career was that breakouts from parallel continuation channels nearly always failed. Based on that knowledge, I generally take three contracts back in the direction of the channel when its boundaries are reached; if it continues another two or three tax I proceed to break every rule of sound trading and add two more contracts. Generally speaking, you can count on the breakouts failing and the price action will fall to the lower level of the Bollinger bands. As most members of my trading room can attest, I have her remarkable success with this trade, though I’ve yet to entice any newer traders to take this trade because it involves initiating a resting order in the exact opposite direction the market is moving.
In summary, we have talked about it to trades that can be relied upon when trading the e-mini contracts. The first trade was a basic momentum trade that has a high level of success and the second trade I described took advantage of continuation channels tendency to break out and then fail. Both are good trades, and there are a host of other great trades that may resonate with traders in a positive way. The point is a simple one, as you begin to trade the e-mini, find a few good trades to start with and they may be sufficient to carry you a long way. As you progress, you will add new trades and techniques to complement your initial learned trades. Learn each set up thoroughly, and execute with precision. That’s the name of the game.