I remember when I first started trading I was fascinated by the idea of trading the ES.
For those that don’t know the ES is the US S&P 500 emini futures contract. It’s one of the most liquid and more popular contracts that people love to trade. I’ve heard it referred to as crack for traders.
However is it really the best option for new traders?
For whatever reason newcomers seem to be drawn to trading the ES.
Maybe it’s because it’s well know, easily accessible and it’s also easy to understand the fundamentals. There’s also a heap of “training” out there on how to trade it.
But in my opinion it’s those very reasons that make it a bad trade. All these things make it really competitive.
When I think about all the professional traders I know – none of them trade the ES.
The only exception is a few that spread the ES against another contract. But not one of them trade it outright.
So if the very best traders don’t trade it – why would a new trader want to?
So what should you be trading?
Well like anything it comes down to your personalty and style of trading.
I find that new trades are drawn to highly volatile, “exciting” products. Things like the ES or even straight forex.
The traders that I see making money trade the most unpopular, boring things they can find.
Bonds, Short Term Interest Rate (STIR) products like bank bills, random commodities. Things that are generally not going to be popular and even quite boring in many instances.
Well they’re simply a better trade.
Compare the ES to the ZN. The ZN is the 10-yr treasury note future.
While the ES zips back and forth and is really difficult to get a handle on. The ZN just grinds up and down. It ranges nicely. You can follow the other bond futures as leading indicators. You can really identify your entry points and get good fills. If you trade with the DOM it’s much easier to spot the big buyers and sellers.
It’s just a much better trade.
So if you’re struggling with your trading, don’t be afraid to look at a really unpopular products.
It might just help turn your trading around.