Day Trade: As a trader, you are aware that not all strategies are suitable for your style or goals. At the same time, you will also realize that little of each market with an odd fate will match your trading technique.
For example, in the event that your technique requires high intraday unpredictability, the 30-year T-bill is unlikely to perform as well as, say, the S&P 500. In the event that you are a position broker who prefers an exceptionally fluid instrument with a propensity to drift without hitches, then in this point, grains may be desirable over, say, cocoa or wood.
It all depends on which feature or characteristics you value most in a futures contract. So overall, the “best market” to trade depends on what you’re looking at to make that market tradeable anyway. In addition, it all depends on the progress of the exchange of your destiny.
Factors to Consider
When Selecting a “Tradable” Market What characteristics define a market as “tradable”? As we said above, it all depends on the qualities of the market that the seller is looking for. Most likely, you are trying to match your own business needs with the external characteristics of the market.
In other words, you are trying to match any of the following five market characteristics to your trading strategy, capital resources, or risk tolerance: contract size, margin, liquidity (volume), volatility (volume), and trading hours.
Let’s talk about each one and explain why their meaning can vary depending on the expectations and needs of different traders.
Margins:
For traders whose trading accounts tend to be smaller, high margins can be unbearable. The biggest risk in trading a high-edge deal is falling below the expected edge, once in a while an edge call, but often with auto-liquidation and costs (per contract). Naturally, the downside of low margins is that you have to take more risks with less money. Therefore, make sure you have enough risk capital to meet the contract’s margin requirements.
Liquidity:
If you can’t get in and out of the market quickly, you risk being locked into a position (or unable to get into a position) while the market moves against your favorite cost level. However, whether you should enter or exit “quickly” really depends on how quickly you can complete the task at hand. For a casual investor, this time period can last a few seconds. For a swing trader, it can be minutes or even hours. For a dealer position, this can mean days. Liquidity depends on your time necessity, among other things.
Something else to consider is that illiquid markets are more vulnerable to cost control by huge sellers. If you are one of them, you may be able to do what you are trying to do in an illiquid market; if not, you might want to stay away.
Volatility:
Most “investors” hate volatility. To reduce volatility, they diversify their portfolios. On the other hand, most short-term traders rely on volatility to succeed in the market. A few deals are more volatile on an intraday basis than others. Finding the right market to trade requires a thorough understanding of a contract’s volatility profile.
Contract size:
Many short-term traders don’t have a lot of money. This is especially the case for dealers who are just starting out. This can severely limit your trading style. For example, holding an EMini contract overnight for a swing trade would be prohibitively expensive for most traders. However, there are contracts that provide standard, mini and micro exposures. These contracts have a lower dollar value per contract and offer customers with lower capital levels a wider range of trading options. Contract size is important to your trading strategy. Additionally, the range of trading strategies available to you expands with contract size.
Trading Hours
When there are the most buyers and sellers in the market, the futures contract is at its busiest. Since intraday brokers depend on value developments to seek advantage, trading hours matter a ton. However, it is wise to choose a commodity that can be traded during your own trading hours. Due to the time zone, it may be difficult for a trader in Australia or even India to trade ES on a daily basis. Similarly, trading various Asian or European markets during their busiest hours can be challenging for US traders.
So which best futures to trade are the “best” to trade in 2020? There are a large number of “maneuvers” and we will suggest a few of them in light of the market qualities you really want to match your exchange procedure.
The best fate markets with respect to market attributes
Edges
The least edges are often those for daily exchange. Also listed here are the best futures markets or futures for day trading:
- For E-Micro contracts (with contract-specific margins):
- Miniature E-Small Russell 2000 (M2K) – $25
- Miniature E-Small S&P 500 (MES) – $40
- Miniature E-Small Dow (MYM) – $50
- Miniature E-Small Nasdaq 100 (NQ) – $50
- All E-Miniature FX Contracts – $50
For E-Little deals:
The E-Mini Russell 2000 (TY and RTY) is $250, the E-Mini S&P 500 (ES) is $400, the Dow (YM) is $500, and the E-Mini Nasdaq 100 (NQ) is $500. Big caveat: It should be noted that a number of contracts with competitive margins are not included. This is for the reason that not all of them can be reasonable for day trading due to their lower liquidity range. Some of the above microcurrency contracts may not be suitable for day trading due to differences in liquidity and volume. This list focuses on margin levels only. Therefore, do not forget to check the volume profile of each contract to check whether it may be suitable (or not) for your trading technique.
Liquidity
Liquidity is an important element with regard to exchange. Once your agreement reaches the ideal cost level, you need to be able to enter and exit that agreement with potential customers. If your trading preferences are based on liquidity, which contracts are the most liquid to trade?
Here are the ten most liquid futures contracts according to CME Group and TradingSim. Keep in mind that just because they are liquid does not guarantee that they will work with your trading strategy or that they will meet other requirements such as access to exchanges, trading hours or knowledge of the fundamentals.