Trade Aptitude

Results of Thursday’s Best S&P Futures Turning Points: Shorting 4305.00 offered a 9.25-point move. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4275.75 stop 4270.00. Short 4367.75 stop 4371.50.

The World Index: (+100/-100) drops from +64 to +25 with most major world markets modestly Bullish.

Catalysts: Employment Report @ 8:30. Final Services PMI @ 9:45. ISM Services PMI @ 10:00. 

Quick Tip: Which Market?

There are dozens of futures contracts available to trade. The question is which are best for you. Here’s a quick look at filtering for candidates: 

1. Volume. Without adequate volume you’ll experience slippage and not perform as well in the real world. 

2. Margin. Check with your broker and determine whether your account size can afford the margin required. Keep in mind that all brokers will give you more day-trading margin than you should use. Keep your per-trade risk to no more than 2% of your account, even if the margin required allows you to trade excess contracts. 

3. Movement. You’re going to make more money with contracts that move more. Compare using the same time interval and ATR. Keep in mind that ATR for futures contracts is meaningless for this purpose UNLESS you multiply the ATR by the point value of the contract. That will give you the ATR in dollars and allow you to compare different contracts properly.

4. Margin Ratio. Divide the “movement” number you just determined by the required margin. Compare. You’ll quickly see which contracts give you the most “bang for your buck.”

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Trade Fearlessly,

Mike Siewruk

P.S. Feel free to share this newsletter with your trading buddies.