Day Trading 201: Different Strokes for Different Folks

Most futures day traders know and trade the popular mini SP500 contract, but there are more than a few other

Today I decided to touch on more of an educational feature rather than provide a certain market outlook.

Many of my clients and blog readers know that when it comes to short-term trading I am a fan of monitoring about 3 different markets, from different segments that hopefully have different personalities.

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Most futures day traders know and trade or have traded the popular mini SP500 contract, but there are more than a few other markets that I think are better for day trading.

Each market has a different personality and behavior dependent on the time of day when it’s most active. If you are finding that the ES (mini SP) is not giving you enough risk/opportunities then start monitoring a couple of other markets and perhaps explore them in the demo/simulated mode.

Below you will find some observations, and tips along with what is unique about these markets, their personality and the most active trading hours.

Interest Rates, 10-year and 30-year 

In most platforms, the symbols are ZB for 30-year bonds and ZN for 10-year notes. The current front month is September, which is U. So ZBU5 for example.

Product SymbolZB
Contract SizeThe unit of trading shall be U.S. Treasury Bonds having a face value at maturity of one hundred thousand dollars ($100,000) or multiples thereof
Price QuotationPoints ($1,000) and 1/32 of a point. For example, 134-16 represents 134 16/32. Par is on the basis of 100 points.
Product SymbolZN
Underlying UnitOne U.S. Treasury note having a face value at maturity of $100,000.
Deliverable GradesU.S. Treasury notes with a remaining term to maturity of at least six and a half years, but not more than 10 years, from the first day of the delivery month. The invoice price equals the futures settlement price times a conversion factor, plus accrued interest. The conversion factor is the price of the delivered note ($1 par value) to yield 6 percent.
Price QuotePoints ($1,000) and halves of 1/32 of a point. For example, 126-16 represents 126 16/32 and 126-165 represents 126 16.5/32. Par is on the basis of 100 points.
Tick Size
(minimum fluctuation)
One-half of one thirty-second (1/32) of one point ($15.625, rounded up to the nearest cent per contract), except for intermonth spreads, where the minimum price fluctuation shall be one-quarter of one thirty-second of one point ($7.8125 per contract).
Contract MonthsThe first five consecutive contracts in the March, June, September and December quarterly cycle.

These contracts are often affected by many of the economic reports that come out at 8:30 AM Eastern and there is very active volume between the hours of 8 AM EST and 3 PM EST

Volume on both contracts are very good. 10 years will often have 1 million contracts traded per day (might be the second most active US futures market after the mini SP 500) and the bonds will average around 300,000 contracts.

These markets can experience very volatile movements during and right after different reports but then will often trade smooth or in an intraday trend the rest of the day.

Currency Futures Markets

I personally prefer currency futures over FOREX any day. More than a few reasons, but the main ones are: Currency futures trade on one, regulated main exchange (CME) while FOREX trades through different inter banks and other means of transactions that are not necessarily regulated. FOREX are “commission free” but in reality there is a spread built in that dealer marks up each time you buy or sell which makes FOREX more expensive than futures.

The main ones I like to follow are:

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The euro, the yen, the British pound, and the Australian dollar. All are paired versus the US dollar.

Each market will have different times of higher volume, which can allow for traders in all time zones to pick their market. Simply open an hourly chart, like the example I show below of the Australian dollar and add the volume indicator to observe what times the market has the most action.

  • 1 euro tick is $12.50
  • 1 yen tick is $12.50
  • 1 Aussie tick is $10
  • 1 British tick is $6.25

Currency futures will often trend better than other segments and will experience different levels of volatility during economic reports in the different parts of the world.

If you plan on following any currencies, start in demo mode, know what reports are coming that affect the specific currency you are trading, and take a look at the daily & weekly charts to get a feel for the action.

Crude Oil and Gold Futures

There are more than a few similarities between the two markets.

They are both volatile and can move VERY fast. I have seen some very large moves happen in a matter of minutes, if not seconds. The “fear and greed” factor really plays a role in these specific two markets.

Both have active trading hours starting with Far East trading around 10 PM EST all the way to the next morning until about 3 PM EST. They have good volume generally speaking but not close to the mini SP or 10-year notes. In saying so, you may see some slippage on stops but the volume is more than enough to trade size.

Each tick in gold is $10, so every dollar move =$100 against you or in your favor. Crude is similar, each tick = $10. One full $1 move = $1,000.

Both markets were quiet today relatively speaking but even on a quiet day, the range on gold was $21 or = $2,100 wide using one futures contract. Crude ranges today were less than $1 or about $890 between the high and the low.

I like using overbought/oversold indicators on the two markets as well as using Range/Renko charts.

For any additional information or to talk to a licensed futures broker, please contact us.

Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

**Note about stops: THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A ‘‘STOP-LOSS’’ OR ‘‘STOP-LIMIT’’ ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.

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