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Stocks & Commodities V. 28:5 (26-30): Looking At Other Markets by Gail Mercer
Stocks & Commodities V. 28:5 (26-30): Looking At Other Markets by Gail Mercer
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Looking At Other Markets by Gail Mercer
Most new traders gravitate to the S&P mini because of its average price range. But heres a look at daily price movement in the currency futures vs. that of the S&P 500. Which one has larger price movements?
any new traders begin their trading experience on the mini indexes, with a primary focus on the mini Standard & Poors 500, as either a scalping trader or an intraday trader. Their daily profit target is normally between three to five points (at $50 per point). Sounds reasonable, right? Wrong! For an experienced scalping trader, this could be done, but not very likely for a new trader. To understand why, we need to look at the daily movement of the mini S&P. For October 2009, the mini S&P moved 19.27 points per day on average. Therefore, if the objective is to capture five points a day, a new trader is trying to capture 26% of the daily movement, which is quite hard for someone new to trading. Now, lets take this a step further and look at the individual daily movement.
MEASURING DAILY
movement As you can see from Figure 1, in October, out of 22 days, there were only two days in which the S&P moved more than 30 points and 12 days that the mini S&P moved less than 20 points, making it even harder to capture the daily profit goal of five points. (When the mini S&P moves more than 30 points, the five-point daily goal is only 16% of the daily range, making it easier to capture the daily goal, provided the movement is after 9:30 am ET.)
Most new traders gravitate to the S&P mini because of its average price range. But heres a look at daily price movement in the currency futures vs. that of the S&P 500. Which one has larger price movements?
any new traders begin their trading experience on the mini indexes, with a primary focus on the mini Standard & Poors 500, as either a scalping trader or an intraday trader. Their daily profit target is normally between three to five points (at $50 per point). Sounds reasonable, right? Wrong! For an experienced scalping trader, this could be done, but not very likely for a new trader. To understand why, we need to look at the daily movement of the mini S&P. For October 2009, the mini S&P moved 19.27 points per day on average. Therefore, if the objective is to capture five points a day, a new trader is trying to capture 26% of the daily movement, which is quite hard for someone new to trading. Now, lets take this a step further and look at the individual daily movement.
MEASURING DAILY
movement As you can see from Figure 1, in October, out of 22 days, there were only two days in which the S&P moved more than 30 points and 12 days that the mini S&P moved less than 20 points, making it even harder to capture the daily profit goal of five points. (When the mini S&P moves more than 30 points, the five-point daily goal is only 16% of the daily range, making it easier to capture the daily goal, provided the movement is after 9:30 am ET.)
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