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 Post subject: CL and ES Futures - Leader ?
PostPosted: Fri Dec 23, 2011 4:07 pm 
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The following observation or question was posted @ EliteTrader.com

Quote:
Quote from amsterdam:

You bring up a VERY good point on how ES is easier to trade when the VIX is higher.

So again, I have to ask, what products are futures traders trading under a high/low VIX?

Reply To Question

Just go to any free delay charting site...pull up all the futures trade instruments and one by one analyze the price action with their chart next to a chart of the VIX via whatever time frame you prefer to trade.

You can easily answer your own questions considering you're question really is a trade strategy specific question. My point, everybody is using a different trade strategy and their answer most likely will not be suitable for you and different from each other because you're using a different trade strategy.

Therefore, after you have your charts up, you can then determine which trading instruments via your trade signals will perform good or bad when the VIX is high, low, trending or range bound. You're own answers will give you a boost in your trading results.

My point, asking for what futures products are being traded by others when VIX is high/low is greatly missing the point by a mile if there's no discussion about what type of trade strategy the trader is using to exploit their trade instruments when the VIX is high/low. Simply, some strategies only perform well when there's high or increasing volatility and other strategies only perform well when there's low or decreasing volatility...same is true for other strategies when the VIX is trending (up or down) or range bound.

Knowing when and when not to use your trade method is an edge. Think about it very carefully, every trader are suppose to have drawdowns or consistent losses of some kind or another in theory at some point. Therefore, imagine...for example...if you discover that your trade method doesn't perform good when the VIX is low or range bound. You could only trade when the VIX is trending or high and stay on the sidelines (no trades even if you have trade signals) when the VIX is low or range bound...essentially you'll be avoiding trading when you're most likely to experience a drawdown period or consistent losses.

Taking it further...you can even determine when to switch (change) trading instruments based upon the performance of your trade method when the price action of the VIX changes.

Yeah...that's a big WOW.

Quote:
Quote from amsterdam:

...I simply don't understand this. ES is a leader in itself, shouldn't other products strength/weakness be derived from ES performance and not vice versa...


This is very not true if you've implied that the S&P 500 Emini ES futures leads all the time or most of the time. Markets are too interconnected and too many global events/economies move the markets one direction or another direction. Simply, one hour Gold is pushing prices, another hour its Oil pushing prices, another hour its Euro-dollar pushing prices, another hour its the U.S dollar, another hour its something else...

Yeah, the S&P 500 Emini ES futures can be a leader for awhile on any given trading day. Same is true for any other key trading instrument that's globally traded.

Merry Xmas and a safe happy holidays.

Attachment:
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122311-Futures-Trading-Emini-ES-Leader.png [ 84.43 KiB | Viewed 100 times ]


http://www.elitetrader.com/vb/showthread.php?s=&postid=3396717#post3396717

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M.A. Perry
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122311-Futures-Trading-Emini-ES-Leader-1a.png
122311-Futures-Trading-Emini-ES-Leader-1a.png [ 14.35 KiB | Viewed 1409 times ]
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