What Are The Advantage of E mini Trading
Written by Sam Porter
There are a huge number of different market vehicles you can day trade in. Why choose E mini trading over all those other options? There are a number of reasons.
When you're day trading, you need to make decisions quickly and effectively. The best way to do this is to reduce the number of decisions you have available to make. This may seem counter intuitive, but the fact is that increasing the decision weight makes it much more difficult for you to day trade effectively. Stocks, for instance, are extremely difficult to trade effectively. There are thousands of different stocks you can trade, and each one is highly correlated to the overall market direction and industry group the stock is in, meaning that every time you trade in stock you must take into account a particular stock's activity, the industry group, and overall market trend at once. These barriers to decision-making render stocks challenging and hazardous for day trading.
E mini trading and similar stock index markets reduce the depth of your decision making to one question: Which direction is the market going? This frees you to make better evaluations of your indicators in answering that question, rather than multiplying the necessary levels of analysis.
Bonds don't move fast enough to make day trading profitable. Commodities can act similarly, or trap you in limit moves, which lock up your capital and slow down your trading by virtue of their own volatility.
E mini trading on the other hand doesn't suffer from these volatility issues; the E mini market has substantial intra-day volatility.
The foreign currency exchange market is also unsuitable for day trading because it does not supply volume data. Volume data is essential to distinguish small-volume amateur traders, who often miss key turning points in the market and do not cause substantial moves of their own, from professional traders, who successfully anticipate market movements and precipitate changes with their activities. This technique is a key to effective day trading that simply isn't available with forex.
E mini trading does offer this type of volume data, so it's possible to use foreign / amateur indicators to trade more effectively. In day trading, it's essential to have as much information about your trades as possible, as opposed to a flood of information of questionable relevance (the flaw of the stock market). E mini trading offers a balance of information, volatility, and ease-of-use that is unparalleled.
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