By Guest Contributor, Michele Hurlbut
I have been watching the Micro Futures market ever since May 5th when it was made available to trade by my broker. I thought it would be a perfect market to move from Sim to live with as a new trader to the Hawkeye System.
Why Micro Futures?
The micro markets would be a great way to get my feet wet live without investing too much capital. For the dow it is $0.50 point (I know, that’s not saying much but it is better than $0.00 that I get in Sim :)) and the dow mini is $5.00 point.
Let’s put this into the perspective of a trade.
In the e-mini market I put at risk $5 for every point I need my stop to be on the other side of my entry to safely give the trade room to breath.
If a trader is worried about risking, let’s say, $100 of their small account then a person might tend to make the stop smaller to ‘conserve capital’. This may make the trade a much riskier one since the stop is not in the best place possible.
If that same trader were to use the Micro futures, they would comfortably be able to put their stop at the appropriate place as they would only be risking $10 and not $100.
Seeing their trades work out because they are not worried about the dollar amount time after time puts a trader into a better mental frame of mind. This gives them confidence to keep making the right trading decisions and growing their account instead of being worried about losing the money and making their stops too tight.
Another benefit I see of the Micro futures market is that you can move up on your time frames for entry without risking more than you would in the Mini futures market.
Using the Hawkeye 3-Step Method for the Win
Hawkeye has the 3-Step Entry method which I have been practicing. Due to my risk tolerance, I have been trading a smaller time frame than the recommended 3 minute.
As many traders know, the smaller the time frame, the more gyrations. So, I was getting stopped out a little more than I liked.
The method still worked. But the win ratio was smaller than what I was seeing from 3 minute time frame traders. Higher win ratio translates to higher P&L and I want that. I think trading the micro futures is my way to achieving that win rate and higher P&L.
Is There Enough Volume in the Market?
Since Hawkeye is strongly volume based, I wondered if there would be enough volume to trade the system well.
For the first week the volume was low. On the second week I noticed that volume was good during the New York trading day but not good outside of that time. The daily volume after market open has grown slowly but steadily over these last couple weeks. Today however, the volume shot up (compared to the other days). The micro Dow futures has been hovering around 10-15% of the Mini’s market for the last week. But today, it was 23% by the writing of this blog.
I think it will only get better from here.
A small caveat; the price bars can be a bit ‘gappy’ with the smaller volume. So, I have taken to using the signals from the 3 minute YM (emini) and placing the trades on the MYM (micro). Fills have been decent however there can be a bit of slippage. But at $0.50/point, I’m not worried . . .
I look forward to seeing this market grow and, maybe, see some of you join me there.
Great trading everyone and speak with you again soon.
Full disclosure: I only trade the Dow and so am not familiar with the volume on any of the other micro markets. Please check your market before trading.
Join Randy in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.
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