Micro Futures

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Micro Futures

By Guest Contributor, Michele Hurlbut

Hi everyone.

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.

Daily Volume Micro Futures

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 (mini) 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.

Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Randy Lindsey
Hawkeye Traders, LLC

Full Analysis on the S&P

With so much in the news regarding financial meltdown, let’s take a good Hawkeye look at the eMini.

Monthly S&P Chart
Daily S&P

Firstly look at the Hawkeye Volume – three months of no demand and one month of selling volume, giving you the heads up that the dominant uptrend was going to retrace.

Now, look where I have placed the dotted lines on the price. The higher one shows a double top with the two Hawkeye Pivot dots in yellow, the lower dotted line shows where price came to and found support right at the Hawkeye stops (indicated by the green crosses).

6 Ways a Market Moves shows congestion, and if prices rise next month a Hawkeye Pivot low will be printed. However, if the low of this monthly bar closes under the Hawkeye stops, a down trend will be established.

Weekly S&P Chart
Weekly S&P

A congestion break-out to the downside found support where I have started the blue line on price. Now look at Hawkeye Volume – although a major price move was not accompanied by ultra high volume, just high volume, and at the end of the week, Friday Hawkeye Volume shows buying volume. And if next week is up, a Hawkeye Pivot low will be established

Daily S&P Chart
Monthly S&P

Now it gets interesting. Remember what I teach at Hawkeye seminars – “The Tanker Effect”; when the markets are fast and volatile price shoots through the previous support. Look at the lowest price bar. Three days back it straddled both previous lows (shown by the blue lines on the chart), and rallied on buying volume, followed by two days of neutral volume indicating support as shown by the price action.

And now the final piece. 6 Ways a Market Moves. Look at the Trend dot crunching right up, still down so still a trend run. But if Monday is up the dot will go flat indicating congestion entrance.

We demonstrate this and many other methods in our live demonstration room held every Wednesday, and this is open to everyone. Click this link for more information or to join us in class.

Good Fortune,

Nigel Hawkes
Hawkeye Traders

[The cyan arrows and red lines are for illustration only and do not form part of the software]

Get Ready for a Potentially Great Trade

Are you ready for a potentially great trade? The dollar index is breaking out of an 8-month trading range. This is happening on some of the strongest economic numbers since 2009. The Fed was requiring stronger economic data – and that arrived on Friday.

The sentiment is that there will be a rate raise at the next Fed meeting. If this is the case the dollar rally is just starting and Hawkeye will show the way.

Dollar Index Monthly Chart

Dollar Monthly Chart
We are now approaching the high that was established 8 months ago and a Hawkeye Zone at 104.13, but we require more volume to provide the market energy to breach this overhead resistance.

Dollar Index Weekly Chart

Dollar Weekly Chart
Price is now in a Hawkeye Zone, with the top side being 101.45. However, attendant volume is not rising, which it needs to do to be able to break out to the upside.

Dollar Index Daily Chart

Dollar Daily Chart
Now this really tells us the story: Good increasing daily volume on a Hawkeye Wide Bar on Friday. As a result, price should retrace back into the Wide Bar in the early part of the week.  Then, look for volume to push price up to the Hawkeye Zones area

Hawkeye Perspective

A potentially great trade is in the making. If 101.45 is breached we should be on our way to a substantial Dollar rally, and a potentially great trade. Overhead resistance has to be taken out, so no maverick trades please. But have this on the radar as a potentially extremely profitable trade is being set up.

And remember, if the dollar goes up look to a short bond trade… yet another potentially great trade.

We demonstrate this and many other methods in our live demonstration room held every Wednesday, and this is open to everyone. Click this link for more information or to join us in class.

Good Fortune,

Nigel Hawkes
Hawkeye Traders

[The magenta arrows are for illustration only and do not form part of the software]