Day Trading Systems

Trade Dow Jones Futures . . . Trade Smart

As so many have said before me, and I agree, you are offering individuals who trade futures and options a very worthwhile forum.

I’d like to get some feedback from you and other members why the Dow Jones Futures are not considered worthy of intraday or long-term trading. I have read all the back-issues but alas, nothing pro or con on daytrading the Dow.

Five reasons why I trade the Dow Jones futures contract instead of full-size S&P-500 or the e-mini S&P:

1. The Dow contract is valued at $10.00 per tick. When the Dow moves from 10,000 to 10,001, 100 ticks you win or lose $100.00. There is good daily volatility; volume and open interest, enough so a daytrader can make a good living just trading the Dow contract. The daily volatility, volume and open interest are not as good as the S&P, but it is getting stronger every month.   The average daily range exceeds 100-points. Sometime it exceeds 300-points. At $10.00 a point, the Dow is a conservative moneymaking machine.

The Big S&P 500 is valued at $25.00 per tick. When the Big S&P-500 moves from 1,000 to 1,001, you win or lose $250.00. I don’t want to get a margin call in the event the market goes “fast” and my stop becomes just some ink on a floor brokers trading card. At $25.00 a tick and virtually no limit, you are inviting disaster. Let the floor traders and the commercials fight it out in this market. I refuse to trade the full-size S&P-500 because you can be wiped out, even with a stop in place.

The e-mini S&P is valued at $12.50 per tick. When the e-mini moves from 1,000 to 1,001 you win or lose $50.00. The brokerage cost to trade one or two contracts is very expensive. Why make the brokers and the CME exchange more money than they deserve.

2. The Dow Futures Contract can be traded electronically direct to your broker or the pit. Just like the E-Mini.

3. The Dow Futures opens for business at 7:20 AM, 1-hour and 20-minutes before the stock market opens and stays open till 3:15 P.M., 15-minutes after the stock market closes. The Dow can also be traded on Project “A”

4. Having tracked the S&P - Dow Jones futures for 2-years and they pretty much trade in the same direction and with the same volatile intraday rallies and reversals.

5. You only need to know the names of 30-companies when you trade the Dow. How many of you who trade the S&P know the 500-companies that comprise the S&P?   Don’t you need this information at your fingertips during earnings report season?

No, I don’t work for the Chicago Board of Trade or have any affiliation with them.

Have you tried trading the DJIA with your trading program? If you have time please see if it works as well as the S&P.

Editor’s Comment: No, have never traded the Dow Jones Index futures. However, the basic algorithm should “work” about the same in any actively traded market but tends to do best in markets with excellent liquidity like the S&P.

I am a new member and would consider ordering your Real Success TradeStation compatible trading software. I am using DTN for real time data. The data is via satellite, not the Internet. How can or will this work?

Editor’s Comment: It works great with the Internet Data Feed and Omega TradeStation or SuperCharts but unfortunately not with DTN. By the way, most everyone seems to be switching to Internet data feeds rather than the once more popular Cable TV and Satellite Feeds. For example, based on my own real-time trading experiences Internet data has great advantages, including portability and amazing Internet real time fills taking only 4 to 7-seconds on average in the e-mini S&P Market.

Question: Is Omega SuperCharts a superior charting program? I don’t need a bushel basket of indicators and don’t care to back test minimalist trading methods, i.e., support and resistance, pivot points and trading ranges.

Editor’s Comment: SuperCharts is a good charting program. It also does many other things but most of our clients use it for running the Real Success Software, data collection and charting. I agree with you, it’s best not to use many indicators and excessive back-testing, as all you are doing is curve-fitting. Keeping it simple, is the theme of the Real Success Method.

Real Success Video Course .

Great News! You can read more great articles that are informative and educational like the one above. We offer many of our Commodity Traders Club News back-issues on-line for the trader to read and gain free trading knowledge. Be sure to take advantage of all the free information offered. Read CTCN's many online newsletter back-issues.