A Jack of Small Trades

If you have not been complaining about ES lately, well then, you either don't trade ES, or you are serene budhist monk who trades ES.

I talk to a lot of traders and have heard a lot of chatter about the goddamn ES.

We all wanted the volatitlity to pop after Labor Day, but it didn't.

So what's a trader to do?

If you trade based on order flow, as I do, then you can apply the same supply and demand concepts that work in ES, on other markets.  This is simply because the laws of Supply & Demand don't change.

If there is overwhelming demand, price will go up.  If there is overwhelming supply, well then, price will go down.

If you trade order flow, and are seeking more volatility, consider both CL & GC as alternatives to ES.

If we go back and look at the average daily range for the following markets, and express that average range in terms of dollars x ticks, we get the following:

Market Average Daily Ticks Dollar Value
CL 140  $                         1,400
GC 136  $                         1,360
ES 54.4  $                            680

The above matrix shows a better than 2:1 ratio for both CL to ES, and for GC to ES.

The implication is that if you were the world's greatest trader and bought the low tick of each market, and sold the high tick of each market, you would make more than twice the profit trading either CL or GC than you would ES.

The takeaway here is simply that you have more intra-day dollar variations on GC and CL than you do with ES.

For me, a trader who likes quick trades, the rubber meets the road, and then leaves the road and pulls into the parking lot, much more quickly trading GC and CL than ES.

Since January, I have been primarily been trading GC.  I have found it a market that provides consistent order flow setups, and quick trades.

If you have any questions regarding how order flow impacts the Supply & Demand curve, and the Price Discovery process, feel free to reach out to me by opening an help desk ticket here and suggest a few date\times that work for you for us to speak and share a screen.

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