Thursday, August 24, 2006

Keep your eyes open

Does it matter, if you earn your money with currencies, with the Russel, the ES, with the australian SPI or with Gold?
I don't think so. They all pay a fixed amount of money / tick.
So why do you stick to one instrument, trying to conquer it?
If you can't get a handle on Gold, well so be it. Nothing wrong with that. You don't need to trade it with such a big universe of contracts out there to select from.
Also you need to be aware, that over time some contracts start to be disregarded, are no longer en vogue with the trading community, while others become new interesting trading vehicles.
Look at the australian SPI. A really dull index just one year ago. Sure it pays 25 AUD/ point (about 20USD) but it was moving 25 to 35 points a day. Nothing to excite a daytrader.
Today it moves about 80 to 120 points on average / day. And that is something you can sure use as daytrading vehicle. Of course due to the timezone it trades in, it might be more interesting for you, if you live on the Westcoast or Hawaii, but even for me, living in Germany it is nice to trade just the close, which often sees movements of 20 to 30 points in 15 minutes.

Make it your monthly homework to look at the average daily ranges of a select group of contracts to see, whether some start showing increased volatility while other fall out of favor.

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