The cost on these would be a problem, for scalping intraday, if you cannot be profitable on a 1 tick capture. Even so, I can see them being useful for swing trades.

As well, it is possible one might trade the mini and hedge with the micros to reduce the exposure.

One such method is to hold a net long (or short) exposure in the micros and then trade only short (or long) against them in eminis. If you can hold say 3 net long then your trade exposure will be 70% of the full size (carry exposure 30%). If you cannot hold that many, you could open them on at start of day and then trade against them all day and close them at end of day or you might have to find some opportunistic swing entries. There are various pros and cons with this trading style. One pro is that many traders will find ability to generate greater profits as facilitates non bias trading. The downside is strong trends against your net exposure and that you locked into trading one side, against primary bias.

The other method that might work is to trade the mini contracts but instead of taking a full stop loss, rather to hedge with a percentage of the micros to reduce your delta at preset levels if the trade doesn't work. The downside is that if the market starts to move in your favor then you will only gain back at a percentage of what you would have gained. You could also scale out at profit targets using the micros, to lock in profits, which might work better for some styles.

If you use the stop loss method, let's imagine for ES you set your first hedge at -2 points, if you capture target without incurring 2 points risk you capture 100% of the target. But, let's say you want to give every chance to capture your trade and you take a total of 8 points risk, this would be $400 on 1 ES. At -2 points, you hedge with 5 micros and now you lose $25*6=-$150+-$100=-$250 vs -$400. What if the trade eventually works out and market eventually goes in your favor 8 points from your entry, you would now be $50*8=+$400-$25*10=-250=+$150. Your R is lowered but probability of profitability is increase. This is assuming you never remove the hedge. Let's imagine you capture the 8 points before your hedges trigger effect, in that case you win $400 vs $250 total risk on the trade. Of course, you could just close your ES trade and open the micro position at 50% size, results would be the same in theory but perhaps some benefit to the mental tracking.

Is there any indication as to what the commissions and fees are going to be on this instrument?

It would be great to play with if the fees were 1/10th the cost of a regular R/T as well.

...or am I day dreaming...?

refine 

Is there any indication as to what the commissions and fees are going to be on this instrument? It would be great to play with if the fees were 1/10th the cost of a regular R/T as well. ...or am I day dreaming...?

It's not the exchange fees that will kill, its the brokerage. Even if the exchange fees were 1/10th (they are actually 1/5.9) your still paying brokerage at the same rate. Let me copy the analysis for you on the previous page of this thread.

SMCJB 

Updating previous chart and another chart. The costs are so high in relationship to tick size I wonder how successful this will be. For the 3 contracts with the super small $0.50 tick size, you'll need 6.88 ticks profit to cover the commission at Tradestation on their standard commission schedule. Previous deleted post incorrectly had Full Size ($2.40) and not eMini ($1.18 Commissions).

I have never traded any of the existing micros, in currencies, but my impression after following several traders who have is that the major point is not to make money (yes, that does seem strange), because (a) transaction costs are high, which has gotten a lot of discussion here, and (b) liquidity is fairly low, so slippage can be a problem.

Of course, you can trade profitably, but you will be giving up a lot due to these factors, and it's not really a good way to make much.

Well, why would anyone trade something if not to make money??? I think the general feeling is that you're trading with something real, not a simulation, and you do have the real-life pressures of money on the line, so it's a better way to learn than pure, riskless sim -- but with a smaller money commitment you can trade with, so you can keep the losses down.

In other words, don't trade this if you expect to clean up. You don't have much chance of that, plus, if you're already a profitable trader, you're probably going to stay with the full contracts anyway. If you think of it as a way to get into real cash trading with less financial risk, it might work out for you.

Naturally, anyone trading these will want to be profitable, but the experience of real money trading may be the greatest benefit for many. Note that it will also be a good way to lose money fast, if you're just attracted to the idea of small margin requirements. But that's something to learn about, too.

Perhaps someone who does or has traded the currency micros can add something about this.

Bob.

bobwest 

I have never traded any of the existing micros, in currencies, but my impression after following several traders who have is that the major point is not to make money (yes, that does seem strange), because (a) transaction costs are high, which has gotten a lot of discussion here, and (b) liquidity is fairly low, so slippage can be a problem. Of course, you can trade profitably, but you will be giving up a lot due to these factors, and it's not really a good way to make much. Well, why would anyone trade something if not to make money??? I think the general feeling is that you're trading with something real, not a simulation, and you do have the real-life pressures of money on the line, so it's a better way to learn than pure, riskless sim -- but with a smaller money commitment you can trade with, so you can keep the losses down. In other words, don't trade this if you expect to clean up. You don't have much chance of that, plus, if you're already a profitable trader, you're probably going to stay with the full contracts anyway. If you think of it as a way to get into real cash trading with less financial risk, it might work out for you. Naturally, anyone trading these will want to be profitable, but the experience of real money trading may be the greatest benefit for many. Note that it will also be a good way to lose money fast, if you're just attracted to the idea of small margin requirements. But that's something to learn about, too. Perhaps someone who does or has traded the currency micros can add something about this. Bob.

+100 to this.

bobwest 

Well, why would anyone trade something if not to make money??? I think the general feeling is that you're trading with something real, not a simulation, and you do have the real-life pressures of money on the line, so it's a better way to learn than pure, riskless sim -- but with a smaller money commitment you can trade with, so you can keep the losses down. ... the experience of real money trading may be the greatest benefit for many. Note that it will also be a good way to lose money fast, if you're just attracted to the idea of small margin requirements. But that's something to learn about, too.

Ya took the words right out of my mouth. This is exactly why I trade the micros...and indeed it has been a fine learning experience.. and indeed, I have lost money doing it... but it is literally a small fraction of the amount to be lost trading the full size. And I know that if I can actually make money on the micros, the only thing holding me back from doing it on the others is... me.

I look at the micros as training wheels on my trading bike No question being live and having a dog in the hunt changes things.. but why on earth would I want to spend any more on tuition than necessary when I can get the same basic education at a considerable discount? Provided one can prove themselves in this environment, one can graduate upward from there.

To put it another way... if you're just starting out and learning, you WILL LOSE MONEY, period. Why put up any more of your hard earned cash than necessary to get through that process we all have to go through? Other than psychologically speaking, trading the micros is more difficult simply because of commissions vs tick value and slippage. If you can trade well in the micros, you should kill it in the full size contracts.

People are way too focused on the commissions. Who's trading ES for a tick? That's just not a viable strategy on an instrument that can sweep 4-8 ticks.

I'm sure I'll make a mistake in the math, but let's just say for the sake of argument that you do 2x risk/reward. So like risk 8 ticks to make 16. If your round turn was $1.50 then you'd need to hit about a 38% winrate to break even. If you were doing 1.5x so more like risk 8 to make 12 then your winrate needs to be 46%. Now of course when you catch a runner you'll probably catch much more than that. It's quite possible in ES to get your average win vs average loss to 3:1 and then you'd only need a 28.75% winrate to break even.

Sure it the end it's going to be a larger % of your profits taken in commissions. However, it's not going to be the commissions that prevents you from being successful. And once you've learned and built up your account you move up to the regular ES contract.

Here is something that I don't think has been mentioned in this thread yet.

I have been doing some research into how the past futures traders went about their business and it sounds like there was a higher rate of success, because you were working directly for a mentor and you didn't trade at first, you were working your a#$ off making sure the company or person you worked for could trade smoothly as I understand it, whatever that took. When you finally did get to trade you had a competent understanding of the market for the product(s) you were going to trade. I'm sure this isn't true for everyone but it sounds like it was more common on the floor.

This is totally missing piece of the puzzle for me. I would love that opportunity, but here we are. There has to be a way to get a feel for real live trading conditions without getting your teeth kicked in financially for the smallest margins of error.

There is a bit of psychological "impulsiveness/fear/hesitation/greed/hope" that I find myself trying to overcome when I go live that isn't present in sim and I can't learn to master by reading a book or watching a video. I have to do the thing I'm trying to get good at, which is trading futures, and I need to be able to meaningully develop my skills under realistic conditions without getting crushed to death.

Sorry for this rant, I realize many of you here are well beyond this stage in your careers, its just a current frustration of mine.

TWDsje 

People are way too focused on the commissions. Who's trading ES for a tick? That's just not a viable strategy on an instrument that can sweep 4-8 ticks. I'm sure I'll make a mistake in the math, but let's just say for the sake of argument that you do 2x risk/reward. So like risk 8 ticks to make 16. If your round turn was $1.50 then you'd need to hit about a 38% winrate to break even. If you were doing 1.5x so more like risk 8 to make 12 then your winrate needs to be 46%. Now of course when you catch a runner you'll probably catch much more than that. It's quite possible in ES to get your average win vs average loss to 3:1 and then you'd only need a 28.75% winrate to break even. Sure it the end it's going to be a larger % of your profits taken in commissions. However, it's not going to be the commissions that prevents you from being successful. And once you've learned and built up your account you move up to the regular ES contract.

Do anyone know how commissions will look like for these micros?