The experienced E-mini daytrader craves one thing and one thing only, volatility. Day traders don't care if the long term trend is up or down just that they pick the right direction for the seconds or minutes their trade is open.
However, for analysis prior to trading, knowing the overall trend and sentiment is crucial. Often, after finding success trading the DJIA E-mini YM and the S&P 500 mini ES, day traders seek out the next challenge,in the electronic E-mini space, which is the Russell 2000 E-mini, symbol ER2.
The ER2 is known for fast, unforgiving moves and highly volatile intraday behavior. In other words, it's the perfect vehicle for the experienced E-mini day trader.
The ER2 is based on the Russell 2000 Index. The Russell 2000 Index is comprised of 2000 of the smallest firms in the Russell 3000 Small Cap Index. Just imagine the volatility these tiny public companies create individually spread across 2000 of them, then add the leverage of an E-mini and you can begin to understand the true power of the ER2. The ER2 trades in .01 cent ticks at 100x the index value. This translates into $10.00 per tick for the trader. The average daily range is around 10 points or 100 ticks. At $100.00 a point and 10 points average per day, the ER2 is truly the most volatile index E-mini available.
Day trading the ER2 successfully takes lightning fast reflexes, a top notch internet connection anda trading platform built for accuracy, reliability and speed. One mistake can be costly in such a fast moving instrument.
I recommend Trading Technologies Xtrader platform for serious ER2 trading. Let's take a closer technical look at the ER2. As you can see from the chart, it has been in a steady uptrend since mid March. It easily broke through the 50 day SMA, and is presently pushing against the 200 day SMA which is 748.85. If price breaks the 200 day SMA, it appears that 777 then 803 are the next resistance levels. Buying intraday pullbacks appears to be the trading tactic of choice right now.
Dave Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.
