Meta-Trader - ESM13

Welcome back, Meta-Traders.

My education as a trader took a big step forward this past week now that I am live on the TradeStation platform.  I have some history with the product since its founding back in 1982 when Ralph Cruz created the first ever product where Trading Strategies could be 1) Described in terms understandable by a trader 2) Back tested against historical data and 3) Executed live in the marketplace.  In the early 1990's, I purchased a product called Super Charts from Omega Research which provides the roots of my understanding whether Automated Trading could make money trading stocks.

Fast forward 20 years and the product has evolved way beyond its roots and now it does all of the above except it now includes Forex, Stocks and Futures.  Earlier in its history, you had to pay $99 per month for access to the platform, but due to competitive pressures, you can get it essentially for free - for non-professionals.  Not only that, trading through the platform is dirt cheap -trades that cost $10 at E*Trade, or OptionsXpress cost $1 (that right one dollar!) on TradeStation.

Its easy to be overwhelmed by all of this information and tools. One of the great features of the platform is when you login you can choose real, or simulated trading.  Simulated trading lets you play around with every feature of the platform but with fictional money.  Platform access includes simulated and separate accounts for Stocks, Forex and Futures which need to be segregated since they are regulated by different entities.

One of the first things I did was pull up a 1440 tick chart of the ESM13 which is which is the March 2013 SP500 E-Mini Futures contract.  Like Forex, this contract trades 24x5 as as a result provides a real-time read on the view on US Equities.  Based on that, I watched the futures after the US stock market close at 4PM EST to see a further sell-off into the close at 4:30 PM EST.   Conclusion:  ES is the real-time 24x5 thermometer of future action in US-Stocks.  That is pretty important in itself since sometimes market moving news breaks outside of market hours.  Lesson #1, watch the futures since they always lead the cash market.

Lesson #2 is the Matrix shown in the upper left corner of this blog.  This single view shows an incredible amount of information for a single tradable.  Its part Level 2 display, showing depth of bid and offers and each price level.  Its also part Market Profile showing amount of trades transacted at each price level as signified by the volume bars on the right side.  The oldest volume is show in dark green while the more recent volume is show in lighter green.  There are also indicators for day high and day low including Volume Weighted Average Price for VWAP.

As if all that were not enough, you can click on the price levels on the left to bid for the stock at that price or on the right to sell short.  Once you have a position, you can submit trailing or fixed stop orders and drag them up and down to make instant changes.  After that you have One-Cancels-Other orders to handle Take-Profit and Stop-Loss orders in a single shot.  Beyond that, you have One-Sends-Another orders so that if an order is triggered due to a Buy or Sell stop, you can kick in another set of stop and take-profit orders. There's no shortage of order handling options.

Enough TradeStation for now.

Those of us following the Fiscal Cliff discussions are pretty much disgusted by the lack of action by our lawmakers.  Despite the sell-off in stocks this past week, the market doesn't seem to care and expects it to be worked on in 2013 with minimal damage to the economy. 

As for Forex, its been a rough year and I have closed a number of accounts.  Expect a recap of 2012 results as well as a plan forward for 2013 by the start of the New Year. Come back early next week for that.

Enjoy your weekend and count your many blessings.