A Short Lesson on Eminis and Indicators Used in Trading - By: Jonathan Daytrader

Let me be concise, so you don't misuse your time on some people who happen to belong into either of two blocs: the faction that states that indicators don't work and the camp that states that you can transact utilizing only indicators without even checking the price bars. Basically, no Emini Trading System.

The second camp is more lunatic than the first one. However, they have a similarity: they mostly are made up of of bozos who have never indulged in trading, thus have inadequate inkling what works and what does not. To be specific, they don't comprehend that indicators do function, except that there are cases when they don't function. You clearly don't know much about trading if you don't know this, which is rather basic to those who spent some time studying these things.

Sadly, at present, the The Net is crowded with merchants masquerading as business professionals adding to the perplexity of those who are only starting to trade Eminis Futures. There are times these masquerading experts will also use the no indicators formula as a way to make their system look special or particularly simple to use. Similar to "look ma, no indicators." I just ran into one of those fellows who has brought it to a totally new level: while he is claiming that his system uses no indicators, even a very cursory examination of his site reveals that the contrary is true. The system uses not just one, but two indicators, rather well known ones, at least among more sophisticated Emini Futures traders.

Let me make sure that you understand what I mean by the indicator. The meaning is quite simple. It is a standard definition.

Mathematically speaking, the indicator is some function of price. Moving means and various oscillators (stochastics, for instance) are appropriate cases of that. What the functions do is to transform the price into something else. That something else at times is not even measured in the same units as price, meaning it does not use a similar scale as the price scheme. Different types of oscillators are an appropriate case of this kind of instance, while fluctuating averages are not. If the price is not subjected to any transformation, then it is obviously not an indicator.

Yes, it is possible to have Emini Futures trading systems that truly rely on no indicators. This author designed a scheme like that for trading the s&p 500 Emini Futures years ago, seven to be more exact. The system did well back then, and continues to work well even these days. I use this personal example to indicate that Emini Future trading systems can work without an indicator. But that does not mean yet that systems using indicators don't.

It is the nature of indicators that lead people to wrongly believe that indicators do not work. As the derivatives of price, indicators lag behind it. Because of this, the trader acting on signs from indicators is bound to be late compared to the trader who utilizes only the amount to decide in his trading. In situations when volatility is relatively high, this is unlikely to matter, but when unpredictability is low, the trader depending on indicators will put great effort with ranges too small to allow him to make any profits. It is unpredictability and not indicators that impedes traders from having profits. The use of indicators will not be a huge complication if trading is restrained to circumstances when instability is decent.

To those new to the world of Emini Futures, who may even not know what I am talking about, let me briefly mention what Eminis are for they are trading instruments that are relatively new.

Emini Futures are smaller contracts of "full-grown" futures contracts that have been present for so long. The mini of their name connotes their diminutive size, which is much smaller than the older futures contracts. Emini Futures have always been traded electronically while the older futures contracts were traded on physical exchanges, permitting small, retail traders with internet connection to vie against traditional traders. Emini Futures trading can be done from the comfort of their homes or anywhere in the world. That's what the "e" in their name stands for, namely "electronic."

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