Looking At Other Markets by Gail Mercer
Most new traders gravitate to the S&P mini because of its average price range. But hereís a look at daily price movement in the currency futures vs. that of the S&P 500. Which one has larger price movements?
any new traders begin their trading experience on the mini indexes, with a primary focus on the mini Standard & Poorís 500, as either a scalping trader or an intraday trader. Their daily profit target is normally between three to five points (at $50 per point). Sounds reasonable, right? Wrong!
For an experienced scalping trader, this could be done, but not very likely for a new trader. To understand why, we need to look at the daily movement of the mini S&P. For October 2009, the mini S&P moved 19.27 points per day on average. Therefore, if the objective is to capture five points a day, a new trader is trying to capture 26% of the daily movement, which is quite hard for someone new to trading. Now, letís take this a step further and look at the individual daily movement.
As you can see from Figure 1, in October, out of 22 days, there were only two days in which the S&P moved more than 30 points and 12 days that the mini S&P moved less than 20 points, making it even harder to capture the daily profit goal of five points. (When the mini S&P moves more than 30 points, the five-point daily goal is only 16% of the daily range, making it easier to capture the daily goal, provided the movement is after 9:30 am ET.)