How do you trade the SP Emini?

Recently I started to trade the SP Emini I’m using the other indexes i.e. @nq-@ym-@tf as a guide to help me trade. I have heard that other traders use more symbols like the Dollar index market and the European markets.
Will you be kind enough to share with me those symbols and the way you use them. Thank you

Intermarket Technical Analysis. These markets are so interconnected, you have to look at the entire playing field.

View the marketplace as one big pool of liquidity. This liquidity flows. What you want to do is stay in sync with the flow.

The little trick or secret with the Stock Index Futures markets your following is they always like to follow some story. Because of this intrinsic behavior I call the ES "the little puppy". For a long time the ES has been following the CL contract as it expressed risk in the Middle East. As soon as this Japan story broke, that focus changed. We discussed this exact shift of focus in another thread. We actually saw this setting up before the disaster struck. No we did not predict an earthquake and Tsunami in Japan ! In that thread I mentioned the non-confirmation and divergence of the Aussie Dollar and the 10 year US Treasury markets from the stock indicies as a "canary in the coal mine" warning us something significant may be changing. Literally hours later the disaster struck and all focus has shifted off CL and to the currencies, specifically the JPY and AUD and the sudden collapse of the Yen carry trade.

Your trading in the ES will be a lot easier and less stressful in the long run if you understand this is how the ES works "under the covers".

pt emini. Thank you for your reply. So in other words I have to learn the forex market in order to understand the ES?

You also mentioned the CL is this symbol still valid to guide my trading on the ES? and if it is so. Is it leading the ES or lagging the ES
your response is greatly valued

in my previous post I failed to mention that I scalp the market that's my trading style, will I be able to get any help from the CL or other symbols to show any guidance? On a 5 mnt. Chart?

We often talk about context. Looking at the daily and weekly charts gives you that context. I would suggest you do that every evening. You want to develop the skill to understand the overall flow of money through these markets.

Here is a very convenient link to do just that at a glance, set the chart time frame to daily: http://finviz.com/futures_charts.ashx

What I outlined very briefly in my first response falls under the general heading of "Dow Theory".

The way I use Dow Theory is applying the concept of "confirmation" and "non-confirmation". This is a very simple technique traders have used for many many years. Let me give a few simple examples:

Stock traders use a "leading stock" as a filter or guide for taking a trade in a related "following stock". So for example, suppose Goldman Sachs (symbol GS) is a leading stock. Then perhaps you are trading a related following stock such as Bank of America (BAC). Now suppose your method says that BAC is setup for a buy signal. Applying Dow Theory, you would wait for GS to confirm the setup and show buying strength. Once buyers start driving GS higher confirming your analysis in BAC, you then go ahead and enter your new BAC long trade entry.

Futures traders use related markets and intermarket analysis to apply the same Dow Theory concept. Six months or so ago, the market was very focused on the currencies, specifically the AUD and EUR. So applying dow theory here, on an intraday basis. The trader would allow the leading EUR market to confirm the trade setup in the ES. I did a lot of this exact type of trade filtering at the time. What I had was one chart of the EUR sitting next to a chart of the ES. When the ES setup for a buy, I waited for buyers to lift the faster leading EUR, then entered my slow lagging ES trade. After that phase, the market focus shifted to the turmoil in oil producing countries of the middle east and the CL contract(crude oil). This past week since the disaster struck Japan, focus shifted back to the currencies. This makes sense given the extraordinary intervention into the JPY by the G-7.

Stock index futures traders also use leading stocks as a filter for the ES. Many traders currently use AAPL as a leading stock.

Bruce has mentioned another concept which finds its roots on Dow Theory. This is a technique I have used for many many years now. The $TICK indicator is used to confirm a trade setup, or as a divergence indicator (as Bruce uses it). When we see the ES trade to a new extreme, for example a new low in the intraday trend, and the $TICK makes a higher low, this sets up a $TICK divergence trade setup. Our expectation in this case is the $TICK non-confirmation of the new price low indicates a loss of market participation signaling an end of the trend direction and a trend change.

To get started for your intraday trading, I suggest you look at the $TICK on a 1 minute bar chart, perhaps a currency (6E or 6J) and perhaps the oil contract (CL). When everything lines up, then you have the confirmation of your ES trade setup.

Pt emini thank you very much I really appreciate it, your thorough explanation give me hope for a green future trading

It is very interesting that the market follows a certain ongoing story like the crisis in Libya or the more recent Tsunami in Japan. Thanks for that post. I'm starting out and this is really helping me get a grasp of all of this.