Trading has changed a good deal since I first stepped onto the trading floor in the 1980’s and one of the most significant changes has been the development of overnight trading. As I am sure you are aware, most contracts are open for e-mini trading nearly 24 hours each day. The market closes briefly just after the cash session for a half hour and then starts the next day’s trading. Obviously, this creates some tremendous opportunities to catch some decent trades after hours.
So what contract should you trade? The simple answer is; any market that has decent volume and price movement. Alas, that is much easier said than done; many of the lesser indexes are very quiet over the course of the evening hours so you will have to be fairly creative in choosing which contract you plan for your e-mini trading. That being said, contracts like the TF and YM generally lack any real movement overnight. Of course, there will be times when even these lower volume contracts are active, especially if there is some significant news or announcements these two markets can be traded, but generally speaking, you will probably have little success with the YM and TF. These contracts are simply too thin to trade most of the time.
However, there are some contracts that can be easily traded in the evening session, especially during Japanese trading hours and European Trading hours. If it were me I would concentrate on contracts that have a significant impact on the European economy.
Some of my favorite contracts to trade are;
6E: This is the futures version of the Euro and it generally moves inversely to what the DX contract is doing. There were several years that this contract was so hot that I started trading at 4 AM EST and had tremendous success. Since the EU is very actively manipulating this contract with stimulus programs this contract has been a bit slow, but recently it seems to have broken out of the choppy market syndrome that has dominated most of the trading on the 6E.
CL: Let’s face it, people seem to want to trade crude and the price action can be very active. Generally speaking, the night session will be very good on this contract or it will be working sideways in a channel.
6A: This is the Aussie dollar and can often track with crude prices. I would check both contracts to see if the markets are correlating or diverging. There can be important news in Australia that may override the usual correlating nature of this contract with crude prices.
ES: I am not a big fan of the ES, as it can be clunky and grind away in a narrow channel. But this is not always the case; there are many nights when good trades can be found. You don’t have to worry about all the hanky-panky that is typical of the ES during the cash session.
6J: The Japanese currency can also be active during the Japanese cash session. Be careful with this contract because the Japanese central bank has been very active in keeping the Japanese currency price stable. I will admit the measures the Japanese central bank has taken can cause a good deal of movement in price or it may bore you to tears.
6B: The British pound is generally active after 3am EST and can be a real blast to trade. It trades in a fairly logical manner but you should always be on the lookout for unexpected spikes in price as it doesn’t take much volume to push this market around, which is in sharp contrast to trading during the cash session. In short, this is a contract that you should always check for potential trades overnight.
As a night e-mini trader, your goal is to look at the all the contracts and determine which one is showing significant movement. Of the contracts listed above, the 6E will generally have the heaviest volume of the bunch. As an e-mini scalper, all I am looking for in trading at night is some reliable movement in price. As always, best of luck in your trading.