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I trade all three depending on setup and what the markets doing. When it comes to analyzing the daily chart of /es, spy, and spx, which is the most important? I'm under the impression that the /es is the most important and that spy/spx follow. Is this accurate? Like i said, i trade spy quite often so should i just focus on the spy daily chart?
What makes me even more confused is for the /ES should i have "adjusted for contract changes" selected? It seems like some people do this and some don't. The daily chart levels completely change. So it's like i have 2 different set of ES levels, different spy/spx levels. I don't know what takes priority. I need to clean this up a bit.
If you guys were in my shoes, and you traded all three how would you do it?
Look up statistical arbitrage - it's not that the ES is followed by the SPY, SPX, they're all traded together with mean reversion strategies. That's essentially what keeps the charts looking highly similar.
If you're talking about continuous futures contracts, I always use those.
If I traded all three to accommodate for changes in liquidity/volatility conditions, holding time, not having to deal with rollover, etc. I'd keep it simple and pay the most attention to the charts for the instrument that I'm currently trading. If I'm trading ES intraday, I'll pay attention to the 5 minute chart plus occasional looks at higher time frames. If I'm swinging SPY, I'll mostly consider a swing time frame like 1 hour or 4 hours along with higher time frame charts. I'd get S&R, channels, trend lines, etc. from whatever instrument I'm trading.
