Following The Trend With Mini-Sized Index Futures

Emini trading is not unlike trading other markets since the same factors can be found across all financial markets no matter which one is chosen by the trader. It is estimated that fewer than twenty percent of people that trade the financial markets have or utilize a trading system to guide their trading, long term investors included. Of this twenty percent or less, most are using predefined indicators with very few understanding the concept behind their system. Most people try to find high-probability entry without any concept of position-sizing or and avenue of exiting the trade. This form of trading usually leads to a trading method that is negative in expectancy.

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However,if the trader understood the role that exists between position-sizing and exits in trading, they would be quite satisfied with a trading system that only produces winners less than half the time. We've all heard it said before but this does not make it no less true, " Let your profits run and cut your losses short. This is exactly what a trading system can do for futures traders that utilize them.

Following The Trend

Trend following indicators tell the trader when the market has changed direction from up to down or down to up and are represented through various chart patterns or mathematical representations. Once the trader enters the trend the trader lets the trade run to fruition until the trend begins to weaken. A classic example of letting profits run. If the market cooperates, the trend follower will enter the trade once the market fits his criteria and will stay in the trade as long as possible.

At some point the trend will end and as a result, cutting losses short should come into play as the trader senses and sees the market has turned against his position and immediately exits the position. However, if the position is currently ahead of this point, the trader exits with a profit. If the position in behind when the market turns, the trader still liquidates the trade and avoids a large loss. Either way the trader has protected himself from a loss and draw down in his trading account that will adversely affect his ability to continue trading.

The Advantage Of Following The Trend

The advantages of following the trend are simple in nature since you will never miss a major move within the market. If the futures market turns from down to up, the trend following indicators utilized should issue a buy signal to execute a long position. However, there is a question that must first be answered: When does the trader execute the order to buy? If it is a large upward move, the signal will be strong so entry should be executed immediately. A second benefit of the strong upward move is the longer the position can be held, the lower the transaction or commission cost will be since less trades need to be executed during the market session to reach profit goals.

Strategy should be considered here since the trader must understand if he can jump on board a major move that profits from one trade can be excellent. This point explains how having a system that is correct less than half the time can still be a winning system since losing trades are cut short and winning trades are allowed to run.

Disadvantages Associated With Following The Trend When Trading

One disadvantage of following the trend is the trader's indicators cannot determine the differences between a major move that offers a large winning trade and a short lived move that is unprofitable and holds the potential for loss. This very often causes a whipsawing effect as traders very often enter trades on the signal only to have the trade quickly turn against them causing small unprofitable trades. Small losses by successive whipsaws can quickly compound and cause the trader utilizing a trend following strategy to consider abandoning their trend following system.

Should Everyone Utilize A Following The Trend Methodology When Trading?

If following the trend fits your personality and meets the needs of the traders trading goals, then by all means they should utilize a trend following system. Following the trend is a time tested method that is used by investors and traders across all markets. As the markets become more and more volatile, there are always more new trends for the trader to use for profit. Traders will very often use a long term trend to enter positions on pullbacks and ride the next wave of the trend up during the market day.

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Learn To Trade Index Futures in Emini Trading Room

Are you tired of scanning through hundreds of charts each night searching for potential stock trade set-ups? Does the idea of trading one instrument each day, eliminating the need for hours of research and reclaiming your personal life appeal to you as a day trader? Do you want to day trade but don't have the $25,000 minimum to open a stock day trading brokerage account? Then look no further! You have discovered the amazing world of emini futures trading. Index futures contracts are traded on the three major indexes, the S&P, NASDAQ and Dow and this is what our focus is on in the Trading Room. We don't trade stocks - we don't trade options - we don't trade currencies. We trade only mini-sized futures contracts, profit from intra-day moves in the market and hold no overnight positions.

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Learn To Trade With a Mentor and Proven Futures Trader
There is no doubt the attraction of the equity markets is a powerful force, especially for people that are new to the markets who are full of excitement and exuberance dreaming of the piles of money they will make speculating in the markets. This blog was designed to help people that wish to learn how to trade eminis and avoid the pitfalls that so often await the new futures trader as he learns the dynamics of the market. The best way to avoid these precarious pitfalls on the road to trading success is to join a trading and follow the index futures market live with experienced traders.

Trading rooms are abundant but finding one that provides new traders with the learning tools to become successful and proficient traders can be difficult. Looking over the shoulder of a professional trader can greatly decrease the learning cure and get new traders up to speed much quicker than going it alone. Education is the key to becoming successful as a futures trader. In a reputable trading room, new traders can follow along as experienced traders explain potential trade setups and show how trades develop.

New traders will benefit from the knowledge of experienced traders as they explain chart formations as well as the many different indicators utilized in their trading system. Different trading methodologies will be covered including scalp trading, trend trading, time and price, pivot points and many other tried and true  trading methods. Over time the novice trader will begin to understand market dynamics and learn to recognize potential money-making trade set-ups without the help of trading room moderators.

Interaction among trading room members is also a great way to learn and spot potential trade set-ups. Insight from other members is another great way to learn since differing perspectives and points of view about the market can help us see market traits and patterns we may not have recognized before. Most traders prefer one contract and will trade it exclusively while others will trade several different contracts depending on market conditions. In a community of traders, you will learn about other contracts, their characteristics and how they react to varying market conditions. You may eventually find yourself trading a contract you thought was not a perfect fit to your personality and risk tolerance.

The beauty of joining a trading room is once the trader learns one set up that is successful, the trader can then learn to recognize this set up and use it over and over with success. Mini-sized index futures traders use many different set ups with varying degrees of success. Some may rely on strong support bounce plays, while others may profit from shorting at areas of strong resistance. Other still may use pivot points while some may rely solely on candlestick chart patterns. As you can see there are various avenues in which the futures trader can approach the market.

One thing is certain, all index futures traders use some form of mechanical system to profit and execute winning trades. Using a mechanical system has one very important element in that it eliminates the human emotion that is so often associated with new traders executing losing trades and eventually blowing out their trading account. Human emotion is probably the single largest factor associated with beginning traders giving up in frustration and having a depleted trading account.

Joining a trading room that has a proven record of success and also one that does not charge astronomical monthly fees is the best route for traders that are interested in making trading index futures trading a full time vocation to earn an income. Once the new trader joins, he can follow along and watch the market in real time as the experienced traders explain their system and why they enter and exit trades at certain points during the market session. A emini trading room should also offer after hours market instruction either through live chat or through email allowing the new members to ask questions to better understand the dynamics of what took place during the previous market session.

If you are considering futures trading, watch as traders trade the the futures live and then decide if our emini trading room is what you need to move to the next level. Join us for our weekly show and decide for yourself. All index futures including the (ES)S&P 500, (NQ)NASDAQ, (YM)DOW and even Stock and Forex trading are available.

There are veteran traders in the room whom are very good at calling the plays they are seeing during the daily market session as well as their executed trades as they occur. Charts are used in the room by the moderators and traders to show the set ups during the active market.

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Avoid Common Beginner Pitfalls In Index Futures Trading

Many new futures traders find their way to the futures market through stock trading. One of the very first lessons a stock trader will learn, especially day traders and scalp traders, is to watch the S&P 500 futures. Most stock traders have a very healthy respect for the S&P 500 futures because they know that wherever they go, the cash markets will follow. Index futures traders that trade the Dow and NASDAQ  contracts will also follow the S&P 500 futures as well since they know the second they go south, it is time to exit all long positions.



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Always keeping one eye on the S&P 500 futures is the first lesson a novice trader needs to learn in how to trade eminis. Many stock traders eventually move to the futures markets but for various reasons. One very large reason is the that index futures require very little research on the part to the trader each night since they trade the same market everyday. Stock traders must scan and research different stock charts every night to find possible trade set-ups that offer trading opportunities once the market opens the next day.

Another reason stock traders may decide to change from stocks to index futures is volatility. On any given day the market is open, futures will almost always move to one direction or another offering opportunities for profit. Volatility is the key to movements that appear on chart screens that offer potential trade set-ups and executions. Reasons vary as to why futures contract traders choose the futures market but one reason is clear, they do offer enormous income potential for traders that are disciplined and focused.

Learning how to trade mini-sized index futures takes time and should not be approached until sound fundamentals are acquired on how the dynamics of the market works. New and inexperienced traders that have not taken the time to gain the fundamentals about the larger markets, including the futures market will most certainly fail and deplete their trading account quickly. One "death spike" can completely destroy a trading account. A death spike receives it's name because of it's formation on a chart. Usually death spikes occur when a unexpected financial news item hits the wires. In seconds, the futures market can turn and blow past stops, not stopping until the market has shaved off 30 or more points in seconds.

Being unprepared for these events can be catastrophic for the inexperienced futures traders. Trading more than one contract at a time with no experience is the main reason for these trading losses. Novice traders often exhibit impatience and want to rush the road to profits and end up losing all of their trading capital.

Money management or preservation of trading capital is one of, if not the most important rules and discipline a futures trader can learn. If there is on area that a trader should focus his energies on, it is developing a system that is mechanical in nature, either through software or mentally, and never deviate from this system during the trading day.

Developing a trading system that is tested against real time market data before ever trading the markets live, will increase the trader's chances of being successful. Experience futures market traders all use a system that has been tested and back tested and proven. One major function of the mechanical trading system is money management used to protect their trading capital.

Although their trading system may vary in design, all focus on money management, One trader may just use  pivot points, another may use support and resistance, while others may use moving averages and crossovers. Trading systems are as varied as traders but all have one thing in common...money management!

When experienced traders first learned how to trade mini futures, they quickly learned that using stops and exiting trades quickly once the trade goes south is the key to winning in the mini index futures markets. In fact, most traders will tell you, they experience more losing trades than winning trades, however, they have learned to cut the losing trades short and capitalize on winning trades.

Also, we need to address trading platforms. Charting software and brokerage accounts are a dime a dozen...there are hundreds that cater to trading the financial markets. A broker should be chosen with two very important points to consider: One is commissions. Brokerage firms that cater to all financial market traders will more often have higher commissions than one that specializes in one market such as the emini market. Commission rates vary, but finding commission rates of $2.50 per side is not uncommon and these brokers should be sought out since commissions can eat into profits.

The second is trade execution. The mini contract markets are fluid, volatile and can be lighting fast and fast executions are a necessity. Again, brokerage firms that specialize know what traders need in a trading platform and will offer the best executions for their clients.

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