Moving Averages, Pivot Points, Oscillators And Emini Trading

Trade execution is a much talked about subject within index future trading circles and  proper execution is covered extensively in our trading room.

In this article we will profile some of the most utilized and popular signals traders add to their trading system and charting software to interpret market direction with the understanding traders are unique individuals and each one will have different preferences.

You may find by adding just one of these trading tools to your arsenal could have have a impact on your trading profitability. However, when you choose to implement a new indicator it is best to test it out in simulation before trading live.

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Pivot Points

As a trader you have undoubtedly heard of support and resistance. Pivot points are used to determine areas of support and resistance and are very popular with futures traders. Pivot points can be calculated different ways, however the most utilized method is by averaging the day’s open, high, low, and close divided by 4. Pivot point support and resistance levels are an excellent choice for trading mini-sized index futures contracts and employed by many veteran traders.

Moving Averages

Moving averages are another tool used by futures traders to profit, mostly with the day trading method rather than a scalp trading methodology. Many market players only use the 9 and 18 day moving averages however time frames are entirely up to the individual trader.

Although moving averages are lagging indicators they are excellent for determining the market environment and making sure you are on the right side of the trade. Some traders will use the 9 and 18 day moving average to enter the market in the morning when market direction is determined in some cases, and ride the trade all day until close, profiting handsomely.

Overbought/Oversold Indicators

Price extremes very often send short term traders into a frenzy when indicators reveal futures contracts are reaching overbought/oversold territory. The New York Tick is one such indicator. When showing plus or minus 1000, the market is said to be in severely overbought or oversold territory and a reversal is likely.

The TRIN is also another indicator used by traders to determine the mood of the market. When the TRIN has a reading of 1.0 or above, the market is generally moving down. With a reading below 1.0, the bulls are usually in control of the market.

RSI (Relative Strength Indicator)

The Relative Strength Indicator is another indicator very popular method for determining emini signals. With a range of 0 to 100, oversold conditions are present when the indicator is nearing zero on the RSI and overbought conditions exist when the indicator is nearing the 100 mark. Many traders use the RSI in conjunction with Japanese candlestick charts and moving averages.

Stochastic

The Stochastic is also used by traders to determine oversold and overbought conditions and like the RSI, is has a range of zero to one hundred. Oversold conditions are implied to exist when the Stochastic is nearing or goes below 30. Overbought conditions exist when the Stochastic is nearing or reaches 70. Just like the RSI, the Stochastic is used by index futures traders along with charting software, usually found at the bottom of the chart screen.

Overbought and oversold indicators can help determine market direction and possible reversals, but are better when used with other indicators rather than being used alone to determine signals on entry and exit.

Japanese Candlestick Charts

Candlestick charts have long been the choice of many traders as well as traders across all financial markets. Developed by a rice trader in the 17th century to predict rice prices, modern traders have incorporated them into many popular trading systems.

Easy to read with clearly define opening, high, low and closing levels, candlestick charts can be used across all time frames. Very popular with scalping traders, candlestick charts can be set to a one minute setting to follow even the smallest time frame. Although all traders do not employ candlestick charts, most traders would equate not using candlestick charts to driving a car blindfolded.

These are just a few of the tools utilized by successful index future traders to interpret market conditions and alert them to possible trade setups or when to exit the market. However, an trading system is a must to be successful, not only in the futures market but in any financial market.

Index futures traders live in a fluid and volatile environment where market noise is a constant. Learning to read signals for order entry and exit is part art and part science and is something that is learned only by experience and by implementing a proven trading system.

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Dow Futures Live Trading Room - Profit With Experienced Traders

YM futures trading has seen exponential growth since their introduction with traders attracted to the exceptional liquidity and potential profits offered with these emini contracts. With a $5 multiplier for each contract, it doesn’t take much volatility within the futures market for traders to profit with several trading opportunities available each day.

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However, some market participants don’t have the experience necessary to trade Dow futures and can benefit from trading along side veteran traders. Fortunately, technology has advance to the point trading along side experienced traders is as simple as turning on your computer and joining a Dow futures live trading room.

Going it alone as a “noob” trader in the index futures market can be frustrating since a understanding of market dynamics and a proven trading system is necessary to be successful. All too often, noobs will find themselves reaching the point of desperation, executing trades based only on emotion.

For example, a trader may start the morning session in a winning position only to see the market turn against him, blow through his stop loss, hoping the market reverses, finally exiting the position only when enough pain has been inflicted.

Emotional Trading Results

Brooding over the huge loss, mad at himself for not obeying his stop loss, the noob trader frantically looks for another set up to “get back” what he lost on the previous trade. Instead of waiting on the market, he forces a trade only to once again see the market turn against him, sustaining another staggering loss.

Frustration and desperation are constant companions for the unprepared - inexperienced “noob” trader. The above illustration is why it is so important for those new to the Dow index futures markets to first have a trading system in place. Rules and discipline are both part of successful trading just as losses are part of successful trading.

However, the experienced trader knows how to practice sound money management rules and does not sustain heavy losses since he follows the rules of his trading system.

Much has been written about trade entry and how to spot the perfect set up with very little about how to exit the market. Money management through stop loss and capital preservation(trade exit should the market turn against you) are just as much a part of the trade as market entry.

Losing trades WILL happen, this is true, but having a trading system designed to handle these losses is an important part of successful trading. Following along with experienced traders in the Trading Room can greatly improve trading success as rookie traders learn trading techniques used within a proven trading system.

Veteran traders explain why they entered the market and why they exited the market at certain levels. Whether day trading or scalping, the new index future trader will learn the dynamics of Dow mini-sized index futures trading.

A Word About Trading Rooms

Some of the most knowledgeable people in the world trade the futures markets so why would you want to compete against these experienced professionals without the necessary skills to participate in the financial markets? Utilizing the services of a reputable trading room can help you stay one step ahead and increase your chances of profitable trading.

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Emini Scalping - Why New Index Future Traders Should Consider Scalping Emini Contracts

Scalping is an effective trading method to capture quick profits from the index futures markets and reduce exposure by using tight stops. Although we use scalp trades frequently in our trading room, we do not limit ourselves exclusively to scalping futures contracts since the market is dynamic and changes from time frame to time frame.

Longer open trade periods may be utilized to capitalize on larger market moves to increase profits but scalp trading is a large part of our trading system. 

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Scalping Index Futures

As index traders, we should always be testing different trading methodologies that can improve the amount of winning trades we execute. Scalping is one method that allows for increased potential for profitable trades since exposure in the market is greatly reduced when scalp trading index futures contracts.

When utilizing this method of trading, traders are capitalizing on extremely short term opportunities. If you already understand the concept of scalp trading and are looking for a scalping system, follow the link below:

Although scalp trading is widely employed by veteran traders, those new to the futures markets can also benefit by using short term trading methods. Building confidence as a new trader is vitally important and by setting our goals at obtainable levels, we can raise our levels of confidence. The emini futures markets are highly liquid and volatile, offering many opportunities for the trader to profit many times throughout the trading session.

By setting goals for only two or three points on each trade, the novice trader can build confidence by reducing exposure and lower risk of broken trades.

The key to scalping, is to approach the market with a trading plan to get in and out of the market quickly, not swinging for the fences hoping for a homerun. Small profits are the goal.

Given the nature of the futures market, there will be many opportunities each day for the trader to execute trades with the potential of profit. Veteran traders that use scalping as their chosen method of trading will, in most cases, execute a large amount of trades each day.

As a trading method, trades are entered and exited rapidly. Once the trader begins to implement the scalp trading method, he will learn to exit the market swiftly on both winning and losing trades. Since the trader knows he will exit quickly no matter if the trade is successful or unsuccessful, large losses are prevented.

New traders so often approach the markets with ideas of huge profits and making a mint rather than focusing on learning to be a successful trader. It is so important for new traders to build confidence and understand profits are the result of disciplined trading.

Although scalp trading is an excellent method for new traders to utilize, it is also a method that is expertly used by market professionals. What makes scalping so profitable is position sizing. Professional market players wouldn’t use this method of trading if it didn’t offer a substantial profit.

Trading one contract will yield small profits on a winning trade. However, by increasing the amount of contracts on each trade, the futures trade can increase the amount of profit through position sizing. On the flip side, risk levels increase substantially with each contract added to each trade.

New traders should start with only one contract and increase the amount of contracts traded on individual trades once confidence and skill levels increase. The futures market is no place for thrill seekers or those who find themselves trading out of desperation. This recklessness will always lead to total failure and empty trading accounts.

Another important factor to consider is your broker. Scalping is a trading method that yield smaller profits and decreases risk exposure. However, because the amount of profit is small, traders will need to execute many trades to show a decent profit. Broker commissions will have and affect on profits which makes having the right broker very important.

Competition is stiff in the futures brokerage industry and locating a broker with inexpensive trading fees is not difficult. Some brokerage firms cater specifically to high volume traders and offer competitive commissions. It should be understood, you will pay a commission on both sides of the trade, both on entry and exit, so this should be considered when choosing a broker.

Scalping requires quick execution of trades since traders seek to be in and out of the market very quickly. Make sure a broker is chosen that offers a reliable trading platform. Nothing frustrates a trader more than to attempt trade execution only to see the market move without their trade being executed because of their broker. It cannot be stressed enough the importance of a reliable broker.

Although scalping is most often employed by veteran traders, a new trader should consider scalp trading mini contracts as a way to obtain the confidence so necessary to trading success. Because this method reduces exposure time within the market, losses can be limited and account draw downs are kept at a minimum allowing the novice opportunities to execute many trades.

Scalp Trading Offers Advantages Over Other Forms Of Trading

If you are experiencing difficulty in your trading, maybe you should consider changing your method to a shorter time frame. Scalping involves a shorter time frame but does require the ability to be laser focused and quick on the draw. Since the holding period for a scalp trade is generally no more than a few minutes if not only for a few seconds.

New traders run into difficulty when they do not approach the markets with a defined plan and look for opportunity with a shotgun method. Day trading, scalp trading, no clearly defined plan for trading and basically entering a trade and hoping for the best outcome.

Their daily plan for trading is as fluid as the market itself, ever changing as the session flows toward the close. Veteran markets players know trading without a clearly defined system, or plan is a recipe for disaster.

By utilizing a scalping method, the trader limits his exposure and has a exit strategy designed to only cost him no more than a couple of points should the trade go against him. By design, scalping is for quick entry and exit.

The very nature of this method of trading reduces exposure and be default, minimizes potential losses. Although the index futures scalp trader generally executes many more trades a day than the atypical day trader, the scalp trader is in a better position to control the amount of losses incurred.

Professional traders have known for years scalping can generate excellent profits each day if the trader practices sound money management skills and follows a trading system with rules designed to protect against devastating losses that so often are a part of the rookie trader’s daily routine. The importance of a trading system can not be emphasized enough.

Unfortunately, new traders blinded by the profit potential offered by index futures trading, seldom have a system in place before jumping into shark infested waters. Once they blow out their trading accounts they finally realize that only when a trading system is in place will they be on the road to profitability.

Index future trading requires discipline and intestinal fortitude not required in many other money making fields. The financial markets are the arenas of the most informed and financially savvy participants, bar none.

In order to compete, the rookie trader must have a system in place that will improve their chances of success against stiff competition. By utilizing a scalping trading system and by exercising sound money management rules, the new trader can quickly be on his way to emini scalping success.

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