Futures Trading Across Higher Time Frames

You've decided that futures trading is how you want to participate in the financial markets and the emini contract is your chosen trading instrument. Great! Index futures are a top notch way to make a good living in the markets but you must first decide on a strategy.


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Part of your strategy will be choosing a time frame in which to trade. Large profits are the goal of every trader and this can surely be accomplished if the trader exercises commitment and discipline.

When deciding upon a time frame, the common approach is to choose one that is best suited to the trader's risk tolerance and trading goals. However, regardless of what time frame you choose to focus on, by analyzing the futures market across numerous time frames you can enhance your winning percentages.

A frequent error common to new traders is executing a trade while watching market action in a single time frame. All traders in every financial market, no matter if they are trading futures, stocks, options or currencies have an ideal time frame they favor.

Assesing The Market With Differing Time Frames

Scalping enthusiast could benefit by assessing market conditions with the 5 minute chart in tandem with the one minute chart. Higher chart levels can enhance your view and provide information you may not be seeing at lower level time frames.

A day trader that favors the 15 minute chart should check out the 30 minute and hourly charts as well to improve his view of market internals.

By analyzing the market across at least two higher time frames we can better check for confirmation of the move we are anticipating. Essentially, the higher time frames acting as confirmation is a signal we can use before executing a trade which shows the strength of the set up in both your favored and higher time frames.

If you are a day trader that generally holds a position for extended periods throughout the daily session riding trend for the day using a hourly chart, it is wise to check the daily and weekly time periods as well.

The same goes for the scalper. If you are using a 3 minute chart, you should be using the five and ten minute charts also. With futures trading, some people have three different time frames open all at the same time as well as the NYSE TICK and TRIN charts.

However, trading systems which are based on simplicity typically are the best systems. Over analyzing can create information overload where too much information can cause hesitation and bad judgment resulting in bad execution.

Utilizing more than three higher time frames is more often than not, overkill. Over thinking the set-up presented by the market can make you second guess and miss an opportunity to enter and exit with a profitable trade.

If you are in the habit of trading with one time frame, odds are favorable you're struggling or you would not be reading an article about trading across multiple time frames. Once you start utilizing higher time frames, it will take some trial and error to become comfortable using a different method.

However, the results may well be surprising. You can only trade with the information you have and with a single time frame you do not have all the information you need to increase your winning percentages.

You are more then likely not seeing many opportunities when they present themselves through a one-dimensional view. A three dimensional view is far superior since it provides a wider scope of the market, helping you to react when opportunity is present. Emini future trading using higher time frames in conjunction with the time you favor can only enhance your trading.

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