Learning Index Futures Trading With A Focus On Trading Well

Make no mistake, the odds of long term success at short term trading stands firmly against most all who enter the financial markets. Each year, beginning traders set out with a plan to educate themselves about emini futures trading with most soon realizing index futures trading is one of the most difficult challenges they’ve ever experienced.

Once they reach this realization most will throw in the towel, ending their short trading careers in frustration, while a serious few will stay in the futures game long enough to learn how to trade and become successful.

Will you become one of the few serious winners or will you go home with the losers?

Check The Daily Emini Trading Room Results

Profiting consistently in the index futures markets demands standing against the crowd mentality which requires a level of commitment and dedication most cannot successfully achieve.

Learn To Trade Well

By beginning to build on these skills early in your trading career, you will be one step ahead and on your way to trading well. Trading well is what successful traders strive for everyday in the markets with profits being the result of trading well.

Most index futures traders use various techniques that comprise a trading system to execute potential trades. By learning to read and understand the dynamics of the market as well as developing an understanding of the internal and external forces which impact the markets, will they set themselves apart from the those that have less commitment to trading well.

The index futures market is one of extremes with traders experiencing winning and losing on a daily basis since all experienced traders know losing trades are a part of trading well. Losses are a part of futures trading and to be expected.

How the trader handles losses is the difference between a successful trader and someone who will not last long in the game. The emotional up and downs, so much a part of the markets, drives many rookies to a quick exit.

Once you learn how to handle your losing trades and accept losses equally with controlling your emotions, you’ve matured as a trader.

Learning to trade well is the key to the game. Beginners come into the futures markets raw and reckless with no clear understanding of market dynamics and most importantly, with no trading system or an expectancy.

Learn from mental mistakes. Make notes on bad executions, cut losses short and use trailing stops. Learn to exercise discipline since lack of this important skill can end a trading career far more rapidly than a lack of trading knowledge.

Many new and inexperienced traders often find themselves in a cycle of winning and losing bigger, over-trading to “get back” what they lost on the previous trade, eventually blowing out their trading account. At this point the trader will either give up or commit to gaining the skills through trading education to become successful.

Use a Trading Mentor

Locate an experienced trader that’s willing to share his knowledge about the markets. Ask about winning  trading systems, bad habits and losing strategies. Find a mentoring program that utilizes a trading system that can be expanded on once you gain confidence and experience at index mini-sized futures trading.

By joining a mentoring program, beginning traders can learn the system used by the mentor with some offering a live  trading room so the beginner can follow along during live trading sessions. Turn their knowledge into your success and follow their advice. The assistance you receive eliminates throwing money away and many months of frustration.

Trading requires that you learn to crawl before you walk. Unfortunately, many who enter the futures markets each year believe they can walk when they haven’t yet learned to crawl.

The futures trading roadside is littered with the blown out trading accounts of novices who didn’t have what it takes, focused only on the potential profits to be made rather than learning to trade well.

Read More

Using Trade Exits To Gain Maximum Profit

Exit strategies are an integral part of any trading system. Without an exit strategy, your trading is doomed to failure. All experienced and veteran emini future traders know what their exit will be before they enter any trade.

Exits are designed to attain the maximum amount of profit and giving little profit back once the profit is made on the trade.

Check The Daily Emini Trading Room Results

All trading systems should have different exit strategies designed into them depending on the current market situation. For example, the trader may have one exit designed explicitly for getting out of the market that do produce a small loss but there is a decrease in initial risk.

Other exits are designed to produce maximum profits. While some are utilized to keep the index futures trader from giving back too much profit. In this article we will cover a few of the exit strategies that can be designed into a trading system and how they can be utilized.

Market Timing

Market timing is most often implemented when the trader expects the market to move in the direction they think very quickly after execution upon entering the market. In this case, the trader may execute the exit before his stop-loss is hit reducing losses even further if the market does not go in the directions thought.

This type of exit is very often employed by people utilizing a scalp trading methodology. Scalp traders, as a rule, are usually only looking for a couple of points before they quickly exit the trade. Scalp traders may very often execute large numbers of trades throughout the daily session.

The Trailing Stop

One other very popular exit strategy used among traders is the trailing stop. The trailing stop is dynamic and fluid, moving along with the market after a trader enters a position. This type of exit is very often employed by day trading futures traders.

Day trading is generally defined as entering a position at some point during the market session and exit is executed at some point before the daily session ends or not long after the session closes in after market hours. However, some day traders may enter and exit positions several times during the day.

Trailing stops are an excellent strategy to use mostly if the market initially begins to move in the trader’s favor. Depending on the trading system used, as the market continues to move in the predicted direction, the trader will automatically move his stop above his original stop loss reducing the potential loss should the market reduce.

Trailing stops are not a guarantee of profit but do reduce the potential of larger losses that would be suffered if the original stop loss was hit. Remember, a trading system should first be designed with emphasis on money management, or protection of capital rather than profitability. Traders that learn this concept are very often the ones that live to become successful veteran traders.

The trailing stop has the ability to help the trader gain maximum profits but the trader should also understand, the trailing stop will also give back some profits since it is trailing, which of course means once you gain profit’s the stop will move up behind the trader’s position.

However once the market reaches exhaustion, the market will pull back and the stop will be hit thus giving back some profit. This is the nature of the trailing stop. It will not get the trade out at the top but will however produce profitable results in most cases if market direction is predicted accurately.

The Mental Exit

One of the most utilized exit strategies by trading market participants is the psychological or “mental” exit. The mental stop depends entirely on the trader and the trader’s interpretation of the market. This exit strategy should only be used by traders that have the discipline and experience to determine when the best time to exit as market conditions dictate.

Maximum profits are the goal. Calling a top is one of the most difficult parts of futures trading or any other form of trading and seldom will a trader execute an exit at the top. However, mental stops are an excellent choice to maximize profits.

The best trading system are designed with simplicity in mind. Rather than focusing on optimizing a index futures trading system, understanding and simplicity should be the main focus. Simplification of a system does not mean only one exit strategy can be used.

You as the trader can have multiple exit strategies and keep them simple to understand and follow. System that are intricate and difficult seldom work since the trader often becomes overwhelmed with the massive amount of information and signals produced by a over-optimized system. Simplistic systems work by allowing the trader to employ multiple exits and still meet their trading objective.

Scaling Out Exits

One exit that should not be avoided although very often employed by inexperienced traders is the scaling out exit. This form of exit requires the trader buy multiple contracts and scale out of them as the market move.

If the trader will take the time to analyze this exit, he would realize how much more profitable he would be if held the entire position and exited fully. The purpose of designing a trading system is to maximize profits and reduce the amount of major account draw downs and losses.

If the system is designed properly, scaling out of positions should not be necessary since the system will produce the best result with a full position. Inexperienced index futures traders very often employ this strategy falsely believing they are successful when they are really robbing themselves of maximizing profits.

Trading takes a considerable amount of dedication and discipline as well innate competitive spirit, no matter what financial market is chosen. Index futures is probably the most fluid and volatile of all the financial markets which requires a well designed system for the market participant to be profitable index futures trading.

Read More

Set Ups And How To Incorporate Them Into A Index Futures Trading System

Trading requires the participant to be prepared for the coming market session and one of the criteria that must be met is trade set up considerations. Liquidity is very important, although the emini index futures market seldom has issues with liquidity during regular market session. However, the index futures are accessible twenty-four a day and liquidity is a concern in the after hours market. If a trader holds a position into the after hours market, unloading these contracts once the daily market has closed can become difficult. Liquidity should be considered if after market hours are chosen by the market participant to hold positions.

 Check The Daily Emini Trading Room Results

Another important consideration is volatility. Depending on the chosen time frame, volatility or price movement is important before acting on a set up. Futures traders live for volatile markets. Enough market volatility is needed to make a profit, usually two to three times the trader’s initial risk.

Whether trading a pullback or entering a fast moving upward breakout, the trader needs to be aware of the dominant direction the market is moving. All financial markets move in three direction: up, down or sideways with the index futures markets being no different. Overall, markets usually trend down or up twenty percent of the time give or take a few percentage points and move sideways the remaining time. However, the day trading participant pays attention to the overall trend make makes his living trading entering both long and short positions within the prevailing trend.

Most players have trading systems that keep them in the market continually. But if you consider the sideways market as a condition of the overall market, then you probably need a trading system that keeps you out of the market at least seventy percent of the time. The person that is always holding a position in the market is going to spend a great deal of time in a sideways market which translates into many losing trades and many transactions cost, which makes your broker very happy. If this is the case, you should look at tweaking your trading system to avoid sideways markets. Sideways markets are very common during the New York lunch hours when floor traders break for lunch.

Set ups are criteria that must be met, according to your trading methodology, before ever executing and entering a position, either long or short. When this set up criteria is met, overall improvement of the trade becoming profitable are enhanced. Most index futures trading participants make a profit because the market moves a sufficient amount from where they entered the market. Although set ups are considered a criteria for a potential trade entry, the are better used as an event that must occur before the trader even considers opening a position.

Timing the market is also a very important consideration when utilizing trade set ups. Once the trader chosen the time frame in which to trade and understands the general market direction, he must wait until the actual move begins. If your trading systems alerts you to a possible trade set up, odds are the system will alert you before the move actually happens. Seasoned traders will use experience and market knowledge to keep from entering a position on the alert while inexperienced traders will enter once the alert is recognized. Experience brings patience and the experienced trader will only enter once the market move has begun. Improve your odds of success by confirming the market direction you are expecting before executing a trade.

Trading software is very important and almost all trading software will come packed with many different indicators and oscillators built into the package. Unfortunately, these oscillators and indicators give the inexperienced participant a false since of security. They will spend a few hours learning about individual indicators and oscillators and usually find these over-optimized system only lead to disaster. Too many indicators cause information over-load while trading systems that utilize one or two indicators such as moving averages or areas of support and resistance are much better. Simple systems using few indicators are the systems most often used by veteran traders.

Building a system that is tested and proven is how veteran traders become successful trading index futures. Focusing on how to locate trade setups and timing market entry are just one the keys to market success. I later articles, we will discuss different trade set ups and how they can be used to improve trade execution in both trade entry and trade exit. However, it should be noted, most newly minted traders focus too much on trade entry and less on exiting trades. Knowing when to sell, it has been argued with great success, is one of the most important factors in protecting trading capital and living to trade again. Trading systems that alert the trader to both entry and exit strategies that are simplistic in mechanics are by far the best emini trading systems

Read More