By Doug Fisher
Mini Dow futures are excellent day trading vehicles for traders seeking short term profits. These index futures contracts have seen a significant increase in trading volume as well as the amount of market participants utilizing them as their dominant source of income. Attracted to the volatility and liquidity, traders employ varying methodologies to enter and exit the market. Day trading is the favored method traders use, while others scalp a few points for smaller profits and may execute a large number of trades everyday.
Some traders may use pivot points for trade execution, relying only on certain levels where the market is likely to "pivot" to trade, while some may use moving averages and crossovers to determine when they enter and exit the market. Index future traders all have their favorite indicators, charts and oscillators they use. However, all successful traders have one trait in common. All have a trading system they use in order to be successful.
All trading systems are designed to alert traders to possible trade set ups with set ups being the primary focus of most traders. However, a trading system is incomplete if sound money management principles are not a part of the system. Much has been written about how to enter the market with much less emphasis on the practice of money management. Determining how many contracts should be traded is an important factor just as when to exit the market if a trade goes bad, both of which are important attributes of money management within a trading system.
However, no trading system will be successful if the trader does not exercise the discipline to follow the rules of their trading system. In order to be successful as a index futures trader, a system that includes sound money management rules must be implemented.
Saturday, May 16, 2009
Friday, May 15, 2009
Mini Futures Trading Strategy For Beginners
By Doug Fisher
Most people that find their way to the index future exchanges, come by way of trading stocks. As new market participants learn more about the stock markets, it's inevitable they will hear about the futures markets, especially the S&P futures market. The S&P futures are not unlike a ring in a bull's nose, wherever the ring goes, the bull will follow just as the equity markets will follow the S&P futures market. Because of this, most stock traders learn to keep one eye on these futures whenever they have open positions since they know when the S&P reverses direction, the rest of the market will most likely follow.
As stock traders gain more experience, some move toward the mini futures market, attracted to it's liquidity, volatility and profit potential. Mini futures, better known as Emini contracts, are scaled down versions of the larger futures contracts with lower margin requirements, which makes them very popular with traders. Mini contracts trade on all three of the major exchanges: S&P, NASDAQ and the DOW. All three offer differing options to traders and most participants will eventually settle on one contract to trade exclusively.
Skills used with success in stock trading can be applied to mini futures trading and methodologies are very similar. Just as in stock trading, the most important strategy is to have a system in place. Although each trader has their own individual trading style, successful traders understand the importance of a trading system. All veteran traders use a system they designed or they use a system designed by other successful traders.
Learning to trade mini future contracts for new traders is best when a mentor is employed. Fortunately, technology has advanced enough that new traders can follow along with experienced traders during market hours to increase their skill levels and confidence. By utilizing the services of a mentor in a live mini future trading room, the new trader can watch as the veteran trader executes trades and explains why he is entering and exiting the market. Usually, the mentor will have a question and answer sessions after the cash markets have closed, allowing the novice trader to ask questions.
Most people that find their way to the index future exchanges, come by way of trading stocks. As new market participants learn more about the stock markets, it's inevitable they will hear about the futures markets, especially the S&P futures market. The S&P futures are not unlike a ring in a bull's nose, wherever the ring goes, the bull will follow just as the equity markets will follow the S&P futures market. Because of this, most stock traders learn to keep one eye on these futures whenever they have open positions since they know when the S&P reverses direction, the rest of the market will most likely follow.
As stock traders gain more experience, some move toward the mini futures market, attracted to it's liquidity, volatility and profit potential. Mini futures, better known as Emini contracts, are scaled down versions of the larger futures contracts with lower margin requirements, which makes them very popular with traders. Mini contracts trade on all three of the major exchanges: S&P, NASDAQ and the DOW. All three offer differing options to traders and most participants will eventually settle on one contract to trade exclusively.
Skills used with success in stock trading can be applied to mini futures trading and methodologies are very similar. Just as in stock trading, the most important strategy is to have a system in place. Although each trader has their own individual trading style, successful traders understand the importance of a trading system. All veteran traders use a system they designed or they use a system designed by other successful traders.
Learning to trade mini future contracts for new traders is best when a mentor is employed. Fortunately, technology has advanced enough that new traders can follow along with experienced traders during market hours to increase their skill levels and confidence. By utilizing the services of a mentor in a live mini future trading room, the new trader can watch as the veteran trader executes trades and explains why he is entering and exiting the market. Usually, the mentor will have a question and answer sessions after the cash markets have closed, allowing the novice trader to ask questions.
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