Originally published at: https://optimusfutures.com/tradeblog/archives/day-trading-futures-benefits/%20
This article on Day Trading Futures is the opinion of Optimus Futures. Day trading futures is as much a mindset as it is a discipline. Developing day trading skills is as much a mental game as it is a matter of accumulating knowledge. Day traders respect “risk” and know it as intimately as possible, like a partner (whether it’s coming from the market, from oneself, or out of pure randomness). Day trading is an advanced topic, especially when it comes to day trading futures (leveraged instruments that are inherently riskier than most non-leveraged assets). You should definitely know something about…
Excellent article once more.
After trying several trading approaches, I also come to the conclusion that setups are fundamental when it comes to trading. That must be, from my perspective, the main trigger to take a position. For my part I use an indicator as confirmation. Often a moving average.
Of course, the size of your trading account determines the size of the positions taken depending on the level of risk you are willing to take. It’s money management.
In terms of time frame, I am more inclined to use the short term on futures for day trading, i.e. 1, 2 or 3 minutes. A different opinion on the subject?
My favorite is ES1, it’s the one with the most liquidity. This is important for me being based in the South Pacific in a time zone close to that of Australia.
I work with a stop, but one of my biggest challenges is when to take a profit.
I see two possibilities:
Either set a goal and exit the position, even if the latter continues to evolve in the direction of the initial trade … the question then arises … how to set the objective, according to what criteria?
Either use the same technique as the entry, a set up, a break in support or resistance, oblique or horizontal, confirmed by an indicator (typically a divergence).
Matt if you have any comments on this topic, I will appreciate it.
Second biggest challenge is concentration. I find that getting older I have more difficulties to stay focus on my screen. Any advise to get better at it would be most appreciated.
Also, it can be a silly question, because it depends on the size of your account, the stops and therefore the risk that one is willing to take, but typically what is the size of the positions of an independent trader making day trading on ES1? Or let me rephrase the question, based on your experience, what is the maximum position size that an independent trader can take with reasonable risk, if at all he has a large enough trading account?
I know that at certain times of the day the liquidity is not the same in the market. It’s less liquid when Asia starts trading, more liquid when London opens, and much more liquid when America wakes up. But for me being in an Asian time zone it can be difficult to trade during the US market hours.
Your thoughts on the subject would be useful to me, if you can help.
In any case, thanks to Optimus for these exchanges. Great work.
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Thank you for your kind words.
Using chart patterns as your setup and the technical as triggers, it sounds like a legitimate way to build a methodology.
The size factor is #1, in my opinion. It does not matter how good your method is, how disciplined you are, or any other factor if you do not trade the right size for your account and your mental tolerance.
Glad to help. Please keep in mind this is just my opinion.
First, I believe that beginner should work with set targets not “see how it goes” and “Grab as much as I can”. I think that the trailing stops, or any other technique besides a fixed target, should come later for a trader, could even be a few years. This is because it takes time to realize the dynamics and movements of the markets and adopt a technique based on volatility rather than personal needs. Beginners tighten stops way too fast and in a hurry.
Now, let’s get to the point of profit target. You have your Setup and Trigger; now you need to back on the charts as far as you can and see the average profit for your method. The past could hint what to expect, and the further back you go, the more scenarios you would understand.
You could discover another scenario where, under certain circumstances ranges, fluctuations volatility, you may need to adjust your stops and your target. The idea is first to look at the number of points the market moves after your trigger. After that, you should look at all other factors such as support, resistance, etc., to refine your exit. I hope it helps.
Espresso in the AM (no sugar), exercise, and the right nutrition. Also, consider the best hours for you to trade, and learn to shut off the screen when necessary.
As much as I want to answer this question, your parameters are too broad, and it depends on one’s experience and individual risk tolerance. However, I am sure your motivation is knowing how to max out the number of contracts and still “stay alive” in trading. Well, here is one wat to look at size: consider the notion value of the contract you trade. Let me give you an example: ES is about $3,300 nowadays, and if you take the point value of the contract ($50), the contract size is $165,000.
So if you have, let’s say $25K, and you trade five contracts, you are trading $825,00($165,000 X 5).
The above should give you a new perspective about leverage and the contract size you are carrying in terms of risk.
You are welcome, and again, we are here to help.
Seems like you understand the concept of liquidity, and I would suggest trading markets that are liquid in your time zone. In addition to ES, consider MDAX and MJNK.
Thanks,
Matt Zimberg
Optimus Futures
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.
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