Day Trading Futures

Day trading futures is a great way to make money however you must ensure that you are thoroughly educated about day trading before you begin. There are advantages and disadvantages to day trading futures which are explained in this article. Read this article carefully and decide if day trading this market is for you.

There are advantages to day trading in the futures market. Since there are no positions held overnight, traders can sleep better. There are no open positions to worry about so there will not be any unexpected major losses to wake up to. This is worth noting because very often futures will open at very different prices than they closed at the day before.

Another advantage to day trading in this market is that you will learn a lot quicker. If you practice futures trading once a week, you are making fewer trades. So theoretically, the more trades you place, the more you learn, and the more experience you gain trading futures.

There are also disadvantages to trading futures daily. For instance, commissions can quickly add up per transaction fees. Traders have to be sure that they pay more out in commission than they are making. If this is the case, then they must take another look at their futures trading plan, as well as their trading strategies and make the necessary changes. Additionally, day traders must be extremely disciplined in their approach. They must not only create a trading plan, but they must stick to it. This means they must follow their entry and exit strategies and they must have their emotions in check. Greed and fear are emotions that many day traders come across at some point, if not every day in their trading career, so it is imperative that they know how to deal with these emotions. The most successful traders have a clear understanding of the psychology of trading and those concepts associated with it.

A lot of the time new futures traders enter the market unprepared and too casually. These traders either quickly lose their money to the markets, or they quickly realize that they need to further their trading education before they continue.

There is a lot more to day trading in the futures markets. Continue to read about futures and determine if the market suits you. There is a lot of information available online, as well as online courses that you can take to help.

Market Direction

Candlestick signals have powerful implications. Having somebody else tell you this may not provide the ‘convincing’ many people require. Fortunately, the visual aspects of candlestick signals allows investors to quickly prove to themselves that the signals and patterns have compelling results. Try it yourself. Analyze whether there was signals at the reversals of a trend, both the top and the bottom on past chart activity. Visual analysis will not take very long. Did a bottom occur when the stochastics were in the oversold condition? Were there candlestick  buy signals at the bottom? The same analysis can be done at each peak.

Note how the Dow shows clear evidence of candlestick reversal signals at the tops and bottoms. In this case, the 50 day moving average and a trend channel add additional confirmation at the bottoms. Sell signals, when stochastics are in the overbought conditions, hitting the top of a trend channel, produce good visual evidence the uptrend is over in a downtrend will start.

Day Trading Futures, DOW


Notice the candlestick signals that have occurred in the past few trading days. A Bullish Harami at the end of a large bearish candle when stochastics were just geting into the oversold condition. This was the first piece of evidence that the  selling may have stopped. The Bullish Harami was followed by a Hammer signal. More evidence the bears could not push the market down through the 50 day moving average. Yesterday’s trade confirmed the Bulls had stepped in. However, by the end of the day, the Dow had given back most of its gains, producing an Inverted Hammer signal. This made today’s trading strategy very easy. Bullish confirmation of an Inverted Hammer signal is a positive open. Failure of an up trend would have been witnessing bearish sentiment on the open.
Upon seeing the premarket futures showing strength, confirming the Inverted Hammer signal, allowed for the immediate purchase of stock positions. Knowing what should occur after a candlestick signal permits an investor to act immediately, without hesitation. This is the advantage of understanding the psychology behind the formation of each signal and pattern.

Day Trading Futures, BCRX


Chat session tonight at 8 p.m. ET – We will discuss how to utilize the information built into inverted hammer signals, the confirmation and the stop loss aspects. Also, we will identify which stocks might have the best potential for the next trend move.

Good investing,

The Candlestick Forum Team

Holiday Specials

Click here for details

Website special reflects current newsletter. If you are reading an archived newsletter you will be directed to Current Website Special.

Speak Your Mind