How To Be a Better Futures Trader

A good futures trader is someone who can profit in any type of market condition. Traders come from many different backgrounds and lifestyles, but most good futures traders are:

Independent Thinkers

Great futures traders think for themselves. They follow what is happening with world-related events, the markets and other factors to make their trading decisions. In times of collapsing prices, they avoid panic and seek out paths to profit by using bearish strategies. Conversely, they do not get caught up in greed when others are feeling like prices will continue to rise with no inevitable correction. Avoiding this kind of crowd mentality allows the best futures traders to position themselves and profit at the right time. (Check out World’s Greatest Investors to learn more.)

Strong Analysts

To be a good futures trader, you must understand technical and fundamental analysis. The more you are able to apply your understanding, the better you will be at spotting trading opportunities. To do this you want to learn as much as you can about all the different forms of analysis. This will help you gain the knowledge and the experience necessary to make better trades. While this may seem like an enormous task, in reality it’s not. It can be done during your leisure time by reading different books, magazines, visiting futures-related websites, watching the news and by paper (practice) trading. (Read our related article Blending Technical And Fundamental Analysis to learn more about doing this.)

Active Learners

To continue learning new ways of trading, consider going to seminars or other events where you can interact with other traders and learn to accept and use new ideas. This allows you to learn from other traders’ mistakes, meaning that your odds of having more successful trades increase.

Handy with the Tools of Their Trade

When you are trading futures information is key. You want to make sure that you have the ability to place trades 24 hours a day, have real time quotes, software to help you analyze the markets quickly and be able to receive fast executions. With these tools you will be able to react quickly to the changing market conditions.

The Bottom Line

Being a good futures trader means staying informed. Inform yourself about different forms of analysis, different strategies and learn from the mistakes of others. Trust in your well-researched strategy and your diligence will pay off. By following these simple tenets, you are increasing your odds of seeing more profits and fewer losses in these challenging yet rewarding markets. (For additional tips on become a great trader, read our related article Patience Is A Trader’s Virtue.)

Postional Calls For the week (22-12-14)

Technical Analysis of GMR INFRA:

Buy Gmr Infra For A Target Of 21. Stoploss is as per your own risk levels.

Technical Analysis of HINDALCO:

Buy Hindalco For A Target Of 168. Stoploss is as per your own risk levels

Technical analysis Of Bhartiartl :

Buy Bhartiartl for a target of 368. Stoploss as per your risk levels.

DISCLAIMER:

Investing and Trading in any equity,future,gold,silver,forex and crude-oil is risky. My recommendations are technical analysis based on & conceived from charts. The information provided is not guaranteed as to accuracy or completeness. This is my personal view only.

Please consult your adviser or consultant or analysts before investing and/or trading. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by any.

What Causes A Gap & Go?

When a market gaps up out of a trading range it confounds many traders. They do not understand how the price can gap up to a whole new trading range, stay there all day, and even go higher through the day. If the gap is out of an oversold level it is actually a high probability trade entry in most cases as a new trading range is established with the potential of a new uptrend beginning. If a gap up does not fill in the first hour and a half of trading the odds are it will just keep going in that direction for the remainder of the day. Shorting momentum is a bad idea in most cases and shorting a gap up is not a signal in most cases it is an opinion. Gap ups tend to work much better in long term up trends than in bear markets.

What causes these situations? They are generally psychological and not based on fundamental valuation changes:

There are only three positions a trader can hold on a gap up day: Short the position, holding it long, or flat and in cash.

The traders short positions will have a very strong desire to cover their shorts to stop the pain, this will increase as the day goes on. Shorts that have to cover due to being stopped out into the gap creates buying pressure pushing the market up yet farther.

The traders and investors long have no pressure to sell on the gap up day. They are happy with their positions and generally let the winner ride in most cases. There is no pressure coming from long positions being stopped out so this alleviates a lot of selling pressure. Only profit taking from this group creates selling pressure and they are under no real urgent pressure as they see their account grow.

Traders and investors on the side line in cash want in on any pull back. Professionals have under performance of the market as pressure and they need to chase and get positioned right so they have pressure to buy. Traders that are flat want to get on the profit bandwagon so they create even more buying pressure as they enter on any chance they get. Many will give up and chase by the end of the day as well.

This is what causes these types of gap and gos. Long are sitting tight creating no selling pressure, short are having to cover causing buying pressure, and people on the sidelines are wanting in causing dips to be bought and rallies out of weakness. Think about these dynamics next time you think “It just can’t go any higher.”

-Steve Burns...