Traders are often lured to into the futures markets with a fascination for day trading.
The thought of buying and selling leveraged contracts without overnight risk is appealing to many, but underestimated by most. As a retail commodity broker, I have had the pleasure, and the pain, of watching futures day traders attempt to profit through strategies ranging from scalping, to "position" intra-day trading, which spans several hours.
My observations of the futures markets have led me to the conclusion that day trading is perhaps one of the most difficult strategies to successfully employ. However, for those that have the perseverance to dedicate themselves to the practice, contain the natural ability to eliminate emotions, and have enough experience under their belt, day trading in the futures market might be one of the most potentially lucrative forms of commodity market speculation.
The term day trading can be used to describe an unlimited number of futures trading strategies and approaches that involve buying and selling a commodity contract in the same trading session. Many are system based, meaning that trading signals are executed according to specific technical analysis set ups; others incorporate a trader's instinct. The approach that you take in the futures markets should be dependent on your personality and risk tolerances; not necessarily what has worked for somebody else. Let's face it; there are only about twenty to thirty commonly used technical oscillators available in most trading platforms. If there were absolute magic to any of them more people would have discovered the Holy Grail to futures trading. Rather than expecting a technical indicator or a computer generated oscillator to do the work for you, I believe it to be more productive to properly educate yourself to the risks and the rewards of the commodity markets. This includes the less technical, and thus less talked about, aspects of day trading.
Futures Day Trading is Mental
I believe that becoming a successful day trader in the futures markets come down to instinct and the ability to control emotion. If you have ever been involved in athletics, you have probably heard the adage that performance is 95% mental and only 5% physical. I have found this to be true in trading as well, although instead of being physical trading is technical. Quite simply, it isn't which technical analysis oscillators and indicators you use, it is how you use them. Perhaps more importantly, how you deal with fear and greed that comes with risk exposure in the commodity markets as you are charting your futures trades. Here are a few day trading tips that may aid in the mental preparation.
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