29 July, Daily Pre-Market Report

Our 2nd profit target for AAPL was hit yesterday, I’m moving our stop up to yesterdays low. S&P e minis re-tested 1100 and are bouncing off this important support level as I write this. A close below this level would be bearish and a close above 1119 Tuesdays high would be bullish. EURAUD is setting up for a short play a break below 1.4336 would be the signal.  If you would like to view how we are managing our other positions in our members area  register here for a 14 day guest pass to the GT members area.

Futures Day Trading

Futures day trading is a very popular form of trading, I suggest before you start “day trading” you have a clear understanding of what it means to trade futures. In today’s blog we’ll discuss what it means to be a day trader as well as the different types of futures markets you can trade.

Futures day trading involves the buying and selling of a financial instrument within one trading day. What this means is that the day trader does not keep a trade open overnight and in most cases closes out all trades by the end of the trading day. Futures day trading is similar to day trading stocks except that you don’t actually own anything when trading futures. Instead you are speculating on the future direction of the price of what you are trading. In fact, the terms “buy” and “sell” actually only indicate the direction in which you expect the futures prices will go. Day traders study and use techniques associated with technical analysis when futures day trading.

Futures contracts are used when futures day trading and they are contracts between two parties in which you have the right to buy or sell an underlying asset within a particular period of time. The majority of futures contracts don’t actually result in actual physical delivery of a commodity. When day trading futures you can trade commodities, currencies, and indexes in interest rates. We explain these below.

Indexes and Interest rates – one of the most highly traded index futures contracts is the S&P 500 index futures contract. Futures contracts on interest rates are also extremely popular contracts and investors use many timing strategies to trade indexes and interest rates. My favourite futures day trading market is S&P 500 index e minis, if you are new to trading futures, I suggest you start with the Dow Jones index e mini contract, it is a $5 contract so you should be able to trade this with a smaller account.

Commodities – these are physical products whose value is determined mostly by supply and demand. Commodities include items such as Corn, Crude, Gold, Nat Gas and more. They trade in a centralized market and investors attempt to predict whether or not prices will rise or fall by a determined date in time. My favourite futures day trading markets for commodities are Gold, Soy Beans and Crude. Gold and Crude are widely traded and less susceptible to slippage, although it does happen when these markets are volatile. I suggest not to trade Soy Beans if you are a novice trader as this market can be very volatile and it takes some getting used to.

Currency – also known as forex, currency is traded like commodities but on a currency exchange. The price of currency is also speculated as to whether or not the price will rise or fall in the future. Foreign exchange trading, as it is often referred to, is the buying and selling of currencies. These include currencies such as the US dollar, the Japanese yen, or the Euro

If you would like to see how we trade futures on a daily basis in our members area register here for a 14 day guest pass to the GT members area.

Gold

As the chart below shows Gold has clearly broken a long term trend-line. We have been bullish of Gold for two years, we now have a small “swing” short position which we took when it broke out of the box at 1175 yesterday. It could take weeks or even months for the bulls to take control again as they have several months of strong overhead resistance to overcome.

Below is a daily chart for Comex Gold Futures August Contract

28 July, Daily Pre-Market Report

As discussed yesterday we bought some in the money Call Options for AAPL. After a gap opening we initiated the trade and took some profits at 262.46 and 264 at the close. I also review S&P e mini futures which had a neutral day after 3 strong bullish the days, I’m still bullish as long as they can stay above 1100 this week.  If you would like to view how we are managing our other positions in our members area  register here for a 14 day guest pass to the GT members area.

Futures Trading for Beginners Part 3

When creating a trading plan for futures, it is important to know which futures market you will trade. I suggest to our novice clients that they keep things simple and select one or two technical setups to implement in the markets and focus on them initially. There are many futures markets to choose from with adequate liquidity for speculation, however when selecting a market it is important to choose one based on your account size, level of experience and investment philosophy. Above all it is important to be flexible; as each futures market can make big moves each year, recently it’s Gold and before that Crude Oil. Being flexible increases a traders probability of catching that big move that can make for a successful year.  

Important Factors When Choosing Markets
History is an important part of successful futures trading. The futures market that has more big trending moves are more likely to have them in the future as well. The following list represents some of the best trending futures markets:

• Currencies – Currency trading is the sector that trends the best. The best currencies to trade are the Euro, the Great British pound and the Japanese Yen. My favourite trending market is currency futures, historically when currencies start a trend they remain in one for a decent period of time.

• Agricultural – Wheat, Corn and Soy Beans being the main markets I trade, I suggest novices start with Corn or Wheat, as Soy Beans can be an extremely volatile market.  

• Energy Futures– Natural gas, heating oil and crude oil futures are all liquid markets to trade. Crude Oil being my favourite as you can choose from two contracts nymex big and mini contracts.
• Metals – Gold, silver and copper are traditionally the most traded commodities. I prefer to trade Gold as it responds more predictably to inter-market correlation, with USD and The S&P 500 Index

For traders with smaller accounts, I suggest trading mini gold futures and currency futures.

Now you have a short list of commodities to trade. The next step is to develop your trading plan. Below I offer some suggestions to get you started
Your rules could include:

 Define your max lose– I appreciate why many traders only focus on “how much they will make” when they first start trading. However knowing which percentage of your capital you are prepared to risk on each individual position will serve you better over time. I suggest 1% to a maximum of 3%.

Set Clear Guidelines – Your trading plan will be more effective, if you are specific and precise. You can always edit it at a later point, however initially select one or two entry setups and one or two futures markets in which you will implement them. This way you will offer yourself the time to learn whether a specific markets suits your personality. Before moving on to try another one

Back Testing – Technology continues to make incredible breakthroughs, you can now successfully test your trading plan. While no two market conditions will ever be the same, it does allow you the chance to reduce unexpected outcomes and understand how your system will perform. Testing will give you the confidence you need to be a successful trader. However never ever load the boat up for one position, if there is a “black swan” day your trading account could be reduced to tears and cobwebs as cash evaporates at an alarming rate, I should know I blew a trading account many years ago and I will never forget it.

 Finally start implement your system with confidence and caution when you’ve identified your target markets, develop, review and test your trading plan. If you would like to see how I manage my personal portfolio on a daily basis in our members area  register here for a 14 day guest pass to the GT members area.