The #1 piece of advice I give to new brokers and new traders is “Don’t Spec Errors. “ In other words, if you entered a position due to an execution error, just close the position and move on. Do not treat the error as a speculative trade.
When stops are triggered on the CME Globex and ICE systems, they do not become market orders. For US futures electronic markets, Stop Orders are really “Stop with Protection Orders.”
Smart Stops Now that we covered the different types of stops in the previous article, let us focus on determining where to place them. Emotions run high when trading, especially in the faster moving futures markets like Crude Oil. Smart Stops are placed at areas that factor in market noise, thus recognizing the potential for… Read More.
Stops are a very important component to trading. In my opinion, the most destructive mistake when trading is NOT placing a stop. In this article, we will review types of stops. In the next article, we will go over placement techniques, and at the conclusion, you will understand how to implement stops no matter your… Read More.
Many traders discuss reward/risk as they are developing and executing a trade. However, few understand how to keep a positive reward/risk profile throughout the trade. For example, let’s follow Steve. He wants to purchase an E-mini S&P (ES) contract as he believes it will rise in price. He has $50,000 in his account and is… Read More.
This concept involves structuring, or carving, our account into capital segments so we can better manage our risk and gauge the effectiveness of our trading. While there is no one “right” way to accomplish this task, the mere understanding and implementation of this process is important. There are several ways we can structure our trading… Read More.
Margin Requirements Are Not Recommendations Many consider the leverage involved with futures to be a blessing and a curse. There are few investing environments that will give an individual investor as much leverage as they can receive from an FCM and exchange — those responsible for setting margins. For example, one clearing firm we work… Read More.
Determining the “initial stop exit plan” is a very important part of your overall trading strategy. However, it is only that – another small piece in your method of trading. While there are countless ways to approach placing initial stops, we’ll discuss some basic ideas that may help you form your “initial stop exit plan”…. Read More.
Traders are always searching for new tools for analyzing markets. Often times, they believe that the more complicated or exotic the indicator, the better it will work. Technical trading can take years to master. New traders can get scared away once they hear terms like “head and shoulders”, “stochastics”, “Elliot Wave”, and “Fibonacci retracement”. While… Read More.
Stop on Close (aka Stop Close Only) is a risk management technique used by swing and position traders. A Stop on Close is a stop order that uses the closing price as the stop trigger. The Stop on Close is not an intraday stop order actively working at the exchange, it is an end of… Read More.