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The Basics of Equity Futures Trading

March 19, 2021 by Daniels Trading| Futures 101

Enjoying success in futures, options, forex, and equity trading requires a collection of unique attributes. And, although “buying low and selling high” (or vice versa) might sound easy, doing so over the long run is a major accomplishment. In fact, many traders spend huge sums of money and years pursuing this goal before finally quitting the markets altogether.

However, if you become familiar with a few basic tenets of active trading, achieving longevity in the marketplace is possible. Read on to learn tips vital for building a rock-solid trading foundation.

Tip No. 1: Go with the Flow

Although “the trend is your friend” is often considered a cliché, it is still great advice. However, despite the winning track records of countless trend followers, many traders choose to adopt contrarian strategies. After all, if most people lose at trading, isn’t the crowd always wrong?

Unfortunately, it doesn’t work that way. At any given time, the markets feature a vast array of participants; experts, newbies, retail traders, and institutional investors are a few examples. The bottom line is this: If a market is trending, it means that there is disequilibrium between buyers and sellers―nothing more. Who is to say that the so-called “smart money” isn’t driving the trend at the expense of novice, unsophisticated traders?

Ultimately, the market is never wrong. If an asset’s price is trending, then there is a good reason. No matter if you’re talking about forex, futures, or equity trading, there is more money to be made following trends than fighting them.
Read our guide, Basic Training for Futures Traders, and discover 50 of the best tips from experts.

Tip No. 2: Discipline Is Invaluable

If you take a look at the attributes of successful traders and investors, discipline almost always tops the list. Long-run winners understand that impulse kills profits—an issue that stems directly from human psychology.

One of the great things about active trading is that discipline can be learned. If you’re emotional and impulsive in other areas of life (and who isn’t!), it doesn’t have to carry over into your trading. These two basic rules all but eliminate the negative impacts of impulse in the markets:

  • Have a plan: A comprehensive trading plan is a detailed schematic that defines how you’re going to attack the markets. The plan outlines trade selection, open position management, risk management, and money management.
  • Stick to the plan: Once your comprehensive plan is in place, it is imperative that you stick to it―no matter what.

Adhering to a comprehensive plan removes most of the guesswork from forex, futures, and equity trading. Pitfalls such as overtrading, rumor-based trading, chasing losses, and adding to negative positions are eliminated. This creates an ideal mindset for quickly cutting off losers while letting winners run.

Tip No. 3: Patience Is a Virtue

At any given time, a trader may take three actions: buy, sell, or wait. In many cases, choosing to wait creates much more value than placing an ill-advised buy or sell order. As it pertains to active trading, less is often more.

Aside from order execution, patience plays a key role in three crucial areas of successful futures, forex, and equity trading:

  • Finding a strong brokerage service
  • Acquiring enough capital to fund trading operations
  • Achieving your financial objectives

Realistically, it can take weeks, months, or years to save enough money to engage the markets from a position of strength. And, although choosing the right broker may not take as long, it will take some time before everyone is on the same page. Finally, reaching your financial objectives is an ongoing endeavor that will require patience, persistence, and dedication.

Interested in Learning How to Build Your Equity Trading?

The three tips above are essential for anyone interested in becoming a competent trader. Of course, they are only the tip of the iceberg. To learn more about what it takes to become a consistent winner in the markets, check out Daniels Trading’s online guide Basic Training for Futures Traders. In it, you’ll find dozens of tips from experienced brokers on how you can build your equity by trading the markets.
Basic Training for Futures Traders

Filed Under: Futures 101

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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