If you are a short term futures trading who is looking for new markets to trade, take a look at the grain markets. They are liquid and at the right time they can move a good amount in a short time- which can make for good trade opportunities.
Taylor Trading Technique
A basic concept of the Taylor Trading Technique is the use of previous session highs and / or lows to determine what a market is doing in the following session, to anticipate where it is likely to go and to take trades when it does what we anticipate.
Breakout setups are one of my favorite patterns to trade. However, even if you miss a market that has a breakout move session, the increased attention and market activity often creates a good trade setup in the following session as traders chase the previous day move.
Chart patterns that combine breakout setups and gaps can make for good trade opportunities. Tuesday morning I was talking to a client, call him Jim, who was short the November soybean futures. There was a gap from 1332-0 to 1331-4 in the daily chart that hadn’t yet been filled in. Jim thought they might fill in the gap on Tuesday while I thought they might wait at least a day.
The Taylor Trading Technique tells us to anticipate a market to make a directional move for a large percentage of trading days. We anticipate that a Buy day will see the market open near the session low and end up closing near the session high. Knowing this, we look for early session confirmation that the market is trending higher on a Buy day.
Breakout patterns can make for great trade setups. When they occur around significant price levels you can have a good combination of factors to understand and trade the futures markets.
As a broker, clients often say things to me along the lines of “the news / fundamentals are bullish, why is the market going down?” Freeing yourself from this kind of thinking not only can help you from some bad trades, if you take it far enough you can profit from the other traders that think this way.
To paraphrase a paraphrased saying. A failed move often creates a good, sometimes great trade in the opposite direction when the market turns on the traders who caught it heading in the initial direction. This is a good reason to watch a market even when you’re kicking yourself for missing the opportunity a big market move gives you.
Many traders look at price charts in order to get an idea as to what the market has recently done. When I look at a price chart my real focus isn’t to see what it did in the past; past action is only important if it helps you to anticipate what the market is likely to do in the future.
I think it’s human nature to be a contrarian, especially among traders. Sometimes that’s a good thing—life would be boring if we all thought the same thing and there wouldn’t be any markets if everyone agreed on a “fair price”. However, it is healthy for your trading health to know when not to be a contrarian and money can be made by going with the flow.