Making money in futures trading hinges upon how well you walk the fine line between risk and reward. On paper, it sounds easy ― simply cut off losers and let winners ride ― right? Well, as any veteran of the markets will tell you, trade management may be the single most challenging aspect of active… Read more.
Trading Strategies
Understanding Market Correlations
A market correlation is a measure, statistical or observational that identifies a positive or negative link between the pricing of multiple assets. These relationships are used to determine the direction and relative strength of evolving price action. Currencies, commodities, debt and equities include many interrelated markets, featuring distinct correlations between select securities. Trading correlations is a… Read more.
Open Interest vs. Volume Trading
Over the course of each calendar year, the Financial Information Association (FIA) measures and reports on the activity present in the global derivatives markets. As an example, the FIA issued a release for year-end 2018 stating that aggregate futures and options volume amounted to 30.28 billion contracts and open interest levels stood at 827.6 million.… Read more.
Advanced Techniques for Futures Trading: Trailing Stop Strategy
Futures and stock trading are two very different disciplines. While it’s true that the ultimate goal of each endeavor is to buy low and sell high (or vice-versa), the mechanisms by which this is accomplished vary. Nonetheless, no matter the market or security in question, the objective of all advanced trading strategies is simple ―… Read more.
Advanced Techniques for Futures Trading: Bracket Orders
Among the many advanced trading strategies that traders employ in the futures markets, bracket orders are among the most powerful. Brackets promote trade-related efficiency, streamlining the process of entering and exiting the market. Whether you’re a commodity, bond, or currency trader, the functionality of bracket orders can help take the guesswork out of managing your open… Read more.
Futures Trading Strategies: Price Discovery
If you have ever bought a house or bartered for a loaf of bread at a farmer’s market, then you have participated in the process of price discovery. Essentially, anything with palpable value has a point at which it is readily exchanged for a premium. Price discovery is the mechanism by which this premium, fee,… Read more.
Advanced Techniques for Futures Trading: Order Carry Over vs. End of Day Cancellation
The minutes preceding the closing bell are a time of intense deliberation for traders who are managing open positions. For intraday and day traders, the decision is simple because going home net-flat is the name of the game. However, when implementing multi-session advanced trading strategies, each market closure presents a unique collection of assumed risks… Read more.
Advanced Techniques for Futures Trading: How Slippage Can Compromise a Strong Strategy
No matter how seasoned or talented a futures trader may be, chances are slippage will have been a formidable adversary at one time or another. To minimize the impact of slippage, traders use two common strategies ― streamlining technological infrastructure and developing advanced trading strategies ― but are there other ways to win the war against… Read more.
Are the Futures Markets Efficient?
According to the Efficient Market Hypothesis (EMH), the financial markets are methodical systems specializing in the valuation of assets. Under EMH, the current price of a security is a reflection of all available and relevant information. Supporters of the theory believe asset pricing is a product of random walk functionality, with the market being “always right.”… Read more.
Best Futures Trading Strategies: 6 Ways to Minimize the Impact of Market Slippage
When it comes to the various hidden costs of futures trading, slippage is the undisputed king of the hill. When a market or stop-market order is filled at an inopportune moment, it can be a drain on both your trading account and patience. Aside from detailed plans governing position management and market entry and exit, some… Read more.