There is no typical retail trader and everyone is just trying to fight his way through the noise with the goal to succeed in this business and make a living, or even more, from it. Trading futures is unique and very different from most other professions and success in one area of your life will not necessarily translate into good trading. In trading, it is not the smartest person who comes out ahead, but the one who can connect the dots and deal with the untypical facets of trading best.
There is no one size fits all when it comes to trading
Everyone approaches trading education from an angle that he feels is most comfortable for him/her and that also matches his character traits and personality. Some approach it from the traditional, purely technical analysis standpoint, some follow a more statistical and math based approach, and others prefer to create and code automated trading strategies and apply a more quantitative approach.
In our opinion, and from years of experience, those who succeed, are the traders who also understand the nature of financial markets and price behavior beyond just the technical side and who are also able to interpret it in a better manner. Whether there is trading from a huge hedge fund or some sophisticated algorithmic solution, there is a logic and flow in the markets.
The combination of observing charts, measuring and analyzing volume flow and seeing the consequences afterwards will allow you to make your own conclusion as to market behavior. Financial markets are living organisms, moved by human beings, and a trader who understands the connection between volume analysis and the subsequent price movements can often make better assumptions and draw better conclusions about what is happening, and what is likely to happen next.
[bctt tweet=”Is Trading Futures All Mathematical and Technical? #automated trading #trading #futures “]Look beyond – trading is not all black and white
Over time, good traders adapt to the markets they are trading and they learn what a likely extension of price is, interpret an overreaction and/or when to just stay away because the market has not yet decided what to do; keep in mind, not trading when you are not sure about the scenario is a valid option and preservation of capital is a key component in trading.
When successful traders say “The market can’t hold”, it could be a pure reaction to the observation of their chart, indicator or the price action of volume. However, once traders can ‘see’ beyond the price manifestation on their charts and understand the underlying dynamics, they can interpret the context much more efficiently and react to what the market is telling them. This occurs when they have learned to respect the anticipated market behavior that could be completely contrary to what their indicators show them.
What is your reference system? Be flexible and open-minded
Look at it this way: A doctor attended a medical school where he learned a reference system for the human body. He has also learned what tests to conduct in order to confirm his suspicions about the truth of the patient’s case. …”let me send it to the lab”. However, when there is a strong disagreement between actual findings and his feelings, he would at times consult with another expert for an opinion or perform a different test. Namely, he does not only rely on his findings, but also understands that the human mechanism could respond and behave in many manners depending on a large array of factors.
A good doctor does not follow his reference system blindly, but with discretion and knows from experience when it is time to deviate from the traditional path in order to help his patience best.
A good trader that has a good reference system will most likely behave in the same manner. His reference system is his trading rules and the confidence and the trust that he has built from his past performance, but he also knows when to ignore it once he recognizes that the method is not in sync with the markets.
THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES.
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