{"id":8804,"date":"2021-02-02T16:28:51","date_gmt":"2021-02-02T21:28:51","guid":{"rendered":"https:\/\/optimusfutures.com\/tradeblog\/?p=8804"},"modified":"2021-02-02T16:28:51","modified_gmt":"2021-02-02T21:28:51","slug":"futures-trading-positions-guide","status":"publish","type":"post","link":"https:\/\/optimusfutures.com\/blog\/futures-trading-positions-guide\/","title":{"rendered":"The Art Of Taking A Trading Position – A Complete Guide On How To Enter, Manage And Exit A Futures Position"},"content":{"rendered":"

This article on futures trading position is the opinion of Optimus Futures.<\/p>\n

\"futures<\/a><\/p>\n

“Tell Me and I Will Forget; Show Me and I May Remember; Involve<\/strong> Me and I Will<\/strong> Understand<\/strong>.” Confucius (ca 450 BC)<\/p><\/blockquote>\n

This article is about the art of taking a trading position<\/em>. The instruction here is limited in terms of its ability to \u201cinvolve\u201d you in the process, as the Confucius quote says above. The best it can do is to walk you through the process. This is just one<\/em> way to approach taking a position. One way that it might work for certain traders.<\/p>\n

Hopefully, it will be informative, covering all of the bases. Ultimately, you can take what you learn here and adapt it to your own trading approach. After all, successful trading is about finding an approach that comes from<\/em> or resonates with<\/em> you; and one that matches your knowledge, capabilities, and capital resources as well.<\/p>\n

Futures Trading Position: January, Dow Jones Futures (YM)<\/strong><\/h2>\n

Part 1: Trade Origination and Thought Process<\/h2>\n

CHECK THE FORMATION<\/strong><\/h4>\n

On January 26,\u00a0 you see a potential double top<\/strong> forming with a slight divergence in the relative strength index (RSI)<\/strong>.<\/p>\n

\"Trade<\/a><\/p>\n

Should you take the trade based on these fundamental signals alone? Perhaps, but you don\u2019t like to rely on technicals only. So, you do a bit more research. Before we get into that, let\u2019s look at the last two bars, yesterday and today.<\/p>\n

\"Futures<\/a><\/p>\n

The first arrow shows a candle with strong rejection toward the upside and buying pressure <\/strong>followed by a doji <\/strong>signaling potential indecisiveness or hesitation.<\/p>\n

Might there be enough momentum to break through resistance? Possibly. But considering that the short-term volatility is news-driven, let\u2019s take a look at the bigger picture. Let\u2019s start with the technicals.<\/p>\n

CHECK OVERALL MARKET SENTIMENT<\/strong><\/h4>\n

Here\u2019s what you might use to \u201ctechnically\u201d gauge the overall market:<\/p>\n

    \n
  1. Regional Banks (KRE):<\/strong> shows sentiment regarding local banks<\/em>, the lifeblood of the local economy.<\/li>\n
  2. Semiconductors (SMH): <\/strong>the chipmaker industry is an important leading indicator by virtue of the fact that its production schedule is at least a year ahead.<\/em> If semiconductors ramp up production, it\u2019s because the industry is expecting a bullish year in sales; the opposite reflects bearish sentiment.<\/li>\n
  3. Dow Jones Transportation Index (IYT):<\/strong> represents the transportation of goods across the country. If the business is going well, you\u2019ll see this industry revving up its engines.<\/li>\n
  4. Biotech (IBB): <\/strong>represents high-risk speculation. There is no high-risk speculation when investors are pessimistic.<\/li>\n
  5. Retail (XRT): represents discretionary spending, which tends to pick up when investors feel they have extra money to spend.<\/strong><\/li>\n<\/ol>\n

    \"OVERALL<\/a><\/p>\n

    Why is it that Retail (XRT) is rising while semiconductors (SMH), transportation (IYT), regional banks (KRE), and everything else is sinking?<\/p>\n

    Does this indicate the possibility that investors are getting ahead of themselves–as in \u201cirrational exuberance\u201d<\/strong>? This is a strong indicator, but it isn\u2019t enough.<\/p>\n

    CHECK OVERALL NEWS SENTIMENT<\/strong><\/h4>\n