forex trading Archives • Futures Day Trading Strategies

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10 Chart Patterns Every Futures Trader Should Know

 

This article on futures trading chart patterns is the opinion of Optimus Futures.

If you want to succeed as a day trader or swing trader, you must know your chart patterns inside out. Since not all chart patterns have the same success rate, it helps to know the most common chart patterns and how to trade around it–meaning, knowing how to manage a trade or take alternative entries (long or short) if a pattern fails. We can help you with the first part.

Here are ten futures trading chart patterns which can help you understand the balance between buyers and sellers in the market. Let’s go over each pattern and explore what it might reveal about the overall market sentiment.

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Stop Trading the P&L! Establishing a Proper Trade Exit Strategy

 

Read the Chart and do not Trade your P & L

The reason many traders fail when it comes to exiting trades is because they focus solely on the money they can potentially lose or win instead of making market-related decisions. This is also called “trading your P&L,” where traders completely detach themselves from their charts and market context and respond only to their account balance and the unrealized profits on their futures trading platform. (P & L stands for Profit and Loss)

Improving Profit Taking & Exiting Trades

Profit-taking or loss, or exiting trades in general, is arguably more important than entry timing because how you exit your trades determines the long-term outcome of your P&L. However, most traders don’t spend much time on developing their trade exit strategies and are often uncertain of even how to exit. This results in emotional trade management driven by impulsive decisions with no clear plan.

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Chart Analysis and News for the Futures Market: Week of 12-04-2016

 

After benefiting from the ‘Trump rally’ for three straight weeks, the markets experienced a slight correction last week across the different asset classes. Friday’s job data showed a mixed picture and doubts over the strength of the labor market persisted. Investors also assessed the likelihood for upcoming rate hikes during 2017, leading to the small turnaround. The following report is the opinion of Optimus Futures.

Technically, the S&P Emini is capped at 2210 and has been trading lower last week. For now, it has found support at the previous resistance at 2180. On a break of that level and additional selling, price could fall back into the range with the bottom at 2110 – however, it is too early to call such a short reversal given the strength we have seen over the past weeks; some fund managers in the US are increasingly bearish, though.

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How to Read Bull and Bear Market Phases – Accumulation, Participation & Distribution

 

Dow Theory is a cornerstone of price analysis and its principles have been time-tested over decades. An understanding of the three market phases and the trend cycle concepts within the Dow Theory can help traders make sense of the way price moves and shed new light on how bull and bear markets are created.

The Dow theory distinguishes between the accumulation phase, which is where the ‘smart money’ starts to accumulate positions very early on, and the public participation phase where the trend has become apparent to the ‘typical investor’ and retail traders. The third distribution phase is the final stage where the market tops and the smart money is unwinding their positions while the average investor is usually still adding to their positions. Let’s now take a closer look at the individual trend phases and what is important to know here.

 

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14 Essential Candlestick Patterns to help you read Charts

 

Candlestick patterns serve as a good visual guide for both day traders and swing traders. You can recognize momentum, change of direction (rejection) and/or price confirmation.  It usually takes time to recognize these patterns, but with a little bit of training and understanding, you can start seeing them in real time trading.

Single Candle Pattern

As we will see, price action traders separate between 1, 2 and 3 candlestick patterns. The 2 and 3 pattern formations are usually an alternation of the 1 candlestick patterns so it’s important that we start here first.

Generally, 2 and 3 candlestick patterns carry more weight because they offer more context in our opinion.

 

Yo-Son and In-Sen

We can also call them “momentum” candles because they are typically large candles without long, or any, wicks. In case of a bullish Yo-Sen, it means that price has rallied all the way from the open until the close of the candle

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