Day trading futures is not for the weak of heart. The futures markets tend to see a great deal of movement during the course of any given day and, even more than that, a futures trading strategy can be very complex compared to the strategy you’d use to invest in stocks. If you want fast moving, exciting and potentially very profitable trading, however, futures may be calling out to you.
Up or Down You Can Still Profit When Day Trading Futures
If you have a basic knowledge of trading stocks, you know that it’s generally a good thing when the market is going up. This is usually what’s called a bull market. In the futures market, things are a bit more complicated. Futures trading systems allow people to make a profit whether the market is going up or down. The way this works is by using long trades and short trades as is appropriate.
A long trade is a bit more intuitive. You enter into the trade by purchasing a futures contract. When you day trade futures, you can usually purchase quantities as low as one contract. You exit your trade by selling your contract. A short trade is exactly the opposite. The short trade strategy is used when the market is going down and involves selling a contract to enter your trade and purchasing a contract to exit. It’s complicated and, like most things, it’s best to learn trading by taking classes or a webinar to give you the basics on how this all works.
What’s Hard About Day Trading Futures?
It’s not uncommon for a day trader to hold a position in a stock through the close of the trading session. It’s very unusual for anybody trading futures to do so. Most of the time, day trading futures means selling your position by the close of any given trading session. Remember that some of these markets function on a 24-hour basis because of the global nature of business, so you could have a disaster happen while you’re asleep.
Generally speaking, the people who day trade futures are those who are willing to sit in front of their computer for the entire trading session, to constantly look at updated information and to make decisions very quickly and to commit to those decisions when they do make them. If you prefer a more laid-back day trading style, the futures day trading market is probably not for you. If you want the maximum possible amount of activity during the day, however, look at day trading futures and see if it will satisfy the risk-taking part of your personality.
For more from Erich, visit the Indicator Warehouse for additional futures resources and NinjaTrader Indicators.