Key Points For Futures Trading: Pay Attention To Market Dynamics, Master Operating Skills, And Do Risk Management

Many friends who are new to futures often encounter a difficult problem, that is, although they have identified the general direction, they become hesitant when placing orders. The final result is that they either buy at a short-term high point or sell out the market that is about to start.

This is actually not a matter of judgment, but the lack of a clear set of rules for the execution of buying and selling points.

The futures market fluctuates quickly and has high leverage, so every entry and exit needs to have a basis.

In today's article, we will talk about a few tips that can be directly applied to trading from a practical perspective, so as to help you transform that vague feeling into specific operations.

Look at the big cycle first, then decide on the small direction

Many traders are accustomed to hurriedly placing orders after opening the one-minute or five-minute charts. However, in the futures market, doing so can easily cause them to be eliminated due to short-term fluctuations.

There is a relatively safe approach, which is to first use daily charts or weekly charts to determine the current main trend.

For example, at the daily level, the moving averages are arranged in a long position, and the price is firmly above the 60-day moving average. In this case, your core idea should be to go long as the main direction.

After clarifying the larger direction, then switch to the fifteen-minute or sixty-minute chart pattern to find the specific entry position.

The advantage is that if you do this, the direction of your order will be consistent with the general trend. Even if you encounter short-term reverse fluctuations, you will have confidence in your heart and know clearly that this is just a correction, not a reversal of the trend.

Many old traders often say "Follow the general trend and go against the small trend", which is what they mean.

Use key positions to set buying and selling references

Futures prices are always in a state of fluctuation based on some key positions. If these positions are found, the buying and selling points will naturally and clearly appear, and they will appear in a clear state.

The most basic reference is support level and resistance level .

You can draw a support line by connecting the more obvious early low points, and draw a resistance line by connecting the previous high points.

In an upward trend, the price returns to the vicinity of the support line, and there is a stabilizing signal at that time, such as the K-line closing a long lower shadow, or forming a bullish engulfing pattern. This situation is a buying opportunity worth considering.

On the other hand, when the price climbs close to the early resistance level, it shows a lack of upward momentum, and the K-line shows a trend of closing a long upper shadow line. At this time, you should be alert to the risk of a callback. This is the time to reduce long positions or consider trying to short.

There are some key price integers, and there are also some places where gaps occur, but these are not lines, but places where market sentiment can easily change, and they deserve more attention.

Learn to use Handicap language to capture instant signals

In addition to the K-line chart, Handicap Information also hides many clues to buying and selling points.

The so-called handicap refers to the five levels of buying and selling pending orders and transaction details displayed on the trading software.

If you find that the price is rising at a relatively slow pace, but there is a sudden suppression of large orders above the first selling level and the second selling level, but the buying side has never taken the initiative to accept these large orders, this situation often means that the selling pressure from above is quite heavy, and a callback is likely to occur in the short term.

On the contrary, when the price is falling, the buy one and buy two levels appear to be supported by large orders. At the same time, a continuous large buy order begins to appear in the transaction details to actively sweep up the goods. This situation is usually a signal for the main funds to enter the market to take over the order. You can pay attention to the opportunities contained in the subsequent rebound.

In addition, observe Open interest The changes are also critical.

When the price rises and the position increases simultaneously, it indicates that new funds are entering the market in a positive manner, so the possibility of the trend continuing is relatively high; if the price is rising but the position decreases, it may mean that the bulls are liquidating their positions and evacuating the market, which in turn leads to insufficient motivation for the rise.

Set a trailing stop loss to protect profits

Buying the right position is only the first step, how to get profits safely is the key.

There are many traders who have such a situation. There is an order that originally had a large floating profit, but they did not take the profit stop operation in time, and eventually suffered a loss and exited the market.

This is usually due to a failure to use Trailing Stop .

Generally speaking, trailing stop loss is a situation where as the price moves in a favorable direction, the stop loss position will continue to be adjusted upward (when going long) or downward (when going short).

For example, if you go long at a price of 3,500, the initial stop loss is set at 3,480.

When the price climbs to 3550, the stop loss position can be moved upward to 3530 to ensure that there will be no loss in this transaction.

When the price continues to rise to 3600, the stop loss is moved up to 3580, and so on.

The advantage is that by doing so, you can lock in the profits that have been made, and also give the trend room for continued development, and you will not be easily shaken out due to normal corrections.

Depending on the volatility of the variety, the distance of the trailing stop can be set. For varieties with large fluctuations, the distance can be relaxed a little, while for varieties with small fluctuations, the distance should be tightened.

In the futures market, no one can buy at the lowest point and sell at the highest point for every transaction.

The fundamental nature of trading is a game of probability. What we are pursuing is not the kind of perfect prediction, but a set of logical methods that can be executed repeatedly.

The few tips shared above, first look at the cycle, then find the position, then keep an eye on the market, and finally set a stop loss, are actually all helping you to build your own trading rules.

Whenever you base every transaction on rules rather than temporary feelings, you will find that your mentality will be much more stable and your operations will be more confident.

If you embark on the road of futures trading, there will be no shortcut. However, once you master the correct method, it will at least save you from taking a lot of detours.

I hope these practical experiences can be helpful to your trading.