I the beginning years I have wasted my time trading stock index futures in unprofitable ways. Quantifying the intuitive trades was especially telling to me since I was, in fact, making paper profits only to see them disappear altogether because I was hoping for even more. I have lost my entire account, and I've used to much leverage and zero money management.
Stock index futures are an excellent trading product which separates the winners from the losers in the futures trading. First, we must establish that very few people make money trading futures. The fact is that 90% of the retail traders lose money or scarcely break even. You will not get rich overnight trading futures. By the way, retail trader is someone who doesn't trade for a professional institution and someone who has first access to the futures market.
Winning retail futures traders use money management. Money management is the precise allocation of trading funds. A money management system might only allow a trader to trade 2% of his account in any one trade. Money management is how you don't broke at a speed of light. A money management system will also have limits on the amount of leverage you can use on a given day. It will also account for volatility in the market.
Winning retail stock index futures traders try to remove as many discretionary decisions from their trading as possible. It is said that the top two things so terrible traders and humans do, in general, have difficulty managing is greed and fear. The discretionary trader will change his trading plan based on those two elements. The professional institutions use computers to remove these two items from their trades.
Winning retail traders do not scalp, and they day trade with an open mind. Scalping trading works wonders for the hedge funds with million dollar computers operated my Ivy league mathematicians. I doubt you are an Ivy League mathematician and you probably don't have a supercomputer in your basement. Leave scalping trading to the professionals and the global hedge funds. You are just a guppy swimming in shark infested water. Guess who's for dinner?
Winning futures traders spend most of their time trading higher time frames such as the 5 minute, 15 minute and check their overall trend on the daily chart. They now that it is easier to spot trends on these higher time frames and it is easier for them to earn money trading this way.
In closing, trading stock index futures is not easy. It is a market dominated by global hedge funds and other institutions using supercomputers to trade. Successful retail traders do not go to war with these entities; they just follow their lead by trading trends in the appropriate time frame. Using money management and an easy to follow a system, successful retail traders carve out their niche.
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