All In One Top Tips For Futures Traders

  • September 10, 2014
  • Blog

At The Day Trading Mentor I take time to spell out exactly how I trade as a proprietary Futures trader and I really hope it continues to get lots of my students profitable by showing exactly what we do as professionals. But in the interest of giving lots of quick accessible information I wanted to put my top tips into a brief summary.

1/ To rise above mediocrity you don’t only have to do things better than everyone else, you have to do them differently. The main reason I wrote The Day Trading Mentor was because every trainee that came to me asking for a job had studied the same information, Forex trading, technical analysis and other things most generic courses teach. This makes up only a tiny part of how professionals really trade. You need to develop unique strategies looking at markets entirely different to everyone else. This is why you have to become an expert at reading order flow and the Depth of Market. Why do you think all professional trading software has a price ladder? Its what we use to trade and make money.

2/ Risk and reward is very important (nothing new here) but not in the way most people teach it. Having small losers and big winners is great, but it is only one way to trade. If all your losers are 5 ticks and all your winners are 15 ticks it doesn’t mean you will definitely make money. What if you only have 30% winners? Not much of a return. Also the bigger your target the lower your win rate. If you are able to have winners three times the size of your losers and able to win more that 40% of the time I will be amazed. I have run lots of algorithmic studies and the same thing happens, the larger your profit target the lower your number of winners. They offset each other. Again, it doesn’t mean this leads to a lack of trading profits. But psychologically having lots of little losers is very hard to take. It often means having runs of 5-6 losers in a row. That is tough to take. If I have 3 or more losers in a row something has gone wrong and I will often walk away from my desk for an hour or two. I will often have a 1:1 risk reward ratio, I will risk a couple of ticks to make a couple of ticks and aim for a win rate of 70% or 80%. Naturally by having smaller profit targets my win rate goes up anyway which is psychologically easier to manage. There are many other metrics to how much to risk on a trade other than a fixed risk:reward which I talk about on my course. If you find yourself losing discipline with conventional risk reward ratios because your win rate is so low be open to changing it.

3/ Understand the players in the market. As an individual trader you have almost no impact on the market. You are an insignificant minnow swimming among whales. Minnows tend to look at the same entry techniques such as technical indicators etc. The whales don’t. Your aim as a trader is to think like a whale and make sure your entry technique is based on spotting exactly where and when the whales will make their move based on the order flow in the market. When you know how, you can start to see exactly where they are building positions... to the exact price which decreases risk AND increases win rate, the perfect scenario.

4/ Be open to trading more than one market. It is vitally important to have strategies that work in all markets, and this is what I show you on my course. Because markets go through phases when they are trading well and when they are not. I often will have 4-5 markets up simultaneously and looking for my setups in all of them. This way I keep steady money coming in and not reliant on any one market performing well for me. Keep researching new markets! Often the best markets are the ones few people are watching.