Why Day Trading Futures Is Not Simple Part IV

Trader Training Room at Axia-Futures with Richard Year 1

Day trading a very specific set up is fine in individual stocks where the best stock can be found that meets all the criteria of the set up. But even then a set up can stop working. Learning new trades and developing new ideas is crucial and even more so when day trading futures, where focus is on a concentrated number of markets and set ups are influenced by current market dynamics. So where do new ideas come from?

Learning to Trade Ideas From Other Traders

Learning someone else’s trade is the simplest way to find ideas – skip the ‘boring’ research, learn a trade, trade it, make money! The problem is that, even with the most well defined strategies, all that is learnt is the criteria to execute and not the mechanics of why it works or where the criteria comes from. Therefore it is almost impossible to recognise when a trade isn’t working until it starts costing money and even then the belief the strategy will start working again is hard to get away from.

Day Trading Futures With Your Own Ideas

Learning to trade your own ideas is the forgotten or dismissed part of trading; either because it is time consuming, less exciting or because of not knowing where to start. But the rewards are a full understanding of your trade, where it is best used, when you can trade bigger size and when it is showing signs of not working or need adapting.

The key to developing new trade ideas is a clear process for doing so: gaining information, pattern matching, developing criteria, condensing to essential characteristics and then execution. Whilst this may seem initially overwhelming, anyone keeping a trade journal or consistent debrief is doing most of it. Gaining information is done by objectively noting down what has happened on the day – day type, where the market sped up or slowed down, technical patterns, current market direction. This is the kind of information taken in during morning preparation, by doing it in a debrief it allows the action to be reviewed and patterns to be more easily spotted and remembered leading to the ability to pattern match. Take the example below by noting down what happened and where a strategy can emerge to play a reversal when compared to similar type moves.

Bund reversal trade
Objective Notation of Trade

The key to developing a strategy is to compare similar patterns and extract the essential criteria: no continuation block after a steady drop, initiative out of the block, pull back and then drift higher. This allows criteria to be created to take the trade. The real learning to trade your trade comes in condensing the specific pieces of action you expect to see – this the part you can’t define when trading someone else’s trade. What exactly will get you in and what will enable you to have greater conviction on the trade? In the video below I explain one of the elements of entering the above ‘block reversal’ type trade, this detailed understanding of a trade is what enables conviction to be heightened and size to be increased.

Learning how to develop new trades via a well defined process is integral to your progress as a trader and for that reason it forms an essential part of our Career Training Course. To learn more about day trading futures you can browse our Trader ‚ÄčTraining courses and our flagship 8 Week Career Trading Course which can be attended live on our London Trading Floor or virtually from home as an online trading course.


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Written by Richard Bailey

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