Developing Futures Trading Strategies

Trading futures can either make a person significant profits or significant losses, it all depends to the futures trading strategies put into place. Futures trading strategies help determine the success of a trader, because without them, a trader is simply buying and selling based on no analytical research. Essentially developing futures trading strategies is the difference between success and failure, unless a trader happens to be exceedingly likely but would you rather risk being lucky or be certain that your strategy will make you money over time.

Each trader is unique and thus each trader tends to develop different futures trading strategies. There is no right or wrong strategy because if there were everybody would be making money using the ‘right’ strategy. However once a trader gets a feel for a market over time they can begin to develop a strategy that works for them and as long as it works for you personally then nothing else matters.

At the heart of futures trading strategies are the indicators that help form the basis of market analysis and determine whether it is a good time to enter or exit the market. There are a whole range of indicators available to the trader preparing their futures trading strategies and the key is to test out as many as possible to find out which indicators you find easy to analyze, which indicators appear to work, which are the most effective and ultimately to discover the purpose of each indicator. Once a trader has successfully tested out the available indicators they can begin to formulate futures trading strategies.

In order to develop successful futures trading strategies, traders tend to find out which indicators work well in conjunction with one another. The best futures trading strategies usually combine three to four indicators because any less and the analysis is deemed to be too accurate, while any more and the analysis can become confused and contradictory. It is also important to choose indicators which measure different things, for example some indicators measure momentum, while some measure volatility and others measure price movement. The best advice any trader can receive is to mess around and try new things because only through experimentation will they successfully land upon working futures trading strategies.

When considering futures trading strategies, it is recommended that traders consider some of the following indicators. Bollinger bands are one of the most reliable indicators around and they measure the volatility of a security based on its history. Bollinger bands are also capable of providing accurate trading signals such as price breakouts. Another popular but simpler form of indicator are the stochastic charts. These measure the volume of a security and determine when a security is oversold or overbought. Once this is indicated it is often a strong signal of a price change. Experimenting with the indicators and discovering which of them work well together, more often than not, is the key to successful futures trading strategies.