Trade Aptitude

Results of Thursday’s Best S&P Futures Turning Points: Buying 5238.00 only offered a 3.50-point scalp. Shorting 5233.00 ran for 45 points. Having a good week? 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 5220.50 stop 5215.75. Short 5216.50 stop 5221.25 if prices falls below and retraces to entry. 

The World Index: (+100/-100) remains at +25 with most major world markets mildly Bullish with low volatility. 

Catalysts: Empire State MFG Index & Import Prices @ 8:30. Industrial Production @ 9:15. UofM Consumer Sentiment @ 10:00. 

Quick Tip: Contract Selection

Unlike the stock market where you have thousands of stocks to choose from, the futures market has dozens of contractsStill, diversification is good. The question becomes which contracts should you trade. Here’s a quick look at filtering for candidates: 

1. Volume. Without adequate volume you’ll experience slippage and not perform as well in the real world. 

2. Margin. Check with your broker and determine whether your account size can afford the margin required. Keep in mind that most brokers will give you more day trading margin than you should use. Keep your per-trade risk to no more than 2% of your account, even if the margin required allows you to trade excess contracts. 

3. Movement. You’re going to make more money with contracts that move. Compare using the same time interval and ATR. Keep in mind that ATR for futures contracts is meaningless for this purpose unless you multiple the ATR by the point value of the contract. That will give you the ATR in dollars the contract is moving and allow you to compare properly.

4. Margin Ratio. Divide the “movement” number you just determined by the required margin. Compare. You’ll quickly see which contracts give you the most “bang for your buck.”

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Trade Fearlessly,

Mike Siewruk

P.S. Forward this blog to your trading buddies. Share in the wealth!


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