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Trader's Tip

One of the best ways to prepare for successful opportunities in the futures markets is to follow a disciplined trading plan with rules and protocol for trade entries and exits.
- Mr. Chris Morse |
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Special Message from Our Author

Today's Featured Article

When trading futures it is important to fully appreciate that the trend is your friend. The markets trend about 30% of the time. If one is following just one or two markets, she is unlikely to string together winning year after winning year with any consistency. However, when following a diversified portfolio across different markets and sectors the trader has many more trend trading opportunities. In fact, the trader's likelihood of being exposed to major futures market trends goes up exponentially.
One of the best ways to prepare for successful opportunities in the futures markets is to follow a disciplined trading plan with rules and protocol for trade entries and exits. Also, it is imperative to follow a diversified and consistent set of various futures markets and sectors. Draw from as many market sectors as possible to gain access to the successful trends each year; grains, metals, fuels, currencies, softs and meats.
If you want excellent diversification, get a complimentary demonstration of the TradeThink trading system by going here. The market names stay the same, but the face of the trend will vary from market move to market move.
For this illustration I will use four types of trends. - Up/Down - There are times when the markets will go almost straight up and then fail to follow through, then comes a reversal move even more rapidly back down.
- Channel
- Often the market price action will trade in a range; looking to break out several times until finally the big trend comes (many traders like range trading for this reason). Imo, range trading is akin to selling out of the money options and trying to use the odds in your favor that the options will expire worthless or that the range will just go on and on. These strategies will work for awhile, but as soon as the big move happens one often becomes whipped out (usually since the trader was increasing position size until that fateful day).
- Stair Step
- One of my favorite trends is the "stair step trend" which is when a market will make a move, consolidate, continue the move and repeat.
- Bell - The bell shape trend which will look like (for a long position) on the way up a nice left side bell shape curve and on the way down will look like the right and down side of a bell curve. With bell trends you can typically capture part of the upside and the downside move.
The up/down and channel trends are problematic for most trend traders unless you can utilize an approach to keep some of the profits of the up/down trend from turning the winning profits into losing trades. With the channel trends it is important to not get whipsawed too often. The "stair step" and "bell" trends are more amicable to the trend follower.
A trading system like TradeThink can show you how to take advantage of these different trends, go here for a complimentary demonstration. |
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Currently TradeThink is in four trades and flat six from its ten market starter pro portfolio. Let's take a look at the trades TradeThink Pro is in.
Stair Step - British Pound March 2010 contract. TradeThink Pro signaled to go short the British Pound on February 1, 2010 at 1.5909.
 If you cannot view the British Pound chart,
go here. As you can see from the British Pound trade above; Think Pro signaled to go short on 2/1/10 at 1.5909 and closed on 3/1/10 at 1.5008. This is currently a 901 point move for $5,631.25 per contract.
Stair Step - Euro Currency March 2010 contract. TradeThink Pro signaled to go short the Euro Currency on January 20, 2010 at 1.4216.
 If you cannot view the Euro Currency chart,
go here. As you can see from the Euro Currency trade above; Think Pro signaled to go short on 1/20/10 at 1.4216 and closed on 3/1/10 at 1.3575. This is currently a 641 point move for $8,012.50 per contract.
For a complimentary demonstration of how TradeThink works click this link. |
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Stair Step - US Dollar Index March 2010 contract. TradeThink Pro signaled to go long the US Dollar Index on January 21, 2010 at 78.76.
 If you cannot view the US Dollar Index chart,
go here. As you can see from the US Dollar Index trade above; Think Pro signaled to go long on 1/21/10 at 78.76 and closed on 3/1/10 at 80.71. This is currently 195 point move for $1,950 per contract.
Choppy - Wheat May 2010 contract. TradeThink Pro signaled to go short Wheat on February 19, 2010 at 509.
 If you cannot view the Wheat chart,
go here. As you can see from the Wheat trade above; Think Pro signaled to go short on 2/19/10 at 509 and closed on 3/1/10 at 516 3/4. This is currently a -7.75 point move for -$387.50 per contract. Notice how our strategy has only signaled this trade one time during this entire chop and is not getting constantly whipsawed.
As you can see there are different types of trends in different markets at different times. Clearly it makes sense to follow a diversified portfolio. Had one just been following wheat, things are not profitable, but by following multiple diversified markets things start to come together for the trend trader. |
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About the Author

| Chris Morse
is the President and Developer for Trade Think, Inc. He has been involved in the development of trading strategies for nearly ten years. Mr. Morse developed a very robust futures trading system, which is in private use at one of the largest and most established FCM's in the world and has earned sizable returns over the last 4 years. Mr. Morse has been interviewed by Active Trader Magazine and given many Key Note speeches internationally on the subject of futures trading systems. Mr. Morse is a frequent contributor for FutureSouce's Fast Break
Newsletters; Market Overview and the Education Edition. Mr. Morse focuses his time on his family, sailing and developing trading systems. |
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Special Message from Our Author

Complimentary Evaluation of Trade Think Trade Signals!
TradeThink's proprietary trading algorithm generates precise entry, exit, money management and trailing stop signals for nearly every major commodities market move with uncanny precision for you. Our Trading signals show traders when and where to enter and exit each trade. The signals are 100% automated and easy to view. Get a Complimentary Evaluation.

Disclosure: Commodity trading has large potential rewards, but also large potential risks. You must be aware of the risks and be willing to accept them in order to invest in the futures markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell commodity interests.
Notice: Returns are hypothetical. Hypothetical or simulated performance returns have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since trades have not actually been executed, the results may have under or over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight, no representation is being made that any account will or is likely to achieve profits or losses similar to those shown. |
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