Knowledge For Success in The Futures Market

Whether its the stock market, futures market, or any other trading venue, it takes a lot of knowledge and understanding to become an elite trader or investor.

Many years of learning successful strategies, methods, techniques, and correct trading principles will have a cumulative effect in shaping a great trader or investor. In this article, we will explore some important aspects of what it takes to be successful trading the futures market, in other words, the commodities market.

If you acquire the skill of proper chart reading, and are able to interpret chart patterns at a high level, your rewards will be substantial. Never underestimate the importance of technical analysis.

Patience is a key element for trading success. You need to wait until as many factors as possible are in your favor, before taking a position in the market. This is your edge. I will not take a position until the odds are strongly in my favor.

Money management is absolutely crucial to successful trading or investing. There is nothing more important then keeping all losses small. You must cut your losses short. A great way to do this is by implementing the proper use of stops. Always predetermine the maximum loss you will take before entering a trade. This is a must in the futures market.

One of my favorite strategies is watching a long and narrow price consolidation, and then trading it once you see a bonafide breakout. As an example, lets say cocoa stays in a price range of 1350-1400 for 3 months. I would go long on a close of over 1400. I would sell short on a close of under 1350.

Another important aspect of successful trading or investing is to accurately identify the trend of the market you are interested in. You can use a weekly chart for the long term trend and a daily chart for entering or exiting a position. If you can properly analyze trends, you will make money in the futures market.

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