Futures Trading

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 Many traders prefer trading futures to conventional stock trading

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because you can actually trade long or short.
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 You can buy and/or sell futures contracts, the point being that you do not have
to buy to sell.

 You can simply sell a futures contract when you believe the market is on the

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decline.
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 Benefits of trading futures include the ideas that

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 Traders can benefit from the market regardless of the direction it is trading.
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 Traders do not necessarily have to take delivery of the commodity purchased (in
the case of commodities) but rather can “flatten” the position before the
contract expires (thereby receive a net profit or loss from the time of purchase
to the time it is sold).
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 Traders are attracted to…LEVERAGE

▪ Leverage is the ability to buy a significant quantity of assets with minimum initial
capital outlay (resulting in small price changes that can result in huge profits or losses).
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 Trading psychology is often cited as the major reasons behind trading

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losses, BUT is trading psychology the “real” reason?
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 The harsh reality is that the vast majority of all traders lose.
 Sticking to any trading system for any length of time is nearly impossible
without having confidence in it!

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 Discipline alone is not enough since traders are constantly testing their
“will to succeed” which often destroys their confidence – at which point
they can unfortunately have to say “buh-bye” to their discipline.
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 Is Trading Psychology an Excuse for Losing?

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 Crafty discussions in trading circles have made trading psychology a very
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convenient rationalization and excuse for losing.

 Never mind a lack of work ethic, trading without a plan, or any honest
assessment of the trader’s self-esteem – it’s much easier to blame losses on
trading psychology!
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 Some skeptics believe that trading psychology is created from existing
personality traits - not initially related to trading, but surface from trading.

 The outcome is fear which is the case in doing anything that is perceived as
“risky” – especially without the necessary understanding and skills.
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 Traders should consider being psychologically prepared to trade,

prepared to accept financial risk for something (e.g., the market) over
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which they have no control.
 Trading is more a psychological issue than a methodological one.
Without an understanding of trading psychology, the chances to
overcome the fear, confusion, and despair that is inherent in trading are
pretty much zero. IntradayMoney.in
 After a series of consecutive losses, method becomes replaced with a
feeling (e.g., psychology) that it is impossible to do anything right. This is
a perfect example of why psychology can be more critical than method.
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 So it goes, it is said that trading is 90% psychological and 10%

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methodological.
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 This does not imply that regardless of trading method, a trader that has
control over their emotional issues will be a profitable trader, or vice
versa.

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 The trading method viewpoint suggests that not only are these statistics
not the case, but that trading psychology does not exist.
 Trading method is the sole determinant of profitability through the ability to
understand and maximize its strengths and minimize its weaknesses.
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 The root cause of the trading psychology problem is knowingly taking a

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“bad” (non-method/non setup) trade and then having to accept this
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action/behavior when there is a loss.
 Keep in mind that a losing trade that is a base method trade is NOT a bad
trade because the risk of loss from 'some' percentage of method trades

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has been accepted.
 To reiterate, a “bad” trade is knowingly taking a non-method/non setup
trade, where the trade does not have method components that setup the
trade, or where the trade is done at a 'filter point' specifically established
to eliminate a trade at that given time.
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Imagine going to class for 1 entire year

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and learning the same thing everyday
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Imagine going to class for 2

consecutive years and learning the
same thing

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Could you keep your focus and
determination and go a third year, if
you knew you were going to do the
same thing again?
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Imagine every trading day

repeating the same steps
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only sure shot tips..!

Imagine focusing on the

Imagine following a pre-
details and “little things”
determined set of rules
to continue to get better
each trading day
and better each time

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Imagine not learning
Imagine every trading day
completely “new” trading
executing the same
stuff….but understanding
strategy
“new” stuff from earlier
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1. Mind (Trading Psychology)
2. Method (Technical Analysis & Chart Analysis)
3.
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Money (Risk Control)
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 We have to organize our trading time, efforts

and decisions by self governing our own Mind Method
personal trading as though you have a separate
“Risk Manager” evaluating your performance

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Consider using “Multiple-R” approach to build
Money
discipline, manage our emotions and structure.
 The structure is where traders learn “Self-
Fulfillment” or “Self-Destruction”.
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TRADING TACTICS
SIDEWAYS TRADING PATTERNS
Range bound; Buy on dips &
Sell on tops
www.dailyniftytips.in Consolidation; Buy Breakouts

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& Sell Breakdowns
Congestion; Don’t Trade
RANGE CONSOLIDATION CONGESTION

PHASE III
TRADING TACTICS
Major market uptrend & Phase II match,
Buy bottom of dips & breakouts. TRADING TACTICS
Major market downtrend & Phase II match,
Sell tops of rallies Sell or Sell Short rallies & buy back on dips.

TRADING TACTICS TRADING TACTICS

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Range bound; Buy on dips & Range bound; Buy on dips &
Sell on tops PHASE II OPTIMAL SELLING ZONE OR PHASE IV Sell on tops
Consolidation; Buy Breakouts SHORT SALE Consolidation; Buy Breakouts
& Sell Breakdowns & Sell Breakdowns
Congestion; Don’t Trade Congestion; Don’t Trade

PHASE I
PHASE I

OPTIMAL BUYING ZONE OR

SHORT COVERING
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Morning Mid-day Late day

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Session
only sure shot tips..! Session Session
Gaps
• Fills Failed Patterns Rallies

Opening Range

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Reversal Times Reversal Times
Reversal Times

Volume Decline Volume Return

News Events
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 Each intraday session provides significant and unique trading opportunities
 With time elapsing, price action provides greater “weight-of-evidence” to whether there is
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a trend
only or not
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 Prior day highs & lows, opening range highs & lows as well as swing pivots can be used to
gauge trending price action
 Relative strength/weakness comparisons can be made on the first (2) intraday sessions to
look for higher quality setups

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 Chart patterns, formations and candlestick patterns can be more thoroughly reviewed for
follow thru
 Reversal times, liquidity increases into the trading day close can provide significant levels of
evidence of price action continuation from prior days
 Intraday P&L can be used to change trading parameters such as position size and entry
method (i.e., All-in or Scaling-in) based on performance in each session
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Pre
Morning Mid-day Late day After
Market
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Session
only sure shot tips..! Session Session Hours
Session
Gaps
•Fills Failed Momentum
News Events News Events
Patterns Rallies
Opening
Range

Overnight
Futures
Reversal Times IntradayMoney.in
Reversal
Times
Reversal
Times
Analysis

News Events
Volume Volume Volume
Analysis Volume Declines Returns Declines
Increases
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 What does the pre-market direction look like?
 Is there an upper and lower boundary of support and resistance?
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 Is the sure
only price shot
actiontips..!
movement news related?
 What does the direction of the first 3 bars indicate?
 Is there congruency at the open for all four E-mini futures contracts?
 Are the 20ma and 200ma consistent directionally for all E-mini futures?
 Does the “gap pattern” create a compelling pattern?

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 Bull/Bear Traps, Bullish/Bearish Piercing Pattern

 What is the next area of support and resistance?

 Is it gapping over significant pivots, or to congestion?
 Is the gap too excessive to invalidate a favorable reward-to-risk?
 Does it set up a compelling pattern in the first 30 minutes of trading?
 Has it retraced > 50% into the gap?
 Normal Trading Hours/Activity www.intradaymoney.in

Pre
Morning Mid-day Late day After
Market
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Session
only sure shot tips..! Session Session Hours
Session
Gaps
•Fills Failed Momentum
News Events News Events
Patterns Rallies
Opening
Range

Overnight
Futures
Reversal Times IntradayMoney.in
Reversal
Times
Reversal
Times
Analysis

News Events
Volume Volume Volume
Analysis Volume Declines Returns Declines
Increases
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 Not having a “trust-worthy” trading plan  Looking for “Instant Gratification”
 Insufficient trading capital  Having a “Cheapskate Mindset”
 Improper money management or risk management
www.dailyniftytips.in  Not acquiring the proper trading education, tools and

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Lack of patience and discipline software to succeed
 Tunnel vision in reference to market conditions  Like fast-paced, risk-filled environment
 Inter-market Analysis  Trading from a mindset of “greed” or “desperation”
 Over-trading  Overconfidence

 Too many markets at one time – not enough trades  Have a very demanding ego that unfortunately distorts
setups one’s rational thinking

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 Excessive trades – trying to recoup losses  Emotions empower your actions
 Holding on to losing trades  Remaining in position to avoid admitting wrong
 Hoping and Praying the markets will turn in your favor  Relying on “Sense of Timing” or “Trading Intuition”
 Countertrend Trading  Trying to regain loses…Revenge Mindset

 Catching “The falling Knife”

 Trying to Pick “Tops” and/or “Bottoms”

 High expectations of “Winnings” and “Profits”
Frustration comes when
expectations aren’t met by reality.
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Negative emotions Positive emotions Call To Actions

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• Discomfort
only sure shot tips..! • Curiosity • Jump back in after
• Fear • Determination a loss or gain
• Anger • Flexibility • Misuse of leverage
• Greed • Confidence • Absence of money
• Frustration • Appreciation management
techniques
• Disappointment • Gratitude

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• Search for “holy
• Regret
grail”
• Inadequacy
• Emotional
• Overwhelmed Management
• Loneliness • Stress Resolution
• Insecurity
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 Trading psychology is often broken up into
three (3) components

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Is required and should often take precedence
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because it emphasizes that a trader is
Discipline
following their trading plan (system) and Confidence

incorporating risk and money management.

 Series of loses often tempt traders lacking
Consistency
“solid confidence” in their trading plan to


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deviate and second-guess their system.
Remember the “natural impulse” to avoid
additional loses (pain) often can reach a level
unbearable for some traders Trading Psychology
 Hence, we want to rely on price action as a
“reality” and gauge for “expectations”
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High & High & High
High High
Close Open

Close Open
Openwww.dailyniftytips.in
&Close
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Close
Open

Low & Low & Low

Low Low
Open Close

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Reversal Bars
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 The best way to establish confidence Trading
Plan

within your trading psychology is to

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have asure
only good gauge
shot of what to expect
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 By using a trading plan (system),
traders can analyze their performance Confidence Consistency
and metrics and quickly make
adjustments as needed

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Performance and metrics provide a
realistic view into the opportunities and Metrics

constraints of the trading system

 This is the best habit a trader can Re-enforces that trading is an “Art”
establish to create consistency first and then “Science” can be used
to enhance it.
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Reference for Demeanor of A Trader and Mindset

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 Identify strategies and trading styles that provide high odds trading
For example, using multiple timeframes and trading in the trend direction
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increases your odds of a favorable trade
 Determine which trading style fits your demeanor
 Low % of winning trades (Being Wrong more…)

 High % of winning trades (Being Right more…)



style chosen.
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Understand the requirements for having a profitable system or strategy for the

 Low % of winning trades
 Implies significant # loosing trades
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 Requires
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because of the # of them
 Requires very tight Stops & bigger profit
Targets
 Usually suggest longer holding periods for
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winning trades to capture bigger $ from
the trend
 Requires Entries in the early phase of trend
 Requires focusing on increasing your
reward-to-risk ratio to improve the quality
of trades for bigger winning trades
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 High % of winning trades
 Implies small # loosing trades
 Less emphasis loosing trade $ because of
the # of them & more emphasis on
maintaining # winning trades
 Usually suggest shorter holding periods for
winning trades
 Less emphasis on reward-to-risk ratio &
more emphasis on quality of trades
 Requires using multiple timeframes and
trading in the trend direction to increase
your odds of high # of favorable trades; or
 Trading less frequent