Tuesday, March 29, 2011

Trade The Futures Markets When The Cash Markets Are Most Active

Futures trading is the trading of futures contracts, which allows specific stocks, commodities or such assets to be traded at a pre-determined price “in the future”. NOTE the Quotation marks of “in the future”. Essentially Futures trading is just an auction process where Supply and Demand play an important key role in determining the price of the Contract, just like supply and demand determine the price of houses or oranges in the market.

The E-mini S&P 500 is no exception. It is the main market of the US, the real measure of the world economy, and since I live in EU I can assure that all traders look at it. This is the market where the best traders are playing, so examining it is crucial, knowing your competition Is equally important.

But, how do we assess our competition?

Simply through the Supply and Demand levels that this Market shows on a chart. They can be pretty clear in the Regular Trading Hours which occur from 9 30 am NY time to 4:15 pm NY time. To spot these important levels of supply and demand, one MUST begin an analysis from what the “Long Term Participants” are doing down to the “Short Term Participants” action.

Have you ever looked at the differences it makes a 24 hr chart of the ES vs a RTH chart of the ES?

The chart setting can determine the differences between winning and losing, therefore, I prefer to be where the volume and levels are at its peak, on the Regular Trading Hours. If you have no experience with currencies, you will be amazed at opening a chart of the EUR/DOLLAR and setting it up from 2 am NY time to 5:30 pm NY time, a whole new world of order arrives at your screen.

So be sure to trade the higher volume levels of supply and demand in the “regular trading hours”, or better said, be sure to trade when the majority of other traders are active in the market.

For more information on the Specific plan and strategy to trade futures, go to http://www.futures-trading-how-to.com/

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