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HTML <html> <head> <title>Futures Trading - Methods to Trade The S&P 500 and E-mini Futures Contracts, PART 4</title> </head> <body> <h1>Futures Trading - Methods to Trade The S&P 500 and E-mini Futures Contracts, PART 4</h1> <div class="info">Author: <a href="author_1_92839.html">Thomas Cathey</a></div><div class="body">After twelve years of watching and day-trading the S&P 500 almost every day, I've come to some conclusions of what works and what doesn't. These methods can also be applied to other markets as well, for both long and short-term trading. <br /> <br /> <br /> We COULD play the trending game and buy break outs, breakdowns and use other “comfortable” ways of chasing the commodity futures market, but our risk goes way up. Probability will catch up with you over time and eat your lunch. In contrast, buying a panic spike can give you a great price buffer for a bounce. Even if the futures price is destined to continue down against you, you can usually get out near even when wrong. <br /> <br /> Don’t try to make a profit on a loser. Just get out with your hide intact, if possible. There are markets when you CAN buy breakouts and do well. They come and go over a few years cycle. Presently in the S&P 500 futures contract, you need to catch the falling daggers and double bottoms without getting sliced. It can be done with practice.<br /> <br /> As a wise trader once said, “you get paid for putting your hand in the fire.” It’s the truth. A comfortable commodity futures trade almost always turns into a loser for me. Buying in the center ranges is for novices. The big moves usually don't start without a panic clean-out first. Just watch the huge volume that comes in as the pros buy up the 1000 lots at the spikes. I feel that unless there is a price spike somewhere recently, the market will not have the power to support a worthwhile move. The commodity pros will usually try to bring the futures market down for another test of the lows to put on their lines.<br /> <br /> It’s interesting to watch the S&P 500 futures market spike the recent low by one-quarter point and then go straight up. You mean to tell me the market was weak two minutes ago when it double-spiked the low and now it is so strong that they are chasing to buy it? No… it was strong all the time. It just took time for the market leaders to decide they got what they could squeeze out at the lowest price and now it’s time to pay up. The new rally then feeds on itself until the other extreme is hit. <br /> <br /> Using hindsight, study the futures contract bid and ask tick volume when a pivot point is reached. You will see large numbers offered on each side, way out of proportion to the rest of the move. Study that pattern for a while and decide what is happening and how you can take advantage of it.<br /> <br /> Well, enough for now. I hope you saw yourself in some of these trading scenarios and learned something. Been there, done that. I've made every mistake a commodity futures and option trader can make and probably a few more. More to come. <br /> <br /> Good Trading!<br /> <br /> <br /> There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.<br /> <br /> <br /> <br /> Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. Get FREE, his complete 44+ lesson, "Thomas Commodity Trading Course" and weekly TimeLine commodity newsletter by visiting: http://www.thomascapitalmanagement.com/commodity/welcome.htm It's brand new and a fun reading "street-wise" e-course. Main site: http://www.ThomasCapitalManagement.com<br /> <br /> <br /> </div> <div class="source">Article Source: <a href="http://www.articlealley.com/article_135257_19.html">http://www.articlealley.com/article_135257_19.html</a></div> <div class="author"> <div class="authorOccupation"><strong>Occupation:</strong> CEO and Money Manager</div> <div class="authorBio">Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course." http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used. </div> <div class="authorUrl"><a href="http://thomascapitalmanagement.com/commodity/welcome.htm" target="_blank">http://thomascapitalmanagement.com/commodity/welcome.htm</a></div></author> </body> </html>
Text Futures Trading - Methods to Trade The S&P 500 and E-mini Futures Contracts, PART 4 Author: Thomas Cathey After twelve years of watching and day-trading the S&P 500 almost every day, I've come to some conclusions of what works and what doesn't. These methods can also be applied to other markets as well, for both long and short-term trading. We COULD play the trending game and buy break outs, breakdowns and use other “comfortable” ways of chasing the commodity futures market, but our risk goes way up. Probability will catch up with you over time and eat your lunch. In contrast, buying a panic spike can give you a great price buffer for a bounce. Even if the futures price is destined to continue down against you, you can usually get out near even when wrong. Don’t try to make a profit on a loser. Just get out with your hide intact, if possible. There are markets when you CAN buy breakouts and do well. They come and go over a few years cycle. Presently in the S&P 500 futures contract, you need to catch the falling daggers and double bottoms without getting sliced. It can be done with practice. As a wise trader once said, “you get paid for putting your hand in the fire.” It’s the truth. A comfortable commodity futures trade almost always turns into a loser for me. Buying in the center ranges is for novices. The big moves usually don't start without a panic clean-out first. Just watch the huge volume that comes in as the pros buy up the 1000 lots at the spikes. I feel that unless there is a price spike somewhere recently, the market will not have the power to support a worthwhile move. The commodity pros will usually try to bring the futures market down for another test of the lows to put on their lines. It’s interesting to watch the S&P 500 futures market spike the recent low by one-quarter point and then go straight up. You mean to tell me the market was weak two minutes ago when it double-spiked the low and now it is so strong that they are chasing to buy it? No… it was strong all the time. It just took time for the market leaders to decide they got what they could squeeze out at the lowest price and now it’s time to pay up. The new rally then feeds on itself until the other extreme is hit. Using hindsight, study the futures contract bid and ask tick volume when a pivot point is reached. You will see large numbers offered on each side, way out of proportion to the rest of the move. Study that pattern for a while and decide what is happening and how you can take advantage of it. Well, enough for now. I hope you saw yourself in some of these trading scenarios and learned something. Been there, done that. I've made every mistake a commodity futures and option trader can make and probably a few more. More to come. Good Trading! There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used. Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. Get FREE, his complete 44+ lesson, "Thomas Commodity Trading Course" and weekly TimeLine commodity newsletter by visiting: http://www.thomascapitalmanagement.com/commodity/welcome.htm It's brand new and a fun reading "street-wise" e-course. Main site: http://www.ThomasCapitalManagement.com Article Source: http://www.articlealley.com/article_135257_19.html About the Author: Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course." http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used. http://thomascapitalmanagement.com/commodity/welcome.htm
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