Becoming a day trader using technical analysis is no easy task. There are dozens of indicators, hundreds of days, and millions of traders. Most of them fail; but, by relying on sound advice from successful traders, you don’t have to. In today’s blog post, we will introduce you to a less well-known market– the E-mini futures market. We’ll also give you great tips on how to win in this market without spending thousands of dollars on various softwares. Lastly, we’ll go over what makes a scalper successful, and how trading in short but intense time frames can allow you to minimize the emotional toll.
Often, new day traders throw themselves in the deep end. They hear about the tens of thousands of dollars someone made in one day and think that that is what makes a successful day trader. They then sign up for a two to three thousand dollar course and buy thousands of dollars worth of software. They sit at their computers for eight hours a day with their three monitors and lose money. Then they repeat this. This is not the life necessary for a successful trader. To achieve your goals, all you need is discipline, a role in a niche market, and patience. The niche market we’ll explore today is a mini futures market– and we’ll also explore essential tips to keep you afloat. But first-
What is the E-Mini Futures market?
E-Mini (global ticker: ES) simply means an electronically traded futures contract (like a regular one) that is only a fraction of the value of a corresponding contract. They are traded in the main indexes, such as the S&P 500 and the NASDAQ 100, but are predominantly on the CME (Chicago Mercantile Exchange). The E-Mini allows traders who are just beginning in the futures market to trade as if they were trading the standard futures. In essence, both their upside and downside are minimized. But when you’re just beginning, this is what you want as you learn the ropes of futures contracts. One main advantage of trading E-Mini is that it offers liquidity, affordability, volatility and low margin rates (active traders can benefit from this). A downside, however, is that the price can move very quickly because of the volatility. Also, there are always less E-mini contracts available because it is a smaller market.
As a day trader, how much should I spend on financial services and indicators?
That’s a simple answer- zero. It is a big misconception that to be a successful trader, you need thousands and thousands of dollars worth of equipment, softwares, etc. The truth is, a trader who knows the market, sticks to his basic metrics, and is consistent with his technical analysis doesn’t need to spend money. In fact, traders who start out should use the free indicators that come with their trading software. For example, two of these indicators that are essential for beginners are the MACD and the EMA. The MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator that plots the relationship between moving averages of two securities. When the MACD is calculated against the EMA (Exponential Moving Average that tracks the average price of a security), a “signal line” is formed. When the MACD crosses above the signal line, buy; when it crosses below the signal line, sell. Other technical indicators are available for free and should guide you in your futures trading endeavours.
What makes a scalper successful?
Scalpers need to be quick, aggressive, and confident. They thrive off small price swings and volatility and accumulate small profits over time. One misconception is that to do this, they sit for the whole day in front of their screens making dozens of trades. The truth is, you only need 1-3 trades per day and you don’t even need to trade five days a week. The key is to have a higher contract load in each trade and to only trade the swings of contracts you’re confident will yield high results. Again, the risk/reward ratio is essential here. Take risks that are worth the reward and have the potential to produce higher outcomes. By doing this, you lessen the emotional investment because you’re simply not overthinking more trades.
The ES market is great for new traders; they can get their feet wet in the futures market without going all in and risking a lot of their money. This market is volatile and prices move quickly, so those with a sharp eye and who trust their data will succeed here. As a beginner, you only need a few indicators– and they’re often free with your broker. You don’t need to spend all day in front of your screen trading stocks if you rely on your technical indicators and trust the price movements.