RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

If you are a commodity trader constructing your own trading ideas, you have many points to consider. What market should you trade? Do you want to be a buyer or seller? Do you want overnight exposure or risk while you are sleeping? Do you want to be in and out  the same day, going home flat without a position?

There are positives and negatives to all trading approaches. If you are considering a short term trade, you need to determine a good entry level, calculate your potential profit  level, and  determine your risk tolerance level. Your trades should  have at least  a 3:1 risk to reward level. If you’re  using charts, you want to BUY a support level near the current market price. If you want to SELL the market, you should sell a resistance number near the current market price. Your risk level, or protective stop can be determined by dollars you feel comfortable risking OR chart patterns you have interpreted. Either way, you should definitely trade with a “stop”. Short term trades tend to go WITH the trend or they can go COUNTER TREND. Ideally, a winning position allows you to change your protective stop in order to lock in trading profits. Day trades have a shorter time horizon to perform, and require market volatility to be activated and consummated. One must adjust expectations accordingly!

Susan Green