Day Trading Futures
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Daily Trading Log
When day trading futures, you enter and exit all positions in the same day -
never carrying a position overnight. Since the overnight moves of the market
are difficult to predict, many traders avoid risk by day trading.
Ironically, the public believes that day trading is the riskiest way to
THIS IS A MYTH !
Some traders day trading futures, make 1 to 3 trades per day, trying to
catch the major intraday moves. Others trade in-and-out very frequently,
trying to “scalp” a small profit on each trade. (My style uses a unique
blend of these two strategies.)
For those day trading futures, the Emini Stock Index Futures have become the
most popular day trading vehicle because of their liquidity, leverage, and
the ease of trading them online. You can go short or long with equal ease.
The time relationship of the eminis (and the “big contracts”) to the cash
indices is important to understand. Let’s start from square one.
The S&P 500 stock index (the cash index, symbol SPX) is central to
trading futures. It has an Exchange Traded Fund (the “Spyders,” symbol SPY)
that trades like a stock. The price of the
S&P 500 cash index moves up and down with the 500 stocks that make up the
index. The SPYders follow the S&P 500 cash index very closely. You can trade
Exchange Traded Funds such as the SPY (and QQQQ for the Nasdaq 100) online
from home. But for day traders, they are not as favorable as
The concept of “futures” is a little confusing, but it boils down to this:
the financial industry has turned the S&P 500 cash index into a “contract”
that trades like a stock. The contract (or futures contract) has a price
that goes up and down from one moment to the next. It has a chart that looks
just like stock chart, and you can make money with it by buying low and
selling high, or vice versa. That’s a complicated as it needs to be for now.
The “big contracts” or SP Maxis were invented first and they’re still
around. With the big contracts, a lot of money changes hands. When the price
of the SP Maxis moves one point, $250 per contract moves with it. The SP
Maxi contracts trade in a literal “pit” where the traders, called “locals,”
shout at each other, buying and selling for everyone who wants a piece of
The locals are not public servants, of course, they make money for their own
accounts. They have the advantage of being able to read each other’s body
language and the tone of the other trader’s voices. They see what the
strongest traders in the pit are doing. They have several other advantages
too, their costs per trade are tiny compared to the public’s commissions.
The “locals” aren’t born as professional traders though, they learn to trade
like everyone else, except they have a huge advantage in learning as well
because they learn to scalp first! Their instant access and low commissions
make this possible compared to others, but those day trading futures online
can take advantage of scalping trades as well.
Scalping is basically limiting your losses to only one or two ticks while
taking any profit you get as you get it. It’s easier than going for several
points per trade, I’ve been using this strategy
day trading futures with
Locals also use the spread (the difference between the bid and ask price),
to grab quick profits from orders that come in on either side of the market.
This makes scalping easier for them.
In the past, all these advantages made it impossible for a “retail” day
trader to be a successful scalper. It was insane to try. And to this day
many traders have the idea that scalping is too difficult for the public
because you have to compete against traders with an unfair advantage.
But all that has changed now. If you follow some simple, yet important
guidelines then you too can be successful scalping and
day trading futures
They took the concept of the Maxi futures contracts and came up with smaller
contracts (the eminis) that move $50.00 per SP point instead of $250.00.
This allows all traders, big and small, to trade the stock index futures.
But even more radically, they set it up so that the smaller contracts (the
eminis) are traded only through computers. This was revolutionary, they
bypassed the pit, taking away the advantage of the “locals,” and leveling
the playing field in a way that has never been done before. And to level the
field even more, retail commission costs fell like a rock. Today, any trader
day trading futures with a small account can pay $4.80 per round turn
(entering and exiting a trade).
This means that scalping is open to the day trading public for the first
time in history. But most people who are day trading futures don’t even
realize where the new advantage really is.
Scalping is one of the keys to making a living day trading futures as I do,
because I follow a simple rule: "Every trade starts out as a scalp until
proven otherwise" .
The SP emini futures became more and more popular and more liquid, breaking
a lot of records along the way.
The SP Maxis futures and the SP emini futures are both derived from the S&P
500 index (symbol SPX), which, as I said, has an ETF that trades like a
stock (symbol SPY).
So the question is - which of these is the leader and which are followers?
Today the emini futures track the Maxi contracts almost tick for tick, with
the emini’s beginning to lead the Maxi’s at times, and also “overshooting”
the Maxis at emotional extremes, such as the at the top of an intraday
Both the SP eminis and the SP Maxis (the futures) lead the S&P 500 cash
index by a variable amount of time, often in the range of a fraction of a
second. Some people call this “the tail wagging the dog,” because the
futures are derivatives of the stock indices, but call it what you want, the
futures are leading the way.
The fact that the futures lead the markets makes their chart patterns more
“pure” and reliable for
support and resistance trading. This makes a huge
difference to me.
I use the stock index futures (the eminis and Maxis) for calculating daily
support and resistance areas, which are the basis of my own trading style –
a style of trading that has paid my bills and built my financial security
for about 30 years now.
I publish my support and resistance levels in the RBI Trader's Updates,
along with my daily trading plan. Since 1996 many professional traders, as
well as some beginners, have subscribed to my work because of its accuracy.
If you are day trading futures and you
want to take your trading to a higher level, or your current trading
strategy lacks consistency, put my 30 + years of trading experience to work
SIGN UP NOW .
There’s never been a better opportunity to turn the corner and become a
The financial markets are risky. Investing is risky. Past performance
does not guarantee future performance. The foregoing has been prepared
solely for informational purposes and is not a solicitation, or an offer
to buy or sell any security. Opinions are based on historical research
and data believed reliable, but there is no guarantee that future
results will be profitable.
We are not advocating trading futures. The prices and contracts in the
TradeStalker's RBI Updates specify a manner in which you could trade. We
occasionally mention the SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets. This is not an
endorsement or recommendation of the SP500 and Nasdaq futures markets.
The risk of loss in futures is substantial. You can lose more than your
original investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.