Futures contracts are written for a specific, finite time period which means they must be rolled over on a regular basis to remain viable. Some contracts, such as crude oil, expire and need to be rolled monthly. Others, such as cotton or gold, expire and can be rolled only on certain specific months of the year. Expiration dates are specified in the contract and will vary with the asset being traded. Before you buy a contract, you should know what the expiration date is and what your rollover options are. Rollover dates are standardized for contracts of different asset classes and are set by each exchange. It’s important to know and track the specific expiration dates and requirements of futures contracts you purchase so that you don’t miss those all important rollover dates. (more…)

Understanding the risk/reward ratio and incorporating it into your futures trading tactics is essential if you want to succeed as a futures trader. Learning to use the risk/reward ratio can help you minimize your risks and maximize your trading profits. (more…)

In 1982 the futures markets started trading options. The appeal of trading options as opposed to futures is the potential to increase profit — often substantially — while limiting risk.

What is an option on a future? An option gives the buyer the right but does not obligate him to buy or sell a particular futures contract at a set price at any time prior to a specific date. When the option is exercised, it is the actual futures contract that is delivered to settle the transaction, not cash. (more…)

Futures traders use two types of stop losses when they trade: mental stops and physical stops. It’s important to understand the difference between the two and figure out how and when to use them. The purpose of a stop loss is to limit your trade losses. When traders set a stop loss, they are determining the specific price at which they will sell to limit their loss — in other words, their exit strategy. (more…)

Becoming a successful futures trader doesn’t happen overnight. You don’t read a book and Voila! another successful futures trader dazzles Wall Street. It would be nice, but it’s just not going to happen. Once you decide to become a futures trader there’s a lot of hard work ahead. (more…)

Loss is the futures trader’s bugaboo, that annoying little wisp of fear in the back of your subconscious that keeps you from pulling the trigger and achieving success. To succeed as a futures trader you have to squelch thoughts of previous failures and concentrate on learning the new skills that will lead you to success. (more…)

I always tell my new clients: “One of the most important things you can do to improve your trading is to develop specific patterns of behavior.”

Tiger Woods doesn’t plop the ball on the ground and flail away. He follows a regimented and very carefully practiced series of steps to give himself the best possibility of success. Following a pattern of behavior time after time has helped to make him the world’s most successful golfer. (more…)

Curious about futures trading? Want to see how we pros do it? I have prepared a short video that takes you through the start of a typical market day. Click here to watch the action. (more…)

To be a successful futures trader you have to master three essential elements: technique, psychology and money management. Mastery and balance of all three elements is vital to success. In our last post we talked about the importance of money management. Today we’re going to discuss psychology. (more…)