As we enter a new year, I find these words from the Daily Motivator of particular import to my life as a futures trader. More than anything else, your daily attitude affects your ability to perform successfully as a futures trader. If you stay positively focused, you will be able to assess your position will confidence and pull the trigger at the precise moment to ensure maximum profitability. Allow negativity or self-doubt to eat away at your confidence and you will fail.

Everyone has the occasional bad day. But whether it’s a trading loss or a crisis in your personal life, you can’t let feelings of negativity engulf you. You have to “shake it off,” “get back on the horse, “get back in the game.” Hackneyed though the sayings may be, they carry a large truth. The only way to succeed is to refuse to allow yourself to be beaten down. You have to maintain faith in yourself and confidence in your ability to succeed. You have to stay positive.

There are many ways to renew your positive energy each day. I enjoy a brisk walk or run in the early morning. The exercise recharges my physical batteries and participating in the beginning of a fresh, new day revitalizes my spirit. Exercise, daily motivations and personal affirmations are all ways to recharge your positive energy before you tackle a new trading day. Experiment, discover the activities that keep you positively motivated, and make them a daily part of your life. The more positive energy you can maintain in your life, the better trader you’ll be.

Ralph Marston ends his December 22, 2007 Daily Motivator with a thought I’d like to pass along to all of you:

“Whether it’s through your actions or through your attitude, there’s always a way to introduce a more affirmative perspective into your life. Stay focused on the positive possibilities and life will continue to grow more richly rewarding.”

My best wishes for a brighter, happier, more profitable 2008!

Visit us at Futures Trading Secrets.

What do we mean when we say, pulling the trigger? It’s trader talk for act. It’s the ability to put into action what your indicators are telling you, all you’ve learned about trading, and what you know from studying the market. The tremendous preparation that goes into becoming a successful futures trader is all for naught if you can’t act. Futures trading is all about pulling the trigger. If you don’t play, you can’t win. And futures traders play to win!

The savvy futures trader knows when to pull the trigger. Acting precipitously won’t get you anywhere. You pull the trigger when your chart indicators hit — generally based on the one or three-minute stochastics. When you pull the trigger, there are three ways to time your entry, or aim the bullet. The timing you choose has a lot to do with your risk tolerance.

• Early entry involves some wiggle. You balance the risk of the wiggle against greater potential gains. You want to time an early entry as close as possible to an exhaustion point and just ahead of a reversal. Since you’ll be going against the crowd at the start, expect an early entry to move away from you initially. You can mitigate the risk of an early entry with smaller trades. Early entry generally gives you the greatest possibility for gain.
• Enter in a positive position right at the moment of greatest impact and you’ve hit the sweet spot. The window for this entry is exceedingly small so you have to be on your toes to catch an entry at the sweet spot.
• Late entry carries the greatest risk. Made at exhaustion levels, a late entry can reverse fast and is for those searching for extended leandowns to make a last-ditch push. However, a critical make or break scenario can trigger a profitable late entry. As a rule of thumb, you should limit late entries. Late entries come nearly at the point of reversal. When you enter late, you gamble that the reversal will come later rather than sooner — a risky venture.

There are critical charting indicators that can be used to find the most lucrative entry point and tell you when to profitably pull the trigger. In my Futures Secrets Trading System course, I show you how to set up your system, develop your charts and recognize the indicators that tell you when to most profitably make your entry. I show you everything you need to know so that you can pull the trigger with confidence.

1. Discipline. Discipline is the primary key to successful futures trading. You must have the discipline to learn your system, study it daily and tweak it to perfection. You must have the discipline to keep a trading log that records your trades, as well as the market conditions, thought processes and external influences that affected each trade. Without such a log, you are doomed to repeat your mistakes, rather than learning from them. You must have the discipline to do your homework, to study and keep up with the market, to keep your system current.
2. Patience. You must be patient if your trading system is to be effective. By trading too soon, you negate the value of your trading system. You must exercise patience and give your system time to work.
3. Loss. Loss is part of the trading game. You must be able to take losses in stride and get right back in the game. When your system dictates that a loss be taken, you must have the discipline to follow your system, take the loss quickly, minimize the damage and move on.
4. Perseverance. There are no overnight success stories in futures trading. Success is a matter of building experience, working and perfecting your system, minimizing losses, and capitalizing on small gains. Success, particularly at the beginning, is more often a series of small steps than giant leaps.
5. Confidence. Above all, a futures trader must have confidence in himself. You must have confidence in your system and your ability to work your system — to pull the trigger. Futures trading is a game of risk. You can’t be afraid to act. You must have confidence in your ability to read your system and act. Those who hesitate are doomed to lose in the futures trading game.
6. Flexibility. The market and market forces are ever-changing. You must have the flexibility to change with the times, to make changes to your system so it remains viable and in tune with current market conditions.

Futures traders are players and the game they play is fast paced. To succeed as a futures trader you must have self confidence, discipline, patience and quick reflexes. You need those quick reflexes to keep track of the many variables that affect the futures markets and, therefore, influence your buy/sell decisions. Among the more important variables you must track are:

• Underlying asset. A futures contract is based on an underlying asset. Most often assets are physical commodities. As we’ve discussed in recent posts, commodities are natural resources, so the underlying asset could be crude oil, soy beans, gold, sugar, etc. However, futures contract can be used to trade all sorts of assets, such as interest rates, indexes, currencies, equities, even the weather! Different commodities are traded on different exchanges. For example, the Intercontinental Exchange (ICE) trades crude oil, electricity and natural gas while the Chicago Board of Trade (CBOT) trades corn, ethanol, gold, oats, rice, silver, soybeans and wheat. Before you trade, be clear about the asset you want to trade and, particularly, about the exchange you want to trade on. Some assets are traded on more than one exchange. For example, wheat is traded on CBOT, the Kansas City Board of Trade (KCBT) and the Minneapolis Grain Exchange (MGE).
• Underlying quantity. The contract size, or trading unit, specifies the amount of the underlying asset covered by the contract. Futures contracts are highly standardized and specific to each exchange.  For ease of trading, the size of one futures contract is predetermined and fixed by each exchange. For example, one futures contract of frozen pork bellies traded on the CME equals 40,000 pounds of pork. One futures contract of light sweet crude oil on the NYMEX equals 1000 US barrels, or 42,000 gallons. Before you purchase a futures contract, make sure you know the exact amount of the underlying asset represented by the contract. Due to the influx of individual investors into the futures markets, many exchanges offer smaller sized contracts — minis. For example, one futures contract for light sweet crude oil traded on the NYMEX miNY is 500 barrels, half the quantity and, therefore, half the price of a traditional contract. For this very reason, I recommend trading the e-minis.

Next time, we’ll talk about more of the variables futures traders have to juggle as they make trading decisions.

There are many potential futures traders out there who spend hours creating and pouring over their charts. They hone their system to perfection. On paper and on sims programs they excel. But ask them to put their money where their mouth is and they just can’t do it. Real futures traders don’t exist on paper and they don’t own the market on sims. Real futures traders take their guts in their hands, plunk down their money and find out what they’re made of in the real world. They may fail more often than they succeed at first, but those very real, money-losing failures will teach them more than a lifetime of sims successes. You are not a futures trader if you can’t pull the trigger in the real world.

Now don’t get me wrong. In my Futures Secrets Trading System course, I emphasize the importance of charts. I teach you how to interpret charts and use that knowledge to trade successfully. I teach you how to develop and hone a futures trading system that works in the real world. I encourage the use of sims trading programs to practice and hone your skills before you try trading in the real world. To become a futures trader, you do have to learn a specific set of skills and take the time to practice those skills. But you also have to have the courage to take the next step — to pull the trigger.
It’s like learning to drive a car. You spend time in the classroom and in the simulator, but eventually you have to get behind the wheel of a real car, turn the key, step on the gas, and take that baby out for a spin on the highway. Preparation and practice can keep you from crashing, and you’re bound to pick up a few dents and scratches along the way, but with time and experience, you’re soon cruising confidently down the highway.

That’s the significant advantage of my Futures Secrets Trading System. I give you the tools and the confidence to take your system out for a spin in the real world. I teach you not only what to do, when to do it and why, but I give you the confidence to take that giant step from mental preparation to physical action. I teach you the single most valuable skill a futures trader can have — how to pull the trigger.

For complete information on my Futures Secrets Trading System, click the link. Read testimonials from satisfied clients, now successful futures traders themselves. Find out how my Futures Secrets Trading System course can teach you how to pull the trigger. Click here to order today.

Every schoolboy is familiar with the physics concept: “for every action there is an equal and opposite reaction.” For unknown reasons, financial markets appear to follow the same basic laws that affect our physical world. Therefore, in the market any price move up or down must be followed by a similar move in the opposite direction. In futures trading, this is called a retracement. Retracements provide futures traders with a valuable reference point that can be used to predict the occurrence of price turns. They can also help a trader measure the strength of a preceding move.

For futures traders, the most important retracement strength levels are 40%, 50%, 60% and 100%. For example: If the market moves upward 6 price points, then pulls back 3 points, it has experienced a 50% retracement. The same holds true if the market declines 6 points, then rallies 3 points. This is also a 50% retracement. Should the market reverse by the full 6 points, returning to its original starting point, a 100% retracement has occurred. Traders call this a double bottom.

Futures traders can use the strength of a retracement to gauge the strength of market movement and predict potential trends. Futures traders use retracement levels as a general guide in making trading decisions and choosing low-risk entry points. If a retracement is shallow, 40% or less, the prior move is considered strong and a counter move should be equally strong. A deep retracement, above 60%, indicates a weak prior move and should garner a correspondingly weak counter move. Futures traders look for buying and selling opportunities at key retracement levels. Learning to identify and trade on retracements correctly is a valuable asset in the futures trader’s toolbox.

The media is quick to focus on the emotional volatility of the populace, and in doing so, often fans the flames of public opinion, increasing emotional panic simply by reporting it. An excellent example is the subprime mortgage disaster in the home loan industry. When first reported with big, black headlines and dire warnings, the reality was that only a small percentage of the total number of mortgages had been made to subprime lenders, and only a tiny percentage of those were actually moving into foreclosure. Initially, most realtors and loan industry officials were not particularly worried and saw what was happening as an uncomfortable but necessary real estate market correction after several years of wildly inflated housing prices.

Widespread media coverage frightened many homeowners, realtors and lenders, leading to all out panic in a fairly short time. The media started issuing dire predictions that the disaster would affect the economy and the market responded. As a broad group, the “people” have always demonstrated a herd mentality. It’s what drives trends. One person acts uniquely, others think he must be on to something important and are quick to follow suit. A trickle turns into a stampede and pretty soon the herd is on the move!

That’s what happened in our subprime example. By constantly increasing its focus on the subprime problem, by continually predicting negative economic repercussions, media attention actually increased public panic, which affected the markets, which impacted the economy, which increased public panic … and so on in a vicious cycle. By dint of its overzealous attention, the media helped the disaster it had forecast become reality.

Futures traders need to look beyond the media hype and dispassionately observe the movement of the market. Don’t allow yourself to get caught up in the emotions of the herd. Trust yourself, trust your system and stick with it.

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.

How are options and futures different? While often confused, there are distinct differences between these two financial instruments. When purchasing an option, the buyer is purchasing the opportunity to buy or sell a futures contract by a certain date. To acquire the option, the buyer pays an up-front fee (called the premium). He can choose not to exercise his option and, therefore, accepts no risk. All risk resides with the writer of the option who is obligated to the sale or purchase if the buyer chooses to exercise his option. With futures, the contract binds both sides equally. Both buyer and seller share the risk and both make a good-faith deposit (called margin) to guarantee that they will meet their financial obligation. The buyer must buy and the seller must sell at the agreed price on the agreed date.

There are two types of futures options:

• Call options: The buyer of a call option buys the right but is not obligated to buy a particular futures contract at a set price at any time before the option expires.
• Put options: The buyer of a put option has the right but is not obligated to sell a particular futures contract at a set price at any time before the option expires.

In trading options on the futures market, futures traders need to be aware of and understand the relationships between:

• the futures contract and the commodity, security or index being traded and
• the relationship between the option and the futures contract.

It is this last point that makes trading in futures options both complicated and volatile. While there is tremendous potential for profit and risk is limited to the up-front cost, traders unfamiliar with options can quickly run amuck. Success is in large part dependent on the trader’s ability to accurately anticipate future price levels, a combination of experience, skill and feeling for the markets.

Making practice trades allows you to:

• Test and fine tune your trading system.
• Learn to successfully pull the trigger.
• Perfect your charting system.
• Develop productive trading habits.
• Practice self discipline.
• See if you have what it takes to be a futures trader.

That last item is very important. You can have the best system in the world but if you don’t believe in yourself, if you don’t believe in your system, if you don’t have the passion to trade, no system in the world will make you a successful futures trader. Like I tell my students, successful futures trading is 90% attitude. Not everyone has the skill, passion, ability or discipline to succeed. Better to find out before you lose your money.

In my Futures Trading Secrets course I recommend that students practice trading on the e-Mini with Sims Broker until they achieve a certain level of confidence and consistency in their trades. Log and study your profits and losses. Look for patterns that indicate when you successfully pulled the trigger and when you failed. Work to increase successful strategies and decrease unsuccessful ones.

Develop successful daily trading habits and routines. Practice the discipline to stick to them even when you don’t feel like it or they don’t seem to be working. Discipline and routine are essential habits of the successful futures trader. Every trader loses sometimes. You have to have the discipline to follow your routine and have faith in your system even when you’re losing if you are to ultimately succeed.

Practicing futures trading on paper is important before you attempt the real thing. Before you start trading with real money, you must develop the discipline to control your emotions and stick to your system. Plunking down cold, hard cash opens the door to greed and fear which can submarine even the best system if not held in check. Practice will give you the skill, confidence and courage to succeed as a futures trader.

<a href=”http://www.directyourmind.com/scripts/d.php?bannerid=369&addcode=CD382″><img src=”http://products.directyourmind.com/42/382/369” alt=”" border=”0″></a> 

Futures traders learn to trust themselves and their system. If you start letting emotion rule your decisions, fear, anger and greed will undermine your carefully planned and practiced strategies. It is by persistently following your system, by dispassionately relying on what your charts tell you, by religiously following your indicators that you will succeed as a futures trader.

When you trade with your emotions, it colors your judgement. You’re no longer trading on your indicators, you’re trading on your gut. And letting your gut rule is like letting it ride in Vegas. Eventually, fear or greed will compel you to make that final disastrous gamble that wipes you out.

The market is an inanimate object. It has no feelings, no agenda, no emotions. If you make a bad trade, you cannot personalize the market. The market is not out to get you. Start thinking this way and you toss logic and wisdom out the window. If you feel yourself getting caught up in emotion, if you feel logic slipping through your fingers, get out. Just stop trading until you can regain control. Every minute you keep trading on your emotions, you come one step closer to disaster. No matter how emotional you become, the market will just sit there. You cannot change the market, you can only react to it.