Futures traders make their money betting on the direction of the market. The market can only do two things; reverse or continue the trend. In short term day trading, the trend is not always your friend! On a normal day, the e-Mini S&P market fluctuates and reverses as much as 40 points. Catching these turns and continuation moves is the goal of futures day traders.
Futures trading is concerned not with individual stock performance but with the macro logic of the market. Futures traders watch the indexes and overall market performance, not individual stocks. Remember, the market is always seeking equilibrium, constantly oscillating between previous highs and lows. Watch carefully and act quickly and you can make money on the rise and fall.
It is important to remember that futures day trading is not like trading stocks. When you invest in stocks, you’re in it for the long haul. You ignore the little ups and downs and don’t get that excited about the big ones because history has shown that over time (sometimes a long time), the stock market will stabilize and stock prices most likely will rise, earning you a profit. In futures trading, the history used is very short. Everything is done in the moment. Your one objective is to catch the current trend or reversal and to catch it again and again each time it changes.
At the end of the day, smart futures day traders cash out. You don’t want to be left holding anything overnight. The futures market is open 24/7. While the rest of us are recharging our batteries, the big boys move in during the wee hours of the night and fatten their trading accounts. They create the difference between the previous night’s market close and the current morning’s market open — called the gap. If you didn’t cash out the night before, you could get caught in the gap — and be left holding the bag! Definitely not a place you want to be.
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