Day Trading Futures is a War of Day Traders
Posted by: Richard Estrada // Category: Euro USD Futures
To understand this phrase you have to understand my perspective not only on day trading futures, but my perspective on the futures market as a whole. Trading futures is a zero sum game, which for most traders is something you already know. For those of you who don not know what a zero sum game is let me give you a partial definition from Wikipedia.
In game theory and economic theory, zero-sum describes a situation in which a participant’s gain or loss is exactly balanced by the losses or gains of the other participant(s). Zero sum games are also called strictly competitive.
The idea of the zero sum game has had a major impact on not only on how I look at the markets, but also on how I look at other traders. In day trading futures, utilizing the definition from Wikipedia, helps me understand that trading isn’t only about assessing information about price, but also about assessing the strategies of how day traders can try and outwit other day traders. Remember, one participant’s gain or loss is exactly balanced by the losses or gains of the other participant(s). It’s also my opinion, that this kind of strategic market action is probably more easily seen in day trading futures, then in long term price behavior, which I believe is dominated by the fundamentals of supply and demand.
But for those of us trading the noise, or the day-to-day price action, the futures market becomes a battlefield of day trading soldiers looking to take out other day trading soldiers. What weapons, tactics and analysis techniques day traders utilize are all different, but our objectives are the same. Remember, the zero sum concept? A participant’s gain or loss is exactly balanced by the losses or gains of the other participants.
So, when I first assess a market, I’m not interested in the weapon I’m going to use when it’s time to get into the market. I am more interested in trying to understand the strategic layout of the battlefield first. Think of it like a chessboard, what are the pieces on the board telling me. Is my opponent playing for position, or is my opponent trying to trap me into a bad position. It’s this kind of perspective I bring to the game of Day Trading Futures.
I will take this perspective out a little further. Once I get an idea of where I might want to engage the market based on my analysis, then I begin to assess what kind of tactics will work best in the battle that I’m about to engage in. This means, what kind of short-term trades will I implement when the shooting starts? If I were anticipating an increase of short-term volatility then I would consider utilizing a short-term day trading strategy that implements a higher frequency of trades. If I were not anticipating an increase of short-term volatility, then I would look to implement a short-term day trading strategy that is more specific in regard to price. This is what I would consider a sniper approach to Day Trading Futures.
Once again, this is just my perspective on Day Trading Futures. It’s not meant to be a Holy Grail of trading. Think of my perspective and analysis as a scouting report in regard to football. The scouting report is about understanding the strengths and weaknesses of your opponent and then creating a game plan that will assist in beating the other team. The scouting report is about what kind of strategy (running more or passing more) might work in scoring touchdowns and what defensive schemes will keep the other team from scoring. The football plays (trade triggers) are what get you into the market.
Trade triggers are the weapons we utilize to get us into the battle. These weapons are the plays that the football team practices day in and day out. Now, I’m going to go out on limb here, but I don’t believe there are any football teams that rely on just one play to beat an opponent. This is why I don’t subscribe to the theory that you only need one definitive trade trigger to get you into the market. Again, this is must my perspective on Day Trading Futures.
If you would like to talk about my analysis in further detail, simply schedule a Private Presentation.
If you are a trader Day Trading Futures then let’s talk and see if my perspective can give you the edge you’ve been looking for. If you are thinking about getting involved in Day Trading Futures then come discover the potential and determine for yourself if it’s worth the risk.
Opinions expressed are subject to change without notice. I make no promises or guarantees Implied or otherwise that utilizing short-term trading strategies will result in profits or limited losses. You should carefully consider whether trading commodities is right for you in light of your financial condition. Again, there is significant of financial loss in trading futures and trading futures is not suitable for everyone.