Day Trading Futures: The Essentials

Years ago, trading actively in the futures market was a privilege limited to
those working for large financial institutions, brokerages, and trading
houses. The advent of online trading platforms and the instantaneous
dissemination of news has democratized access to the markets has
changed the game.

Are you ready to unlock the secrets of day trading futures and take your
financial game to the next level? In "Day Trading Futures: The Essentials,"
you'll discover a comprehensive guide that demystifies the fast-paced
world of futures trading. Whether you're a seasoned trader looking to
refine your strategies or a newcomer eager to break into the market, this
article offers invaluable insights and practical tips to help you navigate the
complexities of day trading with confidence. From understanding the basics
of futures contracts to mastering advanced trading techniques, this is your
go-to resource for day trading futures.

Imagine having the ability to capitalize on short-term market movements

with precision and confidence. "Day Trading Futures: The Essentials"
provides you with the tools and knowledge to do just that. You'll learn how
to leverage technical indicators, manage risks effectively, and develop a
trading plan tailored to your goals. Packed with advice, real-life examples,
and actionable strategies, this book is designed to empower you to make
informed decisions and apply them in the futures market. Don’t miss out on
this opportunity to transform your trading approach—click to read more
and start your journey to day trading the futures market today!
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Table of Contents (12 Chapters)

1. Introduction to Day Trading Futures
• What is Day Trading?
• Overview of Futures Contracts
• Why Trade Futures?
2. Getting Started with Day Trading Futures
• Education and Research
• Choosing a Reliable Futures Broker
• Creating a Trading Plan
• Practicing with Simulated Trading
3. Essential Tools and Platforms
• Trading Platforms
• Charting Software
• News and Data Feeds
• Advanced Trading Tools
4. Technical Analysis for Day Trading Futures
• Understanding Price Charts
• Key Technical Indicators
• Patterns and Trends
• Using Technical Analysis for Entry and Exit Points
5. Day Trading Strategies
• Scalping
• Momentum Trading
• Breakout Trading
• Mean Reversion
• News-Based Trading
6. Risk and Money Management

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 2

• Importance of Risk Management

• Position Sizing
• Setting Stop-Loss Orders
• Managing Leverage
7. Psychological Aspects of Day Trading
• Emotional Control
• Developing Discipline
• Overcoming Fear and Greed
• Building a Winning Mindset
8. Advanced Techniques and Concepts
• Order Flow Analysis
• Volume Profile
• Market Profile (TPO)
• High-Frequency Trading (HFT)
9. Case Studies and Examples
• Real-Life Trading Scenarios
• Successful Day Trading Examples
• Common Mistakes and How to Avoid Them
10. Continuous Improvement and Adaptation
• Reviewing and Analyzing Trades
• Keeping Up with Market Changes
• Ongoing Education and Development
11. Conclusion
• Summary of Key Points
• Final Advice for Aspiring Day Traders
• Resources for Further Learning
12. Twenty-Five Essential Indicators for Day Trading Futures
13. Index of Futures Trading Resources

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 3

14. Disclaimer

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 4

Chapter 1: Introduction to Day Trading Futures

What is Day Trading?

Day trading is a trading strategy that involves buying and selling financial instruments
within the same trading day. The goal is to capitalize on short-term price movements to
generate profits. Unlike long-term investing, day traders do not hold positions
overnight. This strategy requires quick decision-making, a deep understanding of the
markets, and the ability to manage risks effectively.

Overview of Futures Contracts

Futures contracts are standardized agreements to buy or sell a specific asset at a

predetermined price on a future date. These contracts can be based on various
underlying assets, including commodities, currencies, stock indices, and interest rates.
Futures contracts are traded on exchanges and offer high liquidity and leverage, making
them attractive for day traders.

Why Trade Futures?

Day trading futures offers several advantages as well as risks:

• Leverage: Futures contracts allow traders to control large positions with a

relatively small amount of capital.
• Liquidity: Futures markets are highly liquid, ensuring ease of entry and exit.
• Diverse Opportunities: Futures contracts are available for a wide range of assets,
providing multiple trading opportunities.
• 24-Hour Markets: Many futures markets operate nearly 24/7, allowing traders to
react to global events in real-time.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 5

Chapter 2: Getting Started with Day Trading Futures

Education and Research

Before diving into day trading futures, it's essential to educate yourself about the
markets, trading strategies, and risk management. Resources such as books, online
courses, webinars, and trading communities can provide valuable insights and
knowledge. Continuously updating your knowledge is crucial as markets evolve.

Choosing a Reliable Futures Broker

Selecting a reputable futures broker is a critical step. Look for brokers that offer:

• A user-friendly trading platform with robust charting tools.

• Real-time data and market news.
• Competitive commission rates.
• Strong customer support. Ensure the broker is regulated and has a good
reputation in the industry.

Creating a Trading Plan

A well-defined trading plan is your roadmap to success. It should outline:

• Your trading objectives and goals.

• Risk tolerance and money management rules.
• Preferred markets and trading strategies.
• Specific criteria for entering and exiting trades. A trading plan helps maintain
discipline and consistency in your trading activities.

Practicing with Simulated Trading

Before risking real capital, use simulated trading to practice your strategies. Most
brokers offer demo accounts where you can trade with virtual money. This allows you to
gain practical experience and test your trading plan without financial risk. Analyze your
performance, identify areas for improvement, and refine your approach.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 6

Chapter 3: Essential Tools and Platforms

Trading Platforms

A reliable trading platform is essential for day trading futures. Popular platforms include:

• E-Futures International: Known for its advanced DOM (Depth of Market),

analysis tools and it is a FREE platform.
• CannonPro: Offers a wide range of technical indicators and customizable
features. Cloud based.
• Sierra Charts: Popular for its user-friendly interface, very advanced and
customizable charting tools and automated trading capabilities.

Charting Software

Accurate and comprehensive charting software helps traders analyze price movements
and identify trading opportunities. Essential features include:

• Real-time data and historical price charts.

• Technical indicators and drawing tools.
• Customizable timeframes and chart types.

News and Data Feeds

Staying updated with market news and data is crucial for day traders. Real-time news
feeds and economic calendars provide information on events that can impact the
markets. Reliable sources include:

• Bloomberg
• Reuters
• CNBC
• Dow Jones

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 7

Advanced Trading Tools

Advanced tools like Bookmap, Overcharts, Jigsaw provide real-time market data
visualization, helping traders identify liquidity shifts and order flow dynamics. Other
useful tools include:

• Market Profile: Shows the distribution of trading activity over time.

• Order Flow Analysis: Analyzes the buying and selling pressure in the market.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 8

Chapter 4: Technical Analysis for Day Trading Futures

Understanding Price Charts

Price charts are the foundation of technical analysis. Common chart types include:

• Line Charts: Simple charts showing closing prices over time.

• Bar Charts: Display the high, low, open, and close prices for each period.
• Candlestick Charts: Similar to bar charts but with color-coded candlesticks to
show price direction.
• Volume Charts: Bars complete NOT based on time but based on actual traded
volume. Example 10,000 volume for mini SP.
• Range Bar Charts: Bars will complete once a certain RANGE of price traded per
bar. Example 19ticks range bar for crude oil futures.

Key Technical Indicators

Technical indicators help traders analyze market conditions and make informed
decisions. Essential indicators include:

• Moving Averages: Identify trends and potential reversal points.

• Relative Strength Index (RSI): Measures momentum and identifies overbought
or oversold conditions.
• Moving Average Convergence Divergence (MACD): Indicates trend direction
and momentum.
• Bollinger Bands: Measure volatility and potential price breakouts.
• Stochastic Oscillator: Identifies overbought and oversold conditions.

Patterns and Trends

Recognizing patterns and trends is crucial for successful trading. Common patterns
include:

• Head and Shoulders: Indicates potential trend reversal.

• Double Top and Double Bottom: Signal possible trend changes.
• Triangles and Flags: Indicate continuation patterns within a trend.

Using Technical Analysis for Entry and Exit Points

Trading commodity futures and options involves a substantial risk of loss.
The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 9

Combine multiple indicators and patterns to confirm trading signals. Use technical
analysis to determine:

• Entry Points: When to open a trade based on trend direction and momentum.
• Exit Points: When to close a trade to lock in profits or limit losses.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 10

Chapter 5: Day Trading Strategies

Scalping

Scalping involves making numerous small trades throughout the day to profit from
minor price movements. Key aspects of scalping include:

• Quick Execution: Enter and exit trades within minutes.

• Tight Stop-Losses: Limit potential losses with strict stop-loss orders.
• High Frequency: Execute many trades to accumulate small gains.

Momentum Trading

Momentum trading capitalizes on strong price movements in a particular direction. Key

aspects include:

• Trend Identification: Identify and follow strong trends.

• Volume Confirmation: Use volume indicators to confirm the strength of the
trend.
• Quick Decision-Making: Enter trades quickly when momentum is strong and
exit when it weakens.

Breakout Trading

Breakout trading involves entering trades when the price breaks through a significant
support or resistance level. Key aspects include:

• Identify Key Levels: Use technical analysis to find important support and
resistance levels.
• Volume Confirmation: Ensure breakouts are accompanied by increased trading
volume.
• Stop-Loss Placement: Place stop-loss orders just below support or above
resistance levels to manage risk.

Mean Reversion

Mean reversion assumes that prices will revert to their historical average. Key aspects
include:
Trading commodity futures and options involves a substantial risk of loss.
The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 11

• Identify Overbought/Oversold Conditions: Use indicators like RSI and

stochastic oscillator.
• Entry Points: Enter trades when prices deviate significantly from the mean.
• Exit Points: Exit trades when prices return to the mean.

News-Based Trading

News-based trading involves making trades based on market-moving news events. Key
aspects include:

• Stay Informed: Use real-time news feeds and economic calendars.

• Quick Execution: React quickly to news events that impact the markets.
• Risk Management: Use stop-loss orders to manage risk during volatile news-
driven movements.
• Two great resources for News Based trading are: TradeTheNews.com and
BetterTrader.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 12

Chapter 6: Risk and Money Management

Importance of Risk Management

Effective risk management is crucial for long-term success. Key principles include:

• Capital Preservation: Protect your trading capital to stay in the game.

• Risk-Reward Ratio: Ensure potential rewards outweigh risks for each trade.
• Diversification: Spread risk across different assets and strategies.

Position Sizing

Determine the appropriate size of each trade based on your risk tolerance and account
size. Key aspects include:

• Percentage of Capital: Risk a small percentage of your capital on each trade

(e.g., 1-2%).
• Fixed Dollar Amount: Set a fixed dollar amount to risk per trade.

Setting Stop-Loss Orders

Stop-loss orders automatically close a trade at a predetermined price to limit losses. Key
aspects include:

• Placement: Place stop-loss orders at strategic levels based on technical analysis.

• Trailing Stops: Use trailing stops to lock in profits as the trade moves in your
favor.

Managing Leverage

Leverage allows traders to control large positions with a small amount of capital, but it
also increases risk. Key aspects include:

• Understand Leverage: Know how much leverage you're using and its impact on
your account.
• Use Prudently: Use leverage conservatively to avoid significant losses.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 13

Chapter 7: Psychological Aspects of Day Trading

Emotional Control

Managing emotions is critical for successful trading. Key aspects include:

• Avoid Overtrading: Stick to your trading plan and avoid impulsive trades.
• Stay Calm: Maintain composure during volatile market conditions.
• Accept Losses: Understand that losses are part of trading and avoid emotional
reactions.

Developing Discipline

Discipline is essential for consistent trading performance. Key aspects include:

• Follow Your Plan: Adhere to your trading plan and strategies.

• Stick to Rules: Follow risk management and money management rules.
• Regular Reviews: Regularly review your trades and performance.

Overcoming Fear and Greed

Fear and greed can lead to poor trading decisions. Key aspects include:

• Fear: Avoid exiting trades prematurely due to fear of losses.

• Greed: Avoid holding trades too long in the hope of higher profits.
• Balanced Approach: Maintain a balanced approach to trading decisions.

Building a Winning Mindset

A winning mindset is crucial for long-term success. Key aspects include:

• Positive Attitude: Stay positive and motivated.

• Continuous Improvement: Focus on learning and improving your skills.
• Goal Setting: Set realistic and achievable goals.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 14

Chapter 8: Advanced Techniques and Concepts

Order Flow Analysis

Order flow analysis examines the flow of buy and sell orders to understand market
dynamics. Key aspects include:

• Real-Time Data: Use real-time data to analyze order flow.

• Identify Imbalances: Spot imbalances between buying and selling pressure.
• Trading Decisions: Make informed trading decisions based on order flow
analysis.

Volume Profile

Volume profile is a horizontal histogram showing trading volume at each price level. Key
aspects include:

• Support and Resistance: Identify potential support and resistance levels.

• Volume Peaks and Valleys: Use volume peaks and valleys to find entry and exit
points.

Market Profile (TPO)

Market Profile uses time-price opportunities (TPO) to display the distribution of trading
activity over time. Key aspects include:

• Value Area: Identify the value area where most trading occurs.
• Point of Control (POC): Find the price level with the highest trading activity.
• Market Structure: Understand market structure and potential reversal points.

High-Frequency Trading (HFT)

High-Frequency Trading (HFT) involves executing many trades at very high speeds. Key
aspects include:

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 15

• Algorithmic Trading: Use algorithms to automate trading decisions.

• Speed and Technology: Invest in high-speed technology for fast execution.
• Market Microstructure: Understand market microstructure and its impact on
trading.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 16

Chapter 9: Case Studies and Examples

Real-Life Trading Scenarios

Learn from real-life trading scenarios to understand how to apply strategies and
manage risks. Analyze successful and unsuccessful trades to identify key lessons and
insights.

Self-Proclaimed “Experts” – BEWARE!

Finding a genuine mentor in the futures trading industry is a challenging endeavor. The
landscape is crowded with self-proclaimed experts on YouTube and other social media
platforms who boast about their trading prowess. However, many of these so-called
"gurus" often operate using demo accounts, which fail to reflect the complexities and
pressures of live trading.

Therefore, it is essential to approach such claims with skepticism. Scrutinize the

credentials and performance records of any potential mentors rigorously. Verify their
experience and success in live trading, and seek testimonials or verifiable evidence of
their expertise. Be cautious, conduct thorough due diligence, and rely on substantiated
performance rather than flashy marketing tactics.

Common Mistakes and How to Avoid Them

Identify common mistakes made by day traders and learn how to avoid them. Key
mistakes include:

• Overtrading: Avoid making too many trades in a short period.

• Ignoring Risk Management: Always use stop-loss orders and position sizing.
• Emotional Trading: Stick to your trading plan and avoid emotional decisions.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 17

Chapter 10: Continuous Improvement and Adaptation

Reviewing and Analyzing Trades

Regularly review and analyze your trades to identify strengths and weaknesses. Use
trading journals to track performance and make data-driven improvements.

Keeping Up with Market Changes

Stay updated on market trends, news, and developments. Adapt your strategies to
changing market conditions and continuously refine your approach.

Ongoing Education and Development

Invest in ongoing education and development to stay ahead in the competitive world of
day trading. Attend webinars, read books, take courses, and participate in trading
communities.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 18

Chapter 11: Conclusion

Summary of Key Points

Day trading futures offers significant opportunities but requires a deep understanding
of the markets, effective strategies, and robust risk management. Key points include:

• Education and Research: Continuously educate yourself and stay informed.

• Trading Plan: Develop and follow a well-defined trading plan.
• Technical and Fundamental Analysis: Use a combination of both to make
informed decisions.
• Risk Management: Prioritize risk management to protect your capital.
• Psychological Control: Maintain emotional control and discipline.

Final Advice for Aspiring Day Traders

Day trading futures can be rewarding but also challenging. Approach it with patience,
discipline, and a commitment to continuous improvement. Stay focused, keep learning,
and adapt to changing market conditions.

Resources for Further Learning

• Books: Explore recommended books on day trading and futures markets.

• Online Courses: Enroll in online courses to deepen your knowledge.
• Trading Communities: Join trading communities to connect with other traders
and share insights.
• Webinars and Seminars: Attend webinars and seminars to learn from experts.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 19

Chapter 12: 25 Essential Indicators for Day Trading

Futures

1. Moving Average (MA)

Simple Moving Average (SMA)
Example: A trader is analyzing the S&P 500 E-mini futures contract. They use a 50-day SMA to
identify the long-term trend. If the price is above the 50-day SMA, the market is in an uptrend.
Conversely, if the price is below the 50-day SMA, the market is in a downtrend. By following this
indicator, the trader can align their trades with the prevailing trend.

Exponential Moving Average (EMA)

Example: For the same S&P 500 E-mini futures contract, the trader uses a 10-day EMA to capture
short-term price movements. The EMA reacts more quickly to recent price changes, helping the
trader to enter or exit trades based on shorter-term trends.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 20

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 21

2. Relative Strength Index (RSI)

Example: A trader is looking at the crude oil futures market. The RSI shows a reading of 85,
indicating that the market is overbought. The trader anticipates a pullback and decides to short the
contract. Later, the RSI drops to 25, signaling that the market is oversold, and the trader covers their
short position, locking in profits.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 22

3. Moving Average Convergence

Divergence (MACD)
Example: While trading gold futures, the trader notices that the MACD line crosses above the signal
line, indicating a bullish trend. The trader goes long on gold futures. A few weeks later, the MACD
line crosses below the signal line, signaling a bearish trend, and the trader exits the long position.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 23

4. Bollinger Bands
Example: A trader uses Bollinger Bands to trade the EUR/USD futures contract. When the price
touches the upper band, the trader sees it as overbought and initiates a short position. Conversely,
when the price touches the lower band, the trader sees it as oversold and enters a long position.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 24

5. Stochastic Oscillator

Example: While trading the NASDAQ-100 futures, the trader notices the
stochastic oscillator reading is above 80, indicating overbought conditions.
They decide to short the contract. When the reading falls below 20, indicating
oversold conditions, the trader closes the short position and goes long.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 25

6. Average True Range (ATR)

Example: A trader uses the ATR to set stop-loss levels for the E-mini Russell
2000 futures. If the ATR shows high volatility, they set wider stop-loss levels to
avoid being stopped out by normal market fluctuations. Conversely, with low
ATR readings, they use tighter stop-loss levels.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 26

7. Volume Profile

Example: A trader analyzes the S&P 500 E-mini futures using Volume Profile.
They notice high trading volume at the 4200 level, indicating strong support.
They decide to go long when the price approaches this level, expecting it to
hold as support.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 27

8. Fibonacci Retracement

Example: For the EUR/USD futures, the trader uses Fibonacci retracement
levels from a recent high of 1.2000 to a low of 1.1800. They place buy orders
around the 61.8% retracement level (1.1916) and stop-loss orders just below
the 78.6% level (1.1884).

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 28

9. Commodity Channel Index (CCI)

Example: While trading soybean futures, the trader sees the CCI above +100,
indicating an overbought market. They decide to sell short. When the CCI falls
below -100, indicating oversold conditions, they cover the short position.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 29

10. Ichimoku Cloud

Example: A trader uses the Ichimoku Cloud on the Nikkei 225 futures
contract. When the price is above the cloud, it indicates an uptrend, and the
trader holds long positions. When the price falls below the cloud, it indicates a
downtrend, and the trader switches to short positions.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 30

11. Parabolic SAR

Example: A trader uses the Parabolic SAR for trading natural gas futures. The
dots appear below the price, indicating a bullish trend, and the trader goes
long. When the dots flip above the price, indicating a potential reversal, the
trader exits the long position.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 31

12. On-Balance Volume (OBV)

Example: A trader is monitoring the OBV on the copper futures market. They
notice that the OBV is rising while the price remains stable, indicating
accumulation. The trader anticipates a breakout and goes long.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 32

13. Accumulation/Distribution Line (A/D Line)

Example: For the silver futures contract, the trader sees the A/D line rising
even as the price declines, suggesting accumulation. They decide to buy,
expecting the price to follow the A/D line upwards.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 33

14. Chaikin Money Flow (CMF)

Example: A trader observes the CMF for the E-mini Dow Jones futures.
Positive CMF values indicate buying pressure, so the trader goes long. When
the CMF turns negative, indicating selling pressure, they exit the position.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 34

15. Pivot Points

Example: A trader uses pivot points on the DAX futures to identify potential
support and resistance levels. They place buy orders at the first support level
(S1) and sell orders at the first resistance level (R1).

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 35

16. Rate of Change (ROC)

Example: For crude oil futures, the trader uses ROC to measure momentum. A
positive ROC value indicates bullish momentum, prompting the trader to go
long. When the ROC turns negative, indicating bearish momentum, the trader
exits the position.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 36

17. Williams %R

Example: A trader uses Williams %R on the E-mini NASDAQ-100 futures.

Values above -20 suggest overbought conditions, so the trader shorts the
contract. Values below -80 suggest oversold conditions, prompting the trader
to go long.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 37

18. True Strength Index (TSI)

Example: A trader uses TSI to trade the FTSE 100 futures. Positive TSI values
indicate a bullish trend, so the trader buys contracts. Negative TSI values
indicate a bearish trend, prompting the trader to sell.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 38

19. Keltner Channels

Example: A trader uses Keltner Channels on the gold futures market. Prices
touching the upper channel suggest overbought conditions, leading the trader
to short. Prices touching the lower channel suggest oversold conditions,
leading the trader to buy.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 39

20. Donchian Channels

Example: For the S&P 500 E-mini futures, the trader uses Donchian Channels
to identify breakout points. A price break above the upper channel signals a
long trade, while a break below the lower channel signals a short trade.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 40

21. Elder's Force Index (EFI)

Example: A trader uses EFI on the Euro Stoxx 50 futures. A rising EFI indicates
strong buying pressure, so the trader goes long. A falling EFI indicates strong
selling pressure, prompting the trader to sell.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 41

22. Chaikin Oscillator

Example: A trader uses the Chaikin Oscillator on the Japanese Yen futures.
Positive values indicate buying pressure, so the trader buys contracts.
Negative values indicate selling pressure, prompting the trader to sell.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 42

23. VWAP (Volume Weighted Average Price)

Example: A trader uses VWAP for day trading S&P 500 E-mini futures. If the
price is above the VWAP, they consider the market to be bullish and look for
buying opportunities. If the price is below the VWAP, they consider the market
bearish and look for selling opportunities.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 43

24. SuperTrend

Example: A trader uses the SuperTrend indicator on the crude oil futures
market. A SuperTrend line below the price indicates a bullish trend, prompting
the trader to go long. A SuperTrend line above the price indicates a bearish
trend, prompting the trader to go short.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 44

25. Heikin-Ashi Candlesticks

Example: A trader uses Heikin-Ashi candlesticks on the S&P 500 E-mini

futures to identify trends. The smooth appearance of the candlesticks helps
the trader stay in trends longer, reducing noise and avoiding premature exits.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 45

Detailed Usages for Key Indicators

1. Moving Averages (MA)

• SMA: Smooths out price data over a specified period to help identify the
direction of the trend. Used to confirm long-term trends and filter out short-term
price fluctuations.
• EMA: Gives more weight to recent prices, making it more responsive to new
information. Useful for capturing short-term trends and making quick trading
decisions.

2. Relative Strength Index (RSI)

• Usage: Identify overbought and oversold conditions. Readings above 70 indicate

overbought, while readings below 30 indicate oversold. Helps traders anticipate
potential reversals and adjust their trading strategy accordingly.

3. Moving Average Convergence Divergence (MACD)

• Usage: Identify buy/sell signals through crossovers and divergences. A bullish

signal occurs when the MACD line crosses above the signal line, while a bearish
signal occurs when it crosses below. Useful for confirming trend changes and
identifying momentum.

4. Bollinger Bands

• Usage: Measure volatility and identify potential breakout points. When the price
touches the upper band, it may be overbought; when it touches the lower band,
it may be oversold. Helps traders spot potential reversal points and make
informed trading decisions.

5. Stochastic Oscillator

• Usage: Identify overbought and oversold conditions. Readings above 80 suggest

overbought conditions, and readings below 20 suggest oversold conditions.
Useful for timing entry and exit points in ranging markets.

6. Average True Range (ATR)

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 46

• Usage: Measure volatility to set stop-loss levels and determine the best times to
trade. Higher ATR values indicate more volatility, prompting wider stop-loss
levels, while lower ATR values suggest tighter stop-loss levels.

7. Volume Profile

• Usage: Identify key support and resistance levels based on trading volume at
various price levels. Helps traders understand market structure and find optimal
entry and exit points.

8. Fibonacci Retracement

• Usage: Identify potential reversal levels by plotting horizontal lines at key

Fibonacci levels (23.6%, 38.2%, 50%, 61.8%). Helps traders find support and
resistance levels and plan their trades around these key levels.

9. Commodity Channel Index (CCI)

• Usage: Identify cyclical trends in a security. Values above +100 indicate

overbought conditions, and values below -100 indicate oversold conditions.
Useful for timing entry and exit points based on cyclical price movements.

10. Ichimoku Cloud

• Usage: Identify trend direction, support, and resistance levels, and generate
trading signals. The cloud (Kumo) indicates future support and resistance areas,
helping traders make informed decisions based on the overall market trend.

11. Parabolic SAR

• Usage: Identify potential reversal points in the market. Dots above the price
suggest a bearish trend, while dots below the price suggest a bullish trend. Useful
for setting trailing stop-loss levels and identifying trend changes.

12. On-Balance Volume (OBV)

• Usage: Confirm trends and identify potential reversals. Rising OBV indicates
buying pressure, while falling OBV indicates selling pressure. Helps traders gauge
market sentiment and make informed trading decisions.

13. Accumulation/Distribution Line (A/D Line)

Trading commodity futures and options involves a substantial risk of loss.
The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 47

• Usage: Identify trends in buying and selling pressure. A rising A/D line suggests
accumulation (buying), while a falling A/D line suggests distribution (selling).
Useful for confirming trends and identifying potential reversals.

14. Chaikin Money Flow (CMF)

• Usage: Measure money flow over a specific period. Positive values indicate
buying pressure, while negative values indicate selling pressure. Helps traders
gauge market sentiment and make informed trading decisions.

15. Pivot Points

• Usage: Identify potential support and resistance levels. Commonly used by day
traders to determine entry and exit points. Helps traders find optimal price levels
for placing trades.

16. Rate of Change (ROC)

• Usage: Measure the percentage change in price to identify overbought and

oversold conditions. Positive ROC values indicate bullish momentum, while
negative values indicate bearish momentum. Useful for identifying trend strength
and potential reversals.

17. Williams %R

• Usage: Identify overbought and oversold conditions. Values above -20 indicate
overbought conditions, and values below -80 indicate oversold conditions. Helps
traders time their entry and exit points based on market extremes.

18. True Strength Index (TSI)

• Usage: Identify trend direction and strength. Positive TSI values indicate bullish
trends, while negative TSI values indicate bearish trends. Useful for confirming
trend changes and identifying potential reversal points.

19. Keltner Channels

• Usage: Identify volatility and potential reversal points. Prices moving outside the
channels may indicate overbought or oversold conditions. Helps traders spot
potential trend reversals and make informed trading decisions.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 48

20. Donchian Channels

• Usage: Identify potential breakouts and reversals. When the price breaks above
the upper band, it may signal a breakout; a break below the lower band may
signal a breakdown. Useful for identifying trading opportunities based on price
extremes.

21. Elder's Force Index (EFI)

• Usage: Measure the strength of a price movement. Positive values indicate

buying pressure, while negative values indicate selling pressure. Helps traders
gauge market sentiment and make informed trading decisions.

22. Chaikin Oscillator

• Usage: Identify changes in the Accumulation/Distribution Line. Positive values

indicate buying pressure, while negative values indicate selling pressure. Useful
for confirming trend changes and identifying potential reversal points.

23. VWAP (Volume Weighted Average Price)

• Usage: Identify the average price of a security based on volume and price. Used
to determine if the price is trading above or below the average price for the day.
Helps traders gauge market sentiment and find optimal entry and exit points.

24. SuperTrend

• Usage: Identify trend direction and potential reversals. A change in the

SuperTrend line indicates a potential reversal. Helps traders stay in trends longer
and avoid premature exits.

25. Heikin-Ashi Candlesticks

• Usage: Smooth out price action to identify trends more easily. Heikin-Ashi
candlesticks filter out noise to help traders see trends clearly. Useful for
identifying trend direction and staying in trades longer.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 49

Chapter 13: Futures Trading Resources

Below is a list of useful trading resources online.

• The complete guide to risk and opportunities in futures and options

trading
• Recognizing Futures Charts and Patterns
• Daily Support & Resistance Levels
• Intraday Trading Signals
• Live S&P Pit Audio
• Futures eBook - NEW, FREE!
• Futures & Commodities Trading Calendar
• Futures Hedging
• 25 Proven Strategies for Trading Options by CME
• Futures Market 101
• What's My Trading Blood Type?
• Futures Options Trading 101
• Day Trading 101
• 8 Steps to Successful Day Trading
• Top 50 Futures Trading Rules
• Order Types
• Trading Key Economic Reports
• Introduction to Equity Index Products
• Options on Futures for Equity Traders
• Get An Edge With the Trading Psychology Course
• A Trader's Guide to Futures

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
 50

By following the comprehensive guidance in this book, you'll be well-equipped to

navigate the dynamic and challenging world of day trading futures. Whether you're a
beginner or an experienced trader, continuous learning and adaptation are key to
achieving long-term success.

Disclaimer: The material contained in this letter is of opinion only and does not
guarantee any profits. These are risky markets and only risk capital should be used.

Past results are not necessarily indicative of future results. The risk of loss in trading
can be substantial, carefully consider the inherent risks of such an investment in
light of your financial condition.

Day trading can be extremely risky. Day trading generally is not appropriate for
someone of limited resources and limited investment or trading experience and low
risk tolerance. You should be prepared to lose all of the funds that you use for day
trading. And more, you should not fund day-trading activities with funds required
to meet your living expenses or change your standard of living.

You should be wary of advertisements or other statements that emphasize the

potential for large profits in day trading. Day trading can also lead to large and
immediate financial losses.

Day trading will generate substantial commissions, even if the per trade cost is low.
Day trading involves aggressive trading, and you will pay commission on each trade.
The total daily commissions that you pay on your trades will add to your losses or
significantly reduce your earnings.

Day trading on margin may result in losses beyond your initial investment. An
investment of less that $25,000 will significantly impair the ability of a day trader to
make a profit. Of course, an investment of $25,000 or more will not guarantee
success.

Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this publication are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.