Most Effective Futures Trading Strategies

As a futures trader, you may already know that the value of your contract lies in the underlying financial asset. Futures are often traded for hedging or speculation purposes – for instance, a farmer who wishes to have a better idea of how much to price his crops may enter into a futures contract to hedge against drastic price fluctuations. Unlike options contracts, where the buyer has a right but not an obligation to execute their option, futures traders have to oblige by the terms of their contract when the expiration date is up, regardless of the current market price.

In this article, we share with you some futures trading strategies you can try.

Breakout Trading

This is one of the most popular strategies used by futures traders. With breakout trading, the aim is to catch market volatility that breaks out of chart trends, patterns, and technical levels. Some examples of this include the pennant and triangle patterns as well as the head and shoulders pattern. The market tends to experience an increase in volatility just before a breakout occurs as more orders get executed.

Fundamental Trading Strategy

As a professional futures trader, you need to be kept up to date on the fundamentals of your traded financial instrument. If you are a fundamental trader, you will base up to 80% of your trading decisions on fundamentals and the remaining on technical indicators. Technical analysis is also required with this trading strategy. Following micro-fundamental releases is one example of an effective fundamental trading strategy.

Pullback Strategy

As implied by its name, this trading strategy is based on price pullbacks. When the price in any trending market breaks above or beyond a resistance level before reversing and retesting that broken level, this is known as a price pullback. Traders make use of uptrends to enter with a long position and downtrends to enter with a short position.

Trend Following Strategies

Because trend following has a proven track record and is easy to execute, it is a popular futures trading strategy. Traders enter the market in the direction of the underlying trend, which means looking for suitable long positions when the trend is up and vice versa when the trend is down.

Get the Support and Resources You Need from Bold Analysis, LLC

Looking for effective futures trading strategies to suit your trading approach? When you engage our services at Bold Analysis, LLC, you can benefit from the support and resources you will require to make successful trading decisions. Whether 1-on-1 coaching or digital mentorship is more suitable for you, you can be sure of benefiting from 24/7 admin support when you sign up for our services. Or you may wish to become a member of our alert room services to benefit from notifications throughout the day. If you wish to speak to one of our experienced consultants or have a question for us, please feel free to contact us for more information.