Boost your Knowledge With These Scalping Futures Strategies

Scalpers trade futures to profit from small market movements. Futures are leveraged derivative financial contracts which are exchange-traded. Traders can use futures to take advantage of the movements and fluctuations in the market. However, while trading futures is very exciting and you can reap lots of profits, it is also very risky.

Because scalping involves exiting the trade very quickly after entry, you need to trade in a high frequency every day to rack up your profits. Scalping involves minimizing your exposure to market movements, thereby reducing their risk. Here are some tips to help you boost your profits when scalping futures.

Trading Ranges

When trading futures, you have to be able to identify the support and resistance levels. Support levels are the price lows of the futures that appear to form a price floor. Resistance levels are the price highs of the futures that appear to form a price ceiling. The price of the asset may thus hover between support and resistance levels most of the time until a breakout occurs as it can be hard to break through either level.

Once you already identified the support and resistance levels, you simply buy near the support level and sell near the resistance level. You should also aim for moderate volatility stocks which generally do not have unexpected and large fluctuations in prices.

Trading in the middle of a trend also allows you to better predict the price of the future or asset and its market direction. If a breakout occurs or there is a large fluctuation in price, you should wait and monitor until you identify new support and resistance levels. This allows you to form a fresh trading range to boost your profits.

Automated Strategies

Most high-frequency traders often rely on automated trading bots or artificial intelligence for their trading. Automated trading bots bring about numerous advantages, such as greater consistency of executing trades, having no input error, do not switch strategies after losses, getting emotional and angry, and have higher trading velocities.

Automated bots and strategies thus help to optimize the long-term performance of trading futures. However, if you are unable to program your trading bot, then you can rely on some automation strategies to help with your trading. This can involve setting an automatic stop-loss for each trade. A stop-loss order is thus an order to sell or buy a stock once the price of the stock hits a specified price point. Using stop-loss orders helps you to limit losses if prices go against you. It also allows you to trade and take risks with an acceptable risk/reward ratio.

Bollinger Bands

Bollinger bands involve the plotting of two standard deviations (one positive and the other negative) away from the simple moving average of a security’s price. The Bollinger bands thus help to create estimation and roadmap together with a graph of the moving average of the asset’s prices.

This allows traders to implement a scalping strategy whereby they trade within the limits of the Bollinger bands. If the price of the asset hits the top of the band, then traders should go short. If the price hits the bottom of the band, then traders should go long.

Why Choose Bold Analysis, LLC?

We provide digital mentorship services to help you through your futures trading journey. The consultants at Bold Analysis LLC have extensive experience in a wide range of futures and forex trading activities. Find out how we can help you succeed as a futures trader today.