How To Trade Futures

What do the successful CFD traders http://www.contracts-for-difference.com/ do differently? Some of the rules that successful day traders use are familiar to all traders. Others may be contrary to the common beliefs.

Rule 1: Don't follow the crowd

Rule 2: Block out other opinions

Rule 3: When you're not sure, stand aside

Rule 4: Try to avoid market orders

Rule 5: Trade divergence between related commodities

When trading commodities, watch the 'families': grains, the meats or the metals. When you spot a wide divergence in a group, it could signal a trading opportunity. For example, if all grains except soybeans were moving higher, sharp traders would look for an opportunity to sell soybeans as soon as the grains in general appeared to be weakening. The reverse of this is true also. The traders would buy the strongest commodity in the group during periods of weakness.

Rule 6: Trade the opening range breakout

This is a good price-direction clue, particularly after a major report. A break out of the opening range may tell you the direction of trading for the day or the next several days. If the market breaks through the opening range on the high side, go long. If it breaks out on the bottom side of the opening range, go short.

Rule 7: Trade the breakout of the previous day's range

This rule is used by many successful traders to decide when to establish or lift a position. It means never buy until the price trades above the previous day's close, or never sell until the price trades below the previous day's close. Momentum traders commonly use this rule as they believe that the weight in the market is in their favour when they wait for trading to break out of the previous day's trading range before adding to their position.

Rule 8: Trade a weekly breakout

This rule is similar to the daily rule, except it is used on weekly highs and lows. A break of the weekly range can be seen as a signal of the trading direction for several weeks to come and can therefore be considered a stronger signal.

Rule 9: Trade a breakout of the monthly range

The longer the period you're watching, the more the market momentum behind your decision. So monthly price breakout are an even stronger clue to price trends and are vitally important for the position trader or hedger. When the price breaks out on the topside of the previous monthly high, it's a buy signal. When the break out is on the bottom side of a previous monthly low, it's a sell signal.