Futures trading is not easy. There are pitfalls (read risks and consequent losses) along the way. Being a swing trader may seem an easy job of seeing the charts for only a couple of times a day, but practising it exposes you to many excruciating details. I have committed follies, i have seen people make some pretty silly ones too in only a short period of time. Once you have a position, its easy to see the stock go up or down. Not many mistakes you can make there, can you? But initiating a new position or getting out of one seems to be harder for me now. The mind is inconsistent and the ideas are like mayflies. Discipline is a way out. I make sure, I follow my set of commandments before jumping in. Below is an inexhaustive list,
- Don't book profits midway only to buy again
When running profits, run till there is an indication of the trend ending or if your target is achieved. Booking profits halfway will only mean, you spend more on brokerage, if the trend has not ended or end seen. Very important when exposure is just an lot. - Never take a position at the start of the day.
Trading too early in a day only means that trade is undertaken with an incomplete image of the day. There always will be a short pullback until the trend of the day is established. This gives you a better picture. Jumping in early is pre-mature. - Initiate new position preferably during the latter part of the day
There are several advantages to this approach. First, the market sentiment is only evident towards the end of the day. Especially, during days when markets are looking for global ques, trading after Europe opens will provide a better perspective. For a trend based trader closing price gives further clues to the trend. Deferring buying/selling towards the close gives a clearer picture. - Futures trading is not for intraday
The risk/reward ratio doesn't justify doing this, since the brokerage is quite high.
