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Best Strategy for Futures Trading

Two words Price Action. First off what is price action? Price action is the movement of a security's price plotted over time. Price action forms the basis for all technical analysis of a stock, commodity or other asset that can be charted.

day trader looking at his computer placing trades

In short price action is how price moves from A to B on a chart. Traders look to take advantaged of these moves in hopes of a monetary gain. These gains can come from short positions ( looking to capitalize on a decrease in price) or from long positions( looking to capitalize on an increase in price).

There are three different ways price action is used, intra-day trading or scalping, swing trading and investing. Now all three of these methods have there pros and cons but today we are going to focus on intra-day trading & scalping.

Intra-day Trading & Scalping

Firstly what is day trading. Normally when the word day trading is used it means taking multiple trades a day while looking for short term gains, these gains can come in the form of long/short trades. These trades normally last for a few seconds or maybe up to an hour or so.

The real question is how do traders get into these trades? This brings us back to our first statement that price action is the best strategy for futures trading. By using price action traders can look for intra-day trends and look to make gains from them.

But when we say price action what do we really mean? In short we mean, is price making Higher Highs and Higher lows? If so then we most likely have a bullish trend and should look to take longs off of support levels. Traders don't want to simply buy support levels alone, they look to combine price action and handful of tired and tested signals to enter into trades.

These signals are the same regardless what time frame or what direction (long/short) traders are looking at.

The same goes for bearish trends, is price making Lower Lows and Lower Highs? If so then it would probably be a good idea to look for shorts. Ideally traders would look for areas of resistance to get short from. Not only will traders be looking for areas of resistance they will be looking for the proper signals as well.

The idea behind using price action is, traders wont have to wait for any lagging indicators ( yes all indicators lag) to enter into traders. By using and learning price action, traders will be able to make real time decisions on whether to get long or short.

As we know the markets can move extremely fast and if you have to wait on a lagging indicator to get into trades you have most likely missed the move or will end up getting in at the end of the move.

Now one simple blog post won't be able to teach you everything you need to know about price action and how to use it but if you would like to learn more, become a member and get access to our in-depth price action course and numerous other benefits.


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