Lessons for Futures Traders
Lesson for Futures Traders
Opening Remarks
This week brings us back to several core lessons that continue to shape the success of disciplined futures traders. Whether you're managing a funded account, building consistency, or refining your edge, these principles are vital.
Green Over Greed — Cultivating Contentment
One of the most important mental models is to "prioritize green over greed." This means being content with achieving your profit target and then walking away for the day. For instance, closing after 20–30 points locks in gains and reduces the temptation to overtrade. Overtrading is often driven by greed and leads to unnecessary losses. Practicing this form of contentment aligns with the scriptural principle found in James 1:12, emphasizing the importance of patience and endurance through trials. In trading, waiting often proves to be more valuable than constant activity.
Follow the Battle Plan — No Discretionary Detours
Sticking to your mapped-out trades is critical. Every trade you take should be based on the pre-session battle plan. Discretionary trades—those that weren’t planned but seem tempting in the moment—can erode discipline, even if they occasionally work. Success comes from following the process, not chasing unplanned setups. Emotional decision-making undercuts consistency.
The Primacy of Intraday and RTH Levels
Give weight to levels that develop during the current session. These intraday levels hold more relevance than older zones, especially during rollover periods. Regular Trading Hours (RTH) levels also carry significantly more volume and influence than overnight levels. Think of RTH as the "main battlefield" with the bulk of institutional and retail participation. Holiday sessions, due to lower volume, are treated similarly to overnight sessions and are less reliable for support/resistance.
Trade with the Trend
Respect the direction of the broader trend. If the market is in a strong uptrend, shorting can be incredibly difficult and often unprofitable. Instead, look for pullbacks to join the trend via long setups. Days that move strongly lower from open to close (“bell-to-bell short days”) are rare. Even in strong downtrends, significant rallies can occur, providing counter-trend opportunities—but these should be approached with caution.
Managing Shorts vs. Longs
Short trades should generally be scalped—executed quickly and exited for fast gains. These “touch and go” shorts are often not held for extended periods. Long trades, however, can be managed differently. A portion of the position, sometimes called a “runner,” can be trailed behind the RTH low to capture extended moves over multiple sessions.
Multi-Contract Trade Management
Using a structured trade management system, such as a three-contract model, provides clarity and control. One contract may come off at a first target, another at a stretch target, and a third may trail for a larger move. For shorts, it’s critical to lock in profit early and leave a runner targeting zones like single prints. Count “ladders” in the trend to assess structure—five to seven ladders often occur in strong short days, while long trends can stretch even further.
Knowing Which Trades to Avoid
Avoiding poor trades is just as important as identifying good ones. Do not go long into known rejection zones or short into strong support. Never take a new trade if you're mentally still caught up in managing a previous one. Trades taken “in the middle” of a range or structure—without a clear edge—should be passed on.
Journaling and Weekly Reflection
Daily journaling is essential. Log your trade setups, entries, exits, and especially your emotional state, sleep quality, and overall readiness. At the end of each week, take time to reflect. Ask yourself: Which day had the clearest structure? Did I take advantage of it? Reviewing journal notes and screenshots can surface critical patterns and areas for improvement.
The Value of Patience
Trading is mostly about waiting. Professionals understand that hours of boredom often precede the few crucial minutes of execution. Don’t force trades early in the session or after holiday periods. Allow the market to “tip its hand” by showing you where value is building.
Understanding Structure and Magnets
Key levels like weekly gaps, prior all-time highs, and single prints often act as magnets—drawing price toward them. Understanding these market structures helps you anticipate reactions. Double distribution days, where the session splits into two auction zones with single prints in the middle, reveal important structural insights.
News Drivers and Seasonality
Not all news is equal. FOMC minutes may be non-events, but CPI, PPI, and retail sales can drive real volatility. Consumer sentiment and inflation expectations also matter. Seasonality plays a role—July is historically a bullish month. Be aware of these patterns in your planning.
Intermarket Analysis
Watch the broader picture. When one index like the Dow approaches its all-time high, it may indicate a possible stall or reversal in others. For example, if the NQ and ES are trending up and the Dow has already peaked, it might signal an upcoming pullback across indices. Intermarket dynamics offer clues you shouldn't ignore.
Frequently Asked Questions
Q: Why are RTH levels considered more reliable than overnight levels?
A: RTH levels involve significantly higher volume and broader participation, making them more meaningful as support and resistance zones.
Q: How should short trades be managed compared to long trades?
A: Short trades are typically fast scalps, while long trades can be trailed for extended runs using runner contracts behind key levels like the RTH low.
Q: What’s the benefit of using a multi-contract trade management system?
A: A multi-contract system allows for structured exits—taking partial profits early while letting a runner capture larger directional moves.
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Lessons for Futures Traders
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