Successful Futures Day Trading Strategies Blog - Learn how to become a better day trader!

5 techniques for placing stop loss orders based on market context

 

There are many questions about the ways of placing stop loss orders and which technique to follow. Although no single one approach is better than the other, knowing which options you have and how to place a stop loss with different techniques is important. We will now introduce the 5 most commonly used methods, in our opinion, for setting stop orders.

Please note that it does not matter how we define the trade entry in the examples below and they are just meant to provide context for the way of setting stop loss orders.

Disclaimer:  The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to

Read More


Exploring supply and demand zones and how to trade them

 

In this article, we will explain supply and demand zones and what they can tell you about price charts as well as how to use them in your trading. First things first: a supply area on a chart is an area where selling interest outnumbers buying interest and the price falls until the buying-selling balance is restored. Similarly, a demand zone is a price level where price rallies because there is much more buying interest than selling interest. All this will become clearer once we start looking at charts.

 

Supply and demand = the origin of price moves

The screenshot below shows a well-defined demand zone on the left side of the chart. You can see that before price started the large rally, it paused for one price candle. This is what

Read More


5 Indicators and Tools to find Trend Strength and Direction

 

Being able to read charts, and trend structure in particular, is an important trading skill that can help traders better understand market moves and enable them to apply their trading method in the right situation. No system works all the time and knowing how to differentiate between trends and consolidations is an important aspect of trading. In this article, we introduce 5 different ways traders can make sense of charts and which indicators to use to understand price structure correctly.

Classic Dow Theory – Highs and lows

Many traders feel lost when looking at pure (naked) price charts but the analysis of highs and lows, in the sense of the Dow Theory, can already tell you a lot about the market you are looking at.

It all starts with the classic definition

Read More


Why You Need to Adjust your Risk to Reward Ratio and Not Keep It Static

 

The concept of reward to risk and the risk:reward ratio are important principles in trading, yet very few traders know how to use them correctly. The risk:reward ratio principles allow a trader to adjust and filter the trades he is about to take in a way that can give him a better expectancy. But let’s start from the beginning and explore the risk:reward ratio step by step and give you a comprehensive overview.

 

What is the risk:reward ratio (RRR)?

Basically, the risk:reward ratio puts the potential reward and the potential risk of a single trade into a relationship and provides you with a ratio.

For example, a trader who wants to enter a long trade on Gold with a 7 points stop and a 21 points take profit target, has a potential risk:reward

Read More


Deciphering Order Flow – Understanding The Mechanism That Moves Price

 

To understand the mechanism that moves price up or down we have to learn the interplay between the Depth of Market on one side and Market Orders on the other side. This interplay is the Order Flow. We used SierraChart Trading Platform for the illustration.

The Current Price is the last price in which a trade took place. This last trade could have taken place either at the Best Bid Price or at the Best Ask Price. Those two terms will make sense in a minute once we understand what the Depth of Market is.

The Depth of Market is the total Size of limit buy or sell orders that are placed at each price. It is often called Liquidity, Limit Orders, Passive Orders or The Book. Take a look at

Read More