Futures Archives - NeuroStreet Inc.

Measuring Success: Why You Should Be Keeping a Trade Journal

by neurostreet | Oct 28, 2016 | Uncategorized

It’s the end of a long day and maybe not your best trade day. You look at your bottom line and feel nothing but defeat. Should you give up? Is it time to throw in the towel? Having a bad day in the markets can make you feel like giving up. But professional traders know that it’s the long game that matters. But if you’re not keeping a trade journal, that one bad day could be your last. And it doesn’t have to be! Trading is an endurance sport. You should be constantly training, learning, and doing to be an accomplished athlete and the same can be said for an accomplished trader. But, how do you measure your progress? A professional athlete may keep track of their endurance times, their weight, or their strength as measured by activities they perform. As a trader, you should be measuring your trading statistics in much the same way. As a trader, we can track our success and roadblocks by looking at our trade statistics and our trading log/journal. We can look for patterns to see if we can identify strengths and weaknesses that need our attention. But how do you know what you should be measuring or tracking?

Some very important elements to pay attention to when analyzing your trade stats are:

Net profit
Gross profit/Loss
Commissions
Max drawdown %
# of trades per day
% Profitable
# of wins/# of losses (Win/Loss Ratio)
Profit factor
Average time in market
Largest winning/losing trade

It is important to get into the routine of logging your trades daily. We encourage our traders to keep a master trading journal for you to log your trades so you can track your performance and decision-making behavior. You can also take screenshots of your trades to look back over and assess your trading so you can learn from your strengths and weaknesses. Traders should review your stats after a given period of time to adjust your account risk and position sizing. You can track these statistics on an excel spreadsheet or even buy a Trading Journal software to automatically calculate these percentages. We like Trading Journal Spreadsheets for their ease of use and clear format. It’s one of the many things we include for our Mastery Program Customers to help them on their path to success. Now, let’s look back at that opening scenario. You’ve had a bad day in the markets. But, when you look at your trading journal, you see you’ve had a good week overall. You’re discouraged, but know that you’re still making progress as a trader. You can now look back at your patterns and see if there was something specific or different you did that you can avoid in the future. If a professional athlete has a bad day, they look back on their results and then train harder to remove those weaknesses. With the right mindset and careful tracking, your tracking can also lead you on the road to success!

How much is this going to cost me? Futures Margins & Trading Times Explained

by neurostreet | Oct 6, 2016 | Uncategorized

One thing to consider when going into futures trading is how much capital you’ll need to trade on a day-to-day basis. This is defined in part by the types of contracts you trade (see previous article) and partially by your margin. Margin is referred to as the cost of putting on a trade. And, it is the amount set aside in your account for each contract you trade. Your margin varies by the market and the session time (day/overnight). Margin for futures is different than with stocks. With futures, we aren’t paying interest and we are not borrowing money. We are setting money aside that is already in our account. Our margin acts as a security deposit for the trades we take because futures are highly leveraged assets. There are 4 types of margins in the futures market:

Initial margin is the minimum capital amount needed to open a trade.

Maintenance margin is the minimum capital amount needed to keep the trade open. If your account falls below this amount your broker can liquidate your position without notice. For example, with a $10,000 account… if your initial margin is $5000 and your maintenance margin is $3000, your broken would liquidate the position if your account lost more than $2,000 (the difference between initial and maintenance margins and your account size). I know it sounds like a high school math problem, but it’s really that simple!

Excess margin refers to the money left over in your account in excess of the initial margin requirements to open positions.

Day Trading Margins are the amount set by your broker in order to enter into a trade in $ value per contract during market trading hours. The day trading margins return to the initial margin requirements once the market closes. Once the market re-opens your broker will switch back to day trading margin requirements.

Many of these margins vary by brokerage, so make sure to visit your company’s website FAQ sections to identify their day/initial margin requirements. One benefit to trading futures is that it provides flexibility with trading times available to trade. Unlike equities and options markets, global futures trading is open six days a week for 23 hours a day. This provides multiple opportunities for traders to trade different market sessions including (US/Aussie/Asia/Euro). A benefit to trading futures is that you can choose to trade faster market sessions like the (US/Euro) or you can trade the slower market sessions like the (Aussie/Asia). Markets are open for two main sessions during the day. The US market session, or Day Session, runs from 9:30 AM – 4:15 PM ET. The US market accounts for 30% of futures contracts traded. The Aussie/Asia/Euro market session, also known as the Globex Session, runs from 4:30 PM – 9:30 AM ET. Globex accounts for 70% of futures contracts traded. Regardless of the session you choose, you’ve got plenty of diversity in your market offerings.

Choosing the Right Futures Contract for Your Risk Tolerance

by neurostreet | Sep 29, 2016 | Uncategorized

When working to become a successful trader, it’s very important to know your own risk tolerance. This allows you to select trades that work best for you and will contribute to your overall success. For example, how big is your account? What’s the most you’re willing to lose in one day? Finally, once you have these answers, you need the knowledge to select what fits into your category of risk. In this article, we explore futures contract specifications and how to select the right one for you.

Each futures contract varies based on:

1. Contract size

2. Tick increments per point

3. Dollar value per tick

4. Dollar value per point

A “point” in this instance is one singular number movement either up or down as measured by your charts (ex: 101 to 102). A “tick” refers to the minimum price investment that your chosen security can move up or down. Knowing this information helps identify which contracts will be suitable to trade for each person’s risk tolerance and account size. For example, someone with a smaller account may consider trading the Nasdaq 100 Mini (NQ) or the Dow Industrial Mini (YM). These markets have a smaller dollar value per point/tick. However, someone with a larger account may consider trading contracts with a larger dollar value per point/tick. Contracts such as Gold (CL) or Russell 2000 Mini (TF) fit into this category. Below we’ve outlined a few examples of the major markets we focus on as a quick reference tool for you to access these contract specifications and risk metrics.

Futures Contract Name (Symbol)	Smallest Measurement of Movement	Conversion Rate in Contract $ Value	How Much That Movement is Worth
E-Mini S&P 500 (ES)	1 point = 4 ticks	1 tick = $12.50	1 point = $50
Nasdaq 100 Mini (NQ)	1 point = 4 ticks	1 tick = $5.00	1 point = $20
Dow Industrial Mini (YM)	1 point = 1 point	1 point = $5.00	5 points = $25
Russell 2000 Mini (TF)	1 point = 10 ticks	1 tick = $10.00	1 point = $100
Oil (CL)	moves in pennies (.01)	1 pennie = $10.00	10 cents = $100
Gold (GC)	moves in ten cent increments (.10)	each increment is worth $10.00	1 dollar = $100

In conclusion, only you can decide what contracts are right for you. We hope the above chart helps you to figure out what works best for your current account size and risk tolerance. To learn more about these contract types and others, we encourage you to visit us in our trade room or check out our YouTube Channel for Live Trade Recaps.

Basics of Futures Trading Explained

by neurostreet | Sep 22, 2016 | Uncategorized

The time has come! You’ve got your futures account set up and ready to go, but maybe you’ve got a few more questions about Futures and what exactly they entail. In our continuing education series of this blog, we explore the basics behind the futures market to help you better understand all aspects of trading.

First of all, what is a “futures exchange”? Futures trade on different exchanges than stocks, options and forex.

These specialized markets are where you’ll be trading and include:

CBOT (Chicago Board of Trade) is the 1st and oldest exchange in the world.
CME (Chicago Mercantile Exchange) in 2007 became the largest exchange in the world and purchased the CBOT.
ICE (Intercontinental Exchange) is the youngest and is only electronic.
NYBOT (New York Board of Trade) is owned by (ICE).

Both the CBOT & CME are based in Chicago and trade the largest variety of markets. Including, but not limited to, currency futures, treasuries, meats, agricultures, and stock indexes. Whereas, the New York Exchanges (ICE & NYBOT) trade in precious metals, petroleum, agricultures, and “softs”. The “softs” category includes cotton, cocoa, coffee, sugar, and orange juice.

Now, that we understand where we’ll be trading, what exactly are futures? Futures are financial contracts where two parties agree upon buying or selling something with the terms identified now but the payment and delivery taking place at a future date.

If you buy a futures contract you are agreeing to buy something from a seller (for future delivery) at a specific price based on an underlying asset.
If you sell a futures contract you are agreeing to sell something to a buyer (for future possession) at a specific price based on an underlying asset.

When the contract ends, one party purchases or sells the goods. The other party is responsible for its delivery as noted in the contract.

Settlement is the act of fulfilling the contract. Some contracts are cash settled and some with physical delivery.

Cash settled contracts use an external reference to settle the contract between the buyer and seller. (Example: Equity indexes settle based on the closing price of the index on the settlement date.)
Physical settlement contracts require the trader to make or receive delivery if they have an open position at expiration. (Example: “Soft” contracts like Corn, Oil, Wheat, or Cocoa require delivery or receipt by the trader after the settlement date.)

When day trading futures, our goal is to buy and sell futures contracts. Traders make decisions based on the volatility and price movement of specific markets. We are not interested in delivering or receiving the underlying asset, just with the electronic contracts being traded. We like to focus on technical analysis and deployment of trading strategies instead of fundamental analysis. During trading, we use price action, volume, candlesticks, indicators and specific software. This allows us to take advantage of opportunities intraday either for an income or for capital growth.

There are two types of futures contracts you can buy & sell: E-minis and full sized contracts.

E-Mini’s are a certain type of futures contract. The “E” stands for electronically traded and the “Mini” tells us that the contract is typically 1/5 the size of the standard contract. E-mini’s provide faster fills and better prices than full sized contracts.
Full-size contracts are a larger contract. Full-size contracts are pit traded and have larger leverage. Typically traded by larger traders and institutions. Also used to make large size trades due to liquidity requirements.

At NeuroStreet we prefer to trade e-mini’s and global futures because they have good volatility and liquidity. They give you great leverage with no short sale or day-trading restrictions. These types of contracts have great price transparency and good global coverage. In addition, they require less capital to trade. You can also trade them 23 hours/day, 6 days/week which allows you lots of schedule flexibility in your trading. And that’s it. So, you are now on your way to becoming a futures expert. Next, you’ll want to build a trading “watchlist” of markets you want to trade. This is a personal decision and should match with your risk-tolerance and trading style.

What Type of Trader Are You?

by neurostreet | Sep 8, 2016 | Uncategorized

During our last article, we talked about the basics of day trading and how to know if it’s the right fit for you. Once you’ve decided to start your trading journey, you also have to know what kind of trader strategy you want to use. At NeuroStreet we break this down into Trader Type & Trader Style.
It’s important in this industry to assess your trading type or style. This is so you can figure out what works best for you, as an individual. You may be asking yourself – What do I mean by “type” and “style”?
A trader’s type relates to their time horizon, goals, commitment level, and availability to trade.
A trader’s style relates to their trading strategy and approach to making money.

There are three main types of traders:

The Scalper – This is a “fast” trader. They are taking several different trades throughout the day and are in and out of trades very quickly. They focus on making more trades with smaller profit margins and are often available to sit in front of the screen all day to accomplish this.
Day Trader – These traders focus on trends in bull & bear markets and trade on higher time frames than the “scalper” type. They are still trading throughout the day, but are less active in their number of trades and are focused on higher profit margins.
Swing & Position – These traders don’t have the ability to sit in front a screen all day, either because of scheduling conflicts or a full-time job. They still want to trade, but with better tools & resources that allow them the flexibility to maintain their day to day schedule.

Our core strategy is universal and can be traded by all 3 trader types. This is done by simply changing the timeframes they trade on.

A trader’s style refers to the strategy the employ in working with live markets. There are many different styles, although the five most common are:

Trend – Trading with the market’s directional bias.
Reversal – Trading when markets reverse direction.
Counter-Trend – Trading against the market’s trend direction.
Breakout – Taking a trade position within a trend’s early stages.
Momentum – Trading with strong upward or downward trends.

Our core strategy at NeuroStreet focuses on a combination of 3 styles: Trend, Momentum, and Reversal. This allows our strategy to remain effective in changing and dynamic markets. Every day the market will present different scenarios, and, by utilizing a combination of styles, you will be better prepared to react to these scenarios and remain consistent in changing conditions. Our overall “style” is directional at NeuroStreet we trade with the trends and momentums in the market. Even our reversals styles are still utilizing the direction of the flow of capital and accounting for the trend & momentum of the daily markets.
This may be a lot to take in or maybe you’re used to a different style or strategy. The NeuroStreet style will be outlined and featured in greater detail in future blog articles, so you can see if this will be right for you.

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Measuring Success: Why You Should Be Keeping a Trade Journal

Some very important elements to pay attention to when analyzing your trade stats are:

How much is this going to cost me? Futures Margins & Trading Times Explained

Choosing the Right Futures Contract for Your Risk Tolerance

Each futures contract varies based on:

Futures Contract Name (Symbol)

Smallest Measurement of Movement

Conversion Rate in Contract $ Value

How Much That Movement is Worth

E-Mini S&P 500 (ES)

1 point = 4 ticks

1 tick = $12.50

1 point = $50

Nasdaq 100 Mini (NQ)

1 point = 4 ticks

1 tick = $5.00

1 point = $20

Dow Industrial Mini (YM)

1 point = 1 point

1 point = $5.00

5 points = $25

Russell 2000 Mini (TF)

1 point = 10 ticks

1 tick = $10.00

1 point = $100

Oil (CL)

moves in pennies (.01)

1 pennie = $10.00

10 cents = $100

Gold (GC)

moves in ten cent increments (.10)

each increment is worth $10.00

1 dollar = $100