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Making Market Volatility Work for You

You’ve probably been seeing a lot of the word “volatility” in many different trade articles since the close of the US presidential election on Tuesday. News announcements, elections, trade agreements, and foreign events all have an impact on the markets. Be it positive or negative, the markets will tend to fluctuate after a big world event or news announcement, with uncertainty causing volatility and fear to reign. However, for the day-trader, this market volatility can be also seen as an opportunity. In a bearish market, where there is high volatility, you will take short positions. In a Bullish market, with high volatility, you will take long positions. The key here is that you will take positions with the overall market trend. When trading in harsh market environments, it is easy to lose your head, so it’s important to remember to stick to your rules and have a plan before you start. Traders concern themselves with economic calendars surrounding news events that include:

Federal banks
Economic data
Government policy
Global news announcements

We recommend that all traders check the weekly FOREX Calendar (found HERE) to make sure they know what they are trading into. We encourage our traders to avoid any trades around news, to avoid the potential for unpredictability and losing money in the market. Trading into a news announcement is a breeding ground for inexperienced trader losses. Another way to avoid risk is to make sure that you follow you know your rules before the trade starts. The harder part is following them once the trade begins! We always recommend using a stop-loss order to protect against a larger market loss. Have a plan for what you’re going to do with each trade before you start, as well. Know your risk levels and the maximum loss you’re willing to take for a day. If you reach this number or take more than 3 losses in a row, you should likely stop for the day. In an extremely volatile market, things may move too quickly for you to catch a good position. Professional traders know when to quit and try again another day. Once the trade starts, you may be tempted to move your position or change the plan. This is a normal response but you need to ignore it. Stick with your rules and strategies and ignore that emotional response. Having the discipline to trust the system is what separates an amateur trader from a professional. There’s nothing wrong with a small loss, small win, or even a break-even. If you stick with the plan, you can even profit in a volatile market!

Choosing the Right Futures Contract for Your Risk Tolerance

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.

The price action is either a continuation or a reversal of a preceding dominant trend, depending on the timeframe you're trading. With continuation chart patterns, you can identify momentary pauses in a market trend, allowing you to set up your positions before the...

Making Market Volatility Work for You

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

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