Long time lurker here, first time poster. I'm interested in day trading/scalping the usual suspects (ES, CL, NG, ZN). I've been doing it for about two months so far with with varying success. It's funny, some days my TA works perfectly and other days I feel like the markets are completely random.
I originally started with Buffet-style investing (hard core due diligence on companies that might be a value; buy and hold forever). Then I discovered options, which I now really just trade around earnings or use LEAPS to leverage short term investments. Then my "play" account got flagged for pattern day trading due to a mistake I made on an options spread, and while that was getting sorted out, I got into futures! Now, I guess I do it all. Though it's hard with a full-time job.
I'm very impressed with how liquid most of those futures are, and how well they follow technical analysis--even the crazy ones like oil (basic stuff: trend/support/resistance lines, RSI to some extent). They're unlike stocks, which I have found to behave erratically.
Admittedly, I really like "investing", maybe more than "trading", because I find reading about companies and making financial models more intellectually stimulating. But trading futures is just so exciting. The leverage (i.e., efficiency of capital) is unbelievable.
I also realize I have a LOT to learn. For example, I have a hard time figuring when to enter and exit a position based on RSI (set to 6). A basic strategy is to buy when oversold and vice-versa. However, those indicators usually conflict with the trend. I have had some success scalping a retracement and the trend after a retracement, but every time I enter one of those positions, one of those two indicators is telling me not to do it.
Anyway, I look forward to doing more research here and engaging in meaningful conversation with a group of what seems to be highly intelligent and helpful traders. Thanks for having me!
Friend, forget about RSI and other indicators bullshit. Want to trade futures? Look straight forward to market/volume profile and orderflow trading (DOM or footprint). Start to learn from marketdelta websile (section Learn) and jigsawtrading (section Education). Then explore trading journals of guys here to understand how to apply all of it on practice, train couple of months and start normal futures trading
The following user says Thank You to citikot for this post:
I tend to think the shorter your trading timeframe becomes the less important parameter based indicators become because they are lagging, eg: RSI, MACD, that sort of thing. Very useful for longerterm trading but I would say for short term day trading, especially scalping, you want to be looking at orderflow because it doesn't lag and you can keep your entries and exits very well defined, ie, you see something at a price level, say an iceberg after a small pullback, join it in the direction of the trend. Depending on whether you are trading a thick heavier volume, or thin lighter volume instrument, you probably don't want to see price go through that level and if it does then at that moment in time you are wrong about the direction so you get out. Using a lagging oscillator indicator your entries would probably be later, exits and losses larger because you would be waiting until price had moved against you far enough to turn the indicator; and potential profits smaller before price comes back on you.
You have already discovered 'analysis paralysis' where you have a selection of indicators and they never all say the same thing at once. Indicators are based on how price moves and volume traded. You are better off go direct to watching price and volume rather than a smoothed indicator. If you do use an indicator, say you only want to scalp in the direction of the longer term trend, say an RSI on a 5 or 10 minute chart or something, I would suggest you use just one such condition to avoid conflicting signals. Lastly some people say that you could just flick a coin and enter based on that if you exit properly, ie, exit for a small expense as soon as you can see you are wrong about the direction, or for a profit as soon as momentum stops taking the trade your way. I think the exits are more important than the entries. One needs to accept losses and not try to focus on building a system to eliminate losing trades.
Just my thoughts. Good luck.
The following 2 users say Thank You to matthew28 for this post:
Having said all of that you may find a few technical indicators helpful in keeping you OUT of bad trades. You may even find they can help you stay in good trades. I have been using the ADXVMA found here on futures.io; I may think the order flow looks good BUT if the ADXVMA is not in agreement I wait.
Another thing that I struggled with is being so focused on the shorter timeframe that I would overlook the general trend. I added another chart with 34EMA Wave and GRaB bars on a higher timeframe. It is useless for trade decisions (in my opinion) but it will keep you trading with the trend. It is also very helpful to determine if you are in the chop. I use a one minute chart for this.
The following 3 users say Thank You to Wartrace for this post:
Hi there, I'm completely new to trading and just finished some L Williams trading material. Excited to learn and realize the need for community. Really hoping to demystify the trading language which seems elusive. Thanks, Eddie M3
I try to use real time indicators, but tend to fall back on the lagging ones. The order book, for example, I can never see a pattern form and play out because of all the hidden orders and manipulation by algos. They just look like numbers on a screen that change before I can make sense of them.
I suppose if I delve further into the literature mentioned in this thread, I will get better at analysis. Switching to paper trading, rolling my sleeves up, and diving into some research. I'll report back when I'm done.