Futures Trading Rules

General Rules

NOTE: I have halted all futures trading. My experiments have all failed to produce profits. Trade carefully if at all.

New Rules

1. Trade only in the direction of the trend.
2. Look for low volatility trading periods.
3. Place stops at ATR from entry.
4. MACD must have 2 mature bars in the same direction for validity.
5. Use 2 min bars.
6. Look for crossover of SMI signal and threshold for entry.
7. Look at advance / decliners for confirmation.
8. You only get one losing trade per day.  If you lose you are out for the rest of the day.

1. Be aware of all economic announcements and news events. Morning announcements usually happen at 0800, 0830, and 1400.
2. Only place entries on candles that are at least 70% formed. On a 15 min candle you need to be at least 10 mins into the period to have a valid signal.
3. Use a candle chart with 15 min bars, the 20/50 moving averages, and bollinger bands. Check your daily support and resistance to confirm intra-day bias.
4. Candles are more valid the closer to 15 minutes they reach. Be careful not to misread.
5. Don’t trade off of the opening 15 min bar.
6. Exit your position once the trade has moved 5 pts against you no matter what.
7. Stop trading for the day once you’ve made $5,000.00.
8. If you are trying to enter from a hammer take the natural ask and do not try to scalped the entry. The .25 you give up will more than make up for the hammer entries you would have missed.
9. If you have lost three trades in a row, stop trading for the rest of the day.

There are really two types as market: low-volatility and high-volatility. Your biggest job is to correctly identify which market you are in and trade accordingly.

2. My biggest job is to recognize whether we are in a volatile or non-volatile market. A volatile market will be characterized by
5. Wait for a large candle to exceed a bollinger band and then place a trade in the opposite direction for a short 1pt scalp.
7. Remember these are scalping trades, set a time stop for retracement of 1 hr.

Low volatility markets are characterized by tight or contracting bollinger bands, low or decreasing ATRs, resistance at 20/50 and outer BBs. These markets are usually trending and not likely to have large, sudden, and violent reversals. In order to trade in this market you must:

1. Be sure to nibble and not bite. Use the extremes of movements to place your entries in the counter direction. You are looking to pick up 50 to 100% of the ATR and no more per trade.
2. Set your stop loss at no more than 2x ATR. Be sure that its a GTC order in case your cross over 1am ET.
3.

High volatility markets are characterized by wide or expanding bollinger bands, high or increasing ATRs, little resistance at 20/50 and easily able to penetrate the outer BBs. These markets are usually channeling and likely to have large, sudden, and violent reversals (think FOMC announcements). In order to trade in this market you must:

1. Remember that you are trading to win big and lose little here. This is a lower probability trade that will require you to be extremely disciplined with your stop loss.
2. Pick your entries outside of the bollinger bands and only after you have seen at least one full bar of resistance. Set your stop loss at 1x ATR. Stop reversals are allowed but not recommended.
3. Once the price has moved in your direction move your stop loss up (only use stop loss market and NOT limit) to reduce or remove any risk of loss.
4. Be patient. You can look to exit as the price approaches a mid-band, 20, 50, or support / resistance line.
5. You can decide to exit based on the current days action. If the price is just slamming up and down without regard to the 20 then ignore it as well.
6. If you going to exit at a specific price point go ahead and put in your GTC order to exit. This will place the order in the que usually increases the speed of your exit and the order ages forward to execution. This is a great use of “one cancels other” order entry (one for your stop loss and one for your exit).
7. You can also use a time stop so that if you haven’t reached an exit point in an hour go ahead and close down the trade.
8. If you are making a technical entry, don’t get filled and the technical signal is gone, skip that entry.

Below are some good examples of trades and setup that are instructive:

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