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9 Ways To Maximize Your Futures Trading Profit

Looking to maximize your futures trading profit? This article discusses 9 ways that will help you.

Futures trading can be profitable for those who approach it with a solid understanding of markets and a disciplined approach to risk management. 

In this article, we will explore some of the best ways to increase profitability in futures trading through technical analysis, a trading journal, futures risk management, and trader psychology. We will also look at specific futures trading techniques proven to work and detail how we can implement them into our trading approach.

Utilize technical analysis to improve futures trading profit

Technical analysis evaluates charts by analyzing the price action of various securities and financial assets. Using tools such as chart patterns, trendlines, and indicators can improve futures trading profits by enabling traders to identify potential entry and exit points that provide an edge over the rest of the market.

A popular technique in technical analysis is using trend lines. A trendline is drawn by connecting various tops or bottoms, allowing us to visualize a trend easily. By drawing a trendline and watching for breaks or bounces off the line, traders can identify potential trend reversals and make trades accordingly. 

For example, if we connect a trend line to at least two points in an existing trend and wait for the price to retrace into the line, we can wait for a candlestick confirmation to enter into a position with a stop loss just below. This is a simple but highly effective way of trading due to its high reliability and favorable risk-reward ratios.

Daily QQQ chart showing downtrend line with a possible entry example

Utilize Candlestick Patterns to improve technical analysis 

Traders need to become familiar with candlestick patterns, especially the lower they go in timeframes. Reversal patterns like the false break candle strategy and the dragonfly Doji are great examples of profitable futures trading strategies. Candlestick patterns are the foundation of technical analysis; with knowledge on the subject, futures trading profits will be possible. 

Using Trading Journals can improve futures trading profits

Another key component of profitable futures trading strategies is using a trading journal. A trading journal is a detailed record of a trader’s strategies, routines, and trades. This includes details such as the contract traded, entry and exit points, and the profit/loss for each day. By keeping a trading journal, traders can review their past trades and identify patterns and areas for improvement.

Here are some tips for creating a high-quality trading journal:

1. Set specific goals

It can be helpful to set clear goals for your trading, such as increasing your win rate or reducing your risk per trade. They can even be psychological, for example, releasing the outcome of a trade. Your trading journal can help you track your progress toward these goals and is a vital stepping stone toward futures trading profits

2. Record key information

Include the date, the contract you traded, the entry and exit prices, and the position size. Also, note any key events or news that affected the market. Write down what you think you could have done better and what you did right.

3. Analyze your trades

After each trade, take some time to reflect. Remember that even if a trade’s outcome is a loss, it doesn’t mean it was an inferior trade. As long as you follow your plan, that’s all that matters. Consider risk management, entry and exit points, and any emotions that may have influenced the decision-making process. Remember that you are becoming too attached to the outcome if you have a rush of emotions when taking a position. If you follow your plan to the tee, you should feel supremely calm whenever you take a new position.

4. Keep it organized

Use a spreadsheet or a dedicated software program to organize your trading journal. This can make it easier to analyze your performance over time and know if your system incorporates profitable futures trading strategies

5. Keep disciplined

Record every position you take with no exception. This will hold you accountable for every trading decision you make, or else you may fall for the trap of saying, “this trade is not part of my plan but I’ll take it anyway, just this once.”

Prioritize risk management to maximize futures trading profit

Risk management is arguably the most crucial aspect of trading and investing when trying to maximize futures trading profits. No strategy or amount of experience will ever be a substitute for poor risk management. Let’s look at the most critical factors to bear in mind when managing risk.

Critical risk management factors for maximizing futures trading profits

1. Stop losses: Stop losses are a vital aspect of managing risk because it defines how much you are willing to lose on a specific trade. It’s important, however, to remember that stop losses must not be placed too tightly toward a position because it can often lead to the trade being liquidated even though the direction was correct. Place your stop wide enough to give the trade room to breathe, but always have one in place.

2. Position sizing: Adjusting the size of your trades based on your risk tolerance and the potential return is known as position sizing. If your strategy states that only a few hundred dollars can be at risk, then taking a large position size in a volatile market like NQ is not a good idea. By carefully managing the size of your trades, you can help ensure that any potential losses are within your risk tolerance and that your account is not dependent on the outcome of just one position, helping to maximize your futures trading profit.

3. Daily Loss Limits: Setting a limit on the amount you are willing to lose can help prevent negative days from escalating. Maintaining discipline is crucial, as traders may be prone to making poor decisions due to emotional responses to losses. These poor decisions can result in overtrading, ultimately harming any futures trading profits.

Crafting a Trading Plan

Creating a futures trading plan is a fundamental step for any trader. Without a plan, it’s impossible to drive futures trading profits, so take your time and develop one that will suit you. It does not have to be very complicated, but it must include the following:

Define your goals: What do you hope to achieve through trading? Do you want to make a full-time income, supplement your current income, or learn more about the markets? Understanding your goals will help you develop a plan that aligns with your objectives, so ask yourself, ‘what do I want trading to provide me with?’

Determine your risk tolerance: Risking your capital is very stressful in trading. Thankfully there are programs like OneUp Trader that mitigate this (more on this later). However, it is still essential to consider factors such as your financial situation, experience level, and time to allocate to the markets.

Select your markets: Decide which futures contracts you want to focus on. Each market moves. Differently, Crude Oil is more volatile than the E-mini S&P 500, and bonds have a lot more liquidity than soybean futures. Please spend some time demo-trading each one to get a feel for them.

Set up your workspace: Choose a quiet, comfortable space to trade from with a reliable internet connection; perhaps a dedicated office space could be more suitable than a home setup. The last thing any trader needs is a position to be stuck in the market while the internet goes down.

Establish a routine: Set aside specific times for trading and stick to them. Make sure to take breaks and avoid overtrading. Again, strong discipline is required so that you never feel like the market has control over you.

Following these steps and being consistent in your approach can create a solid foundation for your day trading journey. It’s also necessary to review and update your plan as your needs and goals change.

Some advanced trading techniques to consider

Remember that even with a perfect strategy on paper, it will mean nothing if the proper risk management is not in place, so it’s highly recommended that traders focus on building a solid plan to mitigate risk before entering into the realm of backtesting and strategy creation. There are various ways to trade the market, and there is no right or wrong way to do it, but here are a few profitable futures trading strategies you can look at implementing into your approach:

1. Mean reversion: This strategy involves buying and selling assets trading significantly above or below their historical averages. The idea is that prices will eventually revert to their mean or average, allowing traders to profit from the deviation. One way of doing this is by using a VWAP indicator. Large institutions use the VWAP indicator. A common strategy they use is accumulating more of a position if the price trends and retraces back to the VWAP.

2. Momentum trading: This strategy involves identifying and riding trends in the market. Traders using momentum trading will look for assets showing strong price momentum and ride the trend until it shows signs of slowing or reversing. You can use moving average pull-back strategies or trend lines for this one.

3. Range Bound Trading: This is where traders identify a range that the market has been stuck in for some time. They profit by setting buy orders at the low of the range and sell orders at the top. The benefit of this strategy, in particular, is that the risk is always defined as below the range if buying or above the range if selling. Risk reward ratios are also beneficial in range-bound strategies because the targets are set on the opposite side of the range.

Research Trader Psychology

Trading psychology is a very overlooked subject, and it really shouldn’t be that way. It’s the reason why 90% of traders and investors end up losing money. Too many traders do not know what they want the markets to provide them. They are ruled by their emotions and make rash decisions which force them to adopt a gambler’s mindset instead of a probabilistic one. Futures trading psychology is also very specific.

Do you ever ask yourself what you want from the markets? Do you ever question why you are involved in financial markets and what it will take to drive futures trading profits? Trading is only as difficult as you make it; your results will reflect that. Look at your trading performance; they will show you precisely what is happening. If you are not making the profit that you want to see, you need to make changes. It’s that simple.

How does visualizing help us improve futures trading profits? 

Visualizing gives us a clear direction of where we want to go; without it, we are blind. By visualizing the successful trader we desire to be, we train our subconscious mind to act, think and trade like a professional. 

It does not happen right away; it takes time; there is a gestation period just as there is a delay as you tune the dial of a radio. The objective is to believe that you are already profitable. You should try to visualize the profits rolling in effortlessly, accepting the losses as if they were nothing. Remember to always think in probabilities and remain focused and concentrated. 

If you place a trade and feel anxious, ask yourself how a professional would feel. They would likely feel nothing at all because they accept losses as part of the game.

How to start visualizing

Below is a technique you can use to begin visualizing the trader you want to become. You can also follow each of the steps in our Visualization Exercise video.

Sit down and relax for a few minutes. It’s better if the body is completely still for this. Once you have achieved a calm state, question how a professional would trade. Gradually transition into closing your eyes and seeing yourself trading very calmly. See yourself following your plan and enjoying your time behind the desk.

Another exercise is the daily review. It also starts with relaxing the body and then going over the trading day consciously from the moment you started the day to the moment you finished. The question was whether you followed your plan and how you felt each time you took a position. If you come to a moment during the review and notice that you’ve lost control, begin to rectify it by judging yourself on the mistake, then visualize a new variation, one where you kept control and remained calm.

Trader psychology is essential to trading because this industry requires tons of patience and discipline. Once you have nailed down the basics regarding trading technicals and charting, it’s recommended to do most of your work regarding the psychological aspect.

Using OneUp Trader can help you Maximize your Futures Trading Profit

OneUp Trader offers traders a unique avenue into the futures markets by allowing them to trade completely risk-free. This is possible because traders are vetted by completing an evaluation with rigid rules and targets they must follow.

Traders can improve their skills in a simulated environment that feels precisely like a funded trading account by participating in the OneUp Trader Evaluation. If they successfully hit the profit target, follow the rules, and trade for a minimum of 15 days, they will receive a funded trading account with one of our funding partners. 

Traders can also withdraw profits immediately, with 90% going to them and 10% to the funder.

OneUp Trader is a tremendous opportunity for traders to leverage their skills without risking their capital. 
Learn more about how the OneUp Trader program can help you to maximize your futures trading profit, or contact our team today.

Maximize your trading profits today