by Arrnica Dayannandan

Created on: February 11, 2009   Last Updated: February 20, 2009

You need to be successful at trading futures in the first place, in order to begin measuring your success at trading futures. This can be achieved by using a series of simple steps as follows:

*What is your aim?

No one got anywhere by trading in futures without defining what they are aiming for. Therefore, the first step is to know where you are aiming at and staying focused. Yet you must also stay alert of events that may interrupt or disrupt you altogether from achieving such an aim. For instance, consider that you are one of those traders aiming for persistent returns on your intraday trade at reasonable levels of leverage and risk. Your aim will be to achieve at least 10% returns within a week, while staying in a limit of up to 25% drawdown.

*When to make your entry?

To make any entry you need to be on a constant look out for any short term scalping signals. The probability of your success will be greater when you are scanning for the bandwidth of extremely overbought/ oversold circumstances. So effectively, once you have grabbed such an opportunity, you are waiting for the market to return to its mean. This is in addition to the advantage of breakouts owing to support and resistance levels. That is to say that you are trying to take advantage of the initial trend momentum. It is needless to say that you must buy under oversold conditions and short sell under overbought conditions. Similarly, buy to ride the breakout above resistance and short sell down the breakout below support.

*When to make your exit?

This requires no special intelligence. When you are exploiting a scalping method, all that you have to do is stick on, till you achieve your basic 1:1 risk/reward ratio. Exit by booking a profit, if you can hit your target, or exit when you hit your stop loss levels.

*Judicious deployment of trading money

Futures trading will work in your favour, if your win ratio is in excess of at least 55%. If you want your risk-return tradeoffs to work in your favour, you need to risk a minimal 4.5% of your total account per trade. This will make sure that no matter whether your account stays constant, dives up or down, you can still be able to correctly trade for the size of your account. Also make it your second nature to stick by your conviction of exiting no matter how tempting it is to not exit at stop loss levels. This holds true unless you have some extraordinary, as well as credible market news that prompts you to believe otherwise. This will ensure that you do not

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