Futures Help Solve Your Trading Problems By, Gabriel Grammatidis


Are you trading Futures? If not why not? Futures can help solve a number of common trading problems. See if you have any of the problems listed below –

Problem 1. You can’t trade live market hours for the New York or Chicago time zones.

You can easily trade Liquid Futures markets if you live in another time zone and even if you don’t live in the US. You can trade the most well-known Futures on the CME Globex Exchange around the clock and from more than 150 countries. When I travel to other countries, I can still trade Futures at times that are convenient for whatever time zone I’m in.

In addition to the largest and best-known Futures markets, more types of Futures products are moving to 24-hour trading. Several local Futures exchanges have already integrated their product offering into the Globex platform such as Futures on the Japanese Nikkei or the British FTSE stock indexes. Other Futures exchanges, such as the European Exchange (EUREX), have just recently decided to expand their trading hours: the EUREX family of Futures can now be traded 21 hours a day, seven hours longer than previous market hours. I would not be surprised to see this expanded to a 24-hour cycle soon.

Problem 2. Opening gaps have caused you some painful results.

Futures markets don’t experience gaps day to day. They take only a short trading break daily at 5 pm (ET) which means price action is smooth & flowing for nearly 24 hours each day. For this reason, traders can use long-term systems, swing systems, day-trading or even quick scalping techniques at any time of the day or night.

Because of the smooth prices and absence of gaps, you can choose to trade from the very short-term (5 second, 15 second, 1 minute, or 5 minute bars) to medium-term (15 minute, 60 minute and 240-minute bars) to longer-term charts such as the Daily, Weekly, Monthly or even Quarterly. Usually, I trade intraday or enter into swing positions on the 5, 15, 60, and 240-minute charts. If I want to do something other than stay at the screens during the day or if I want to sleep peacefully at night, I use stop orders to take care of my open positions.

Problem 3. You trade stocks but they offer limited choices regularly of what/how to trade because individual stock prices are highly correlated with the overall equities market.

With Futures, you can trade numerous uncorrelated major Asset Classes such as Equity Indexes, Metals, Energies, Interest Rates, and Specials (e.g. the VIX, USD Index or Bitcoin).

Multiple asset classes and timeframes gives you the freedom to find lots of opportunities and to trade just the best ones at that tie. The systems I trade help me quickly scan 21 Futures markets across multiple timeframes and condense the opportunities into a handful of low-risk, high-quality trade ideas. Further, I don’t care if trends are bullish or bearish. Futures trading enables you to go short just as easily as you are able to go long. You have full flexibility across many different dimensions in Futures markets.

Before the shift to an electronic platform, futures markets used the open outcry method. Here is the view of traders in the pit from some years back. Photo credit: wsj.com

Problem 4. You worry about your fill prices on stock trades because of high-frequency trading bots, order prioritization, bid ask spreads, algo traders, and dark pools.

Retail traders in the Futures markets have equal footing access to the same prices as institutions and large corporations. How? In the late 2000s, CME Globex implemented an ‘open access policy’ which allows instant & direct participation in the trading process via communications hubs around the world that connect directly to local brokers. Orders execute within milliseconds for any trade size at any time and from any place in the world.

In plain terms, trading Futures is the most efficient and effective trading vehicle you can find globally in the capital markets.

Problem 5. You can’t trade some instruments and some symbols short-term so you can’t compound your earnings and grow your equity rapidly.

You can trade the liquid Futures markets very well in very low Timeframes (e.g. 5-second, 15-second, 1 minute or 5-minute charts) because of the market efficiency and liquidity. The lower the timeframes you trade, the more trade opportunities you will encounter in a given time period. This applies especially to the 5 very liquid US Equity Index markets, Gold, Crude Oil and Natural Gas. These markets are so liquid that you can trade timeframes well below the 1-minute charts if you want. (Some of my students have specialized their trading game on this kind of very short-term trading.)

Problem 6. You are very uncomfortable converting intraday trades into swing trades so you miss out on the big R multiple moves.

Because Liquid Futures markets trade practically 24h a day, you can hold a position overnight without running the risk of big gaps at the opening bell like stocks can do. When a day-trade develops well and provides excellent long-term potential, I routinely transition it into a swing trade. Thus a position with a 15-minute chart entry could be converted into a swing trade on the 60-minute chart. If it continues to do well, my rules then allow it to progress to the 240-minute chart and even potentially higher by following a specific swing exit algorithm. These type of swing trades do not occur every day but when they do, very Big R Multiple results are common. We call these Pirate Trades!

Problem 7. You know your stock order could be routed to any number of electronic exchanges so you never really know if you are getting a good price, let alone the best price on a trade.

All CME Globex Futures orders clear through the CME Clearing House (the single largest clearinghouse in the world) which ensures no price ambiguity. It guarantees futures contracts and ensures the integrity of all trades. With this market structure, you get fast and transparent pricing. That means you know the price of your order was the best price at that time.

Problem 8. You didn’t want to open an account for stocks, an account for options, an account for Forex and you didn’t want to deal with multiple platforms so your trading equity is heavily concentrated in just stocks. You worry about what you will do in a bear market.

With Liquid Futures, you can diversify your trading across a vast number of asset classes. Additionally, you can go long or just as easily go short in any of them though a single platform. Further, you have probably noticed that some commodities have made spectacular moves in the last year. Gold and silver are near all-time highs. Oil hit an all-time low and has recovered partly. In addition, you could easily have traded the big moves down and up in the equity indexes and the recent surge in Bitcoin. You could be simultaneously short the S&P, short Oil, long Gold, and long BTC to diversify your account – all within the same platform. Trading Liquid Futures can really take your trading to the next level!

Problem 9. You want to trade BTC but you have read about GBTC’s premium and you are not sure about putting money in lightly regulated crypto exchanges.

You can trade BTC on a fully regulated exchange through the CME futures contract today. In addition, Ethereum will become a tradable futures contract soon as well.

Problem 10. You are a beginner or intermediate trader and think some other markets might be better for learning how to trade.

Actually, Futures markets offer you a great way to start trading for the following reasons –

  • Futures markets are some of the most liquid in the entire world.
  • Futures on margin is very cost-effective and it allows you to benefit big from small moves in small timeframes.
  • Retail traders get the same prices transacted instantly at low costs and in the same efficient way as the larger traders.
  • You don’t have to worry about opening gaps killing your positions.
  • You can easily convert a shorter-term trade into a longer-term trade.
  • You can trade outside the business hours in New York or Chicago.
  • You can find the kind of price patterns you trade because there are so many markets and they are uncorrelated.
  • Americans benefit from a much lower tax on Futures trades compared to stock trades.

I started trading Futures very early in my career and I can say with confidence that there is no easier, no more cost-effective and efficient way to trade than Futures right now — wherever you live, at whatever timeframe or time of the day you might want to choose.

Given this short, but powerful list of solutions to your trading problems, why aren’t you trading Futures already?

Take your trading to the next level!

I hope to see or hear from you soon,

Gabriel Grammatidis

P.S. from Gabriel — I will teach three low-risk, high SQN scoring trading systems for Futures at the upcoming live-streamed Futures Trading Systems Workshop in mid-September.

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