Trading Commodity Futures - Intuitively Day Trading The S&P 500 And E-Mini - PART 3

By Thomas Cathey

Every trading market has its own special patterns and oddities that will communicate its intentions. Patterns don't always work every time of course, but even that can be a clue of underlying extreme weakness or strength. Just like knowing a spouse well, learning to read your special market can pay dividends. Read on to learn more...

More Observations From My Trading Notes:

“When entering with the main trend, have patience for the move to occur. Average in a second lot if needed and don’t get faked out easily.”

Amen. S&P 500 futures contract price action will do everything it can to get you out. Remember that. Averaging down ONE time, once in a while, works for me when I’m confident of a turning point. I might even do it twice, but that's it. Doing it all the time, to feel good, hoping for a turn, is the eventual road to big losses. When they carry traders out by their feet, it's high probability he averaged himself there.


“When holding a position with the trend, use patience to let the move climax for profit.” Amen and Praise the Lord! As someone once said, "Don't sell your wheat until it boils!" This applies to all markets.


“Remember that doing the right thing over a large number of trades is what makes money long-term and consistently in commodity futures trading.” The same principle applies to owning a casino. You don’t see the casino owners worrying. They may lose in the short-term, but over a long series of events they must do well. They have the odds in their favor. You can do this in commodity trading with a decent method too, as long as you keep the losses from getting out of hand and you keep control of yourself.

There’s so many ways to blow it. We get a few winners and get cocky. We take marginal futures trades and give back a good portion of our profits. Or we have a bad day and try to make it all back on one trade. Run for the hills after you have 2-3 bad trades. There is always a reason for losers, and sometimes yours is not to know the reason why. Just accept it and test the waters carefully the next day.


“You can handle any market.” This is a confidence building statement. What I mean here is that it doesn’t matter if the e-mini futures market trends up, trends down, chops, goes quiet or whatever, I can handle any market with confidence. I have a plan for each market activity. If it’s dull, I do nothing but wait. If it’s trending up with a positive A-D line, I buy only. If it’s trending down with a negative A-D line, I sell short only. If it’s swinging wildly and I can’t figure out what’s happening, I watch and wait. If the e-mini is chopping and my "chop system" is working well, I toggle it on and take the signals.

When things get tough, it pays to have faith that the market will start talking to us again. Meanwhile, our competition is in there slugging it out, giving back their cash. We must learn to conserve our mental as well as financial energy during uncertain times.

Part Four of Four Parts - Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course" - they're all free. Main site:

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