Futures Margin Trading Tips: It's Not the Price That Matters, It's the Trend
3 min read · · Korean original
Hello. Today I'd like to talk about some tips for futures margin trading. When trading futures, the question most people wonder about is probably "Is it okay to enter at this price?" In other words, "Isn't this price way too high?" But professional traders say that direction matters more than price, followed by entry timing, and only then price. Even if your entry is a little late, you can expect a reasonable profit as long as you get the direction right. Conversely, that's also why trading against the trend is dangerous.
How to Trade in a Trending Market
In a trending market, the trend on a larger timeframe usually drives the overall move more than the trend on a smaller timeframe. So you can take a strategy of selling at resistance and buying near support on your main trading chart. In a market with a clear trend, it can actually be better not to use technical indicators. You just let the trend carry your trades. When the trend is strong, the market usually ignores the indicators and keeps moving in its direction.
How to Trade in a Sideways Market
On the other hand, you might wonder what to do in a sideways market where there's barely any trend. The strategy is the same here too. Look for buying opportunities at support and selling opportunities at resistance. In fact, more than 80% of the market is sideways, so you should prepare a strategy for these sideways markets. Of course, the established view in the industry is that it's better to wait for the best opportunity and enter then, rather than trading repeatedly by jumping in and out at every level. What matters here is actively using stop-loss orders and indicators such as the Slow Stochastic. However, don't put blind faith in them. You need to carefully pick your entry point to turn your trades into profits.
For reference, trends can be classified by direction into uptrends, downtrends, and sideways trends, and by strength and duration into long-term and short-term trends.
Today we looked at the importance of the trend in futures margin trading.
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