While bonds have been trending aggressively over the last few months in a Bear Market (yield), equities seem to be very directionless or sitting in a deer market. A deer market is a term used to illustrate a market condition when investors are unable or unwilling to move due to uncertainty – like a deer who freezes when “caught in the headlights” of a vehicle. (more…)

A common preoccupation, bordering on an obsession, for many novice traders is the ability to identify and profit from a technical breakout that leads to a trending market. I don’t blame them for seeking the answers to questions such as “how do I know when this market is going to break?” or “where do I enter and where should I place my stop?” It seems a logical subject for discussion to which there must be a solution; how else do you make money! Unfortunately for them this preoccupation is fuelled by the retail trading industry and the trading communities on the internet that promote freely available, fool-proof systems and free training with guaranteed results. The majority of these products are trend-following in nature and make for easy-to-draw technical charts, clear and unambiguous to all those that view them – after the event of course. How convenient it is to offer a product that once plugged-in will turn the global financial markets into an instant cash-generator for anybody with internet access. (more…)

A recurring question that has been asked by prospective traders wishing to join the Trading Floor Training programme during a flurry of interviews this week has been “which markets will I trade?” A sensible question for the eager, novice trader to pose and one which is asked with an expectation that the answer will be “a suite of products across a range of asset classes.” “Surely that is the glamorous world of financial markets that I will now inhabit as a Professional Trader” is the thought process of the interviewee! Futex traders and investors access multiple futures markets on a variety of global exchanges in addition to options and various cash markets. In fact, one of our business’ key strengths is the speed and ease with which our team of professional market participants can take advantage of opportunities in any product of any asset class. However, the ability to negotiate effectively a suite of products simultaneously is one which is honed over time; a difficult skill that requires tuition, experience and dedicated practice.

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As part of our regular look at Technical Analysis for Inbox Education we recently introduced the concept of Key Market Metrics (KMMs) (click here to see more information). KMMs are the objective, market-generated patterns of price activity that form the basis of a trading approach. The observation, recording, discussion and subsequent implementation of KMMs form a key component of the Trading Floor Training programme and a very effective technical analysis strategy. The May Trading Floor Training intake has just completed their analysis of KMMs and their findings provide some interesting insight.

Taking the Euro Stoxx 50 – a Blue-chip representation of 50 supersector leaders in the Eurozone and one of the most popular products amongst the Futex traders – as their focus product, our latest trainees have delved into the statistics and generated results that will go a long way to shaping their trading approach over the next 4 weeks. For example, the average trading range in the first hour (the Initial Balance) has tripled in size in May when compared to March. The average daily trading range has also tripled. The volatility that has permeated the financial markets over the past few weeks has manifested itself in the KMMs and trading styles should be amended as a result. It was also interesting to confirm that the outliers in terms of KMM data were as a direct result of significant fundamental drivers, for example the announcement of the European rescue package and the dramatic intraday sell-off, exacerbated by computerized trading, in the US equity markets.

And herein lays the key to the use of KMMS. By regularly analysing their chosen market objectively and in detail as part of their daily/weekly technical analysis routine, our novice traders are able to ensure an intelligent and thus effective trading approach. By studying metrics such as the smallest, largest and average size of an hourly or daily trading range and correlating the results to the day of week and the economic calendar, our trainees become skilled at interpreting in real-time the developing market conditions. They develop an ability to objectively assess whether the unfolding price activity is suggestive of a typical or an atypical trading day. This assessment guides the trading approach and assists in the rational identification and execution of higher probability and lower risk profit opportunities – a key goal for any professional Proprietary Trader.

Futex Investment & Trading Academy

“The Ultimate Futures Trading Education

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As regular readers will know, our professional traders use technical analysis to complement rather than define their understanding of the markets. Each market trades uniquely and none stand still. So although helping all students of our Trading Floor Training programme to develop their own style of trading is of paramount importance, experience shows that keeping technical analysis simple and unambiguous is key to achieving consistent profitability.

Enter the simple trend line.

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‘Technical Analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends.’ John Murphy’s definition, taken from his seminal work Technical Analysis of the Financial Markets – often referred to as an industry bible – is one which is repeated in journals, articles and internet forums across the trading community. However, what the majority of novice traders fail to realise is that although the underlying principles of the patterns he describes are valid, there is a lot more to consistent profitability in a live market than simply executing Murphy’s set-ups. (more…)

The cornerstone of technical analysis amongst the professionals on our trading floor is the effective identification and utilisation of support and resistance. It is easy for novice traders to get sidetracked by the plethora of tools, indicators and studies that exist within the field of technical analysis and to overlook the basic, essential and ultimately profitable principles. However, if a trader is able to consistently identify where the market will find support or resistance and how significant the market’s reaction to the price level will be, then he will be able to make effective, profitable trading decisions. (more…)

Most aspiring traders that join Futex Academy have a basic knowledge of technical analysis. The plethora of books, magazine articles, blogs and websites dedicated to this popular trading discipline ensures that the majority of motivated applicants are able to recognise and discuss chart patterns with some conviction. However, what these novice traders do not realise is that this initial knowledge can be more a hindrance than a help and that these information sources really should carry a warning sign… (more…)

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