Overview
Your comprehensive guide to professional futures trading
90%
Traders Lose Money
2%
Max Risk Per Trade
3:1
Min Risk/Reward Ratio
Welcome to ETTFOS Professional Trading Guide
This comprehensive guide provides everything you need to become a successful futures trader. Navigate through the sections using the sidebar menu.
ā ļø Risk Disclaimer: Trading futures involves substantial risk of loss and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before trading, carefully consider your investment objectives, level of experience, and risk appetite.
What You'll Learn
- Complete technical analysis framework for futures markets
- Fundamental analysis and economic indicators
- Professional risk management techniques
- Trading psychology and discipline
- Advanced strategies and execution methods
- Market-specific trading approaches
The ETTFOS Trading Philosophy
Method
Develop and follow a proven trading system with clear rules for entry and exit.
Money
Implement strict risk management to preserve capital and maximize returns.
Mind
Master your emotions and maintain discipline through all market conditions.
Essential Trading Formulas
Position Sizing
Contracts = (Account Ć Risk%) / (Stop Ć Point Value)
Risk 1-2% of account per trade maximum
Risk/Reward Ratio
R:R = (Target - Entry) / (Entry - Stop)
Minimum 2:1 ratio for consistent profitability
Win Rate Required
WR = 1 / (1 + Avg Win/Avg Loss)
At 2:1 R:R, you need only 33% win rate
Kelly Criterion
f* = (pĆb - q) / b
Use 25% of Kelly for safety margin
Market Hours Reference
| Session | Time (ET) | Characteristics | Best For |
|---|---|---|---|
| Asian | 5:00 PM - 2:00 AM | Low volatility, range-bound | Position entries, Yen pairs |
| London | 2:00 AM - 11:00 AM | High liquidity, trending | EUR/GBP pairs, Gold |
| New York | 8:00 AM - 5:00 PM | Peak volume, news releases | All markets, best execution |
| Overlap | 8:00 AM - 11:00 AM | Maximum volatility | Breakout trades, scalping |
Risk Management Rules
Position Limits
- ā¢ Max 2% risk per trade
- ā¢ Max 6% daily loss limit
- ā¢ Max 20% monthly drawdown
- ā¢ Max 3 correlated positions
Profit Protection
- ā¢ Move stop to breakeven at 1:1
- ā¢ Trail stop after 2:1 profit
- ā¢ Take partial profits at targets
- ā¢ Never let winner become loser
Chart Patterns for Futures Trading
Breakout Patterns
ā¼
Futures markets respond strongly to breakouts due to leverage and stop-loss clustering.
| Pattern | Target Calculation | Success Rate | Best Markets |
|---|---|---|---|
| Triangle Breakout | Height of triangle | 70% | All futures |
| Flag/Pennant | Pole length from breakout | 65% | Trending markets |
| Rectangle | Range height | 60% | Range-bound |
Pro Tip: Volume should increase by 150% on breakout for confirmation. False breakout rate is ~30% in choppy markets.
Reversal Patterns
ā¼
Major reversals often coincide with fundamental shifts or seasonal turns.
- Head & Shoulders: Neckline break = entry signal. Target = head to neckline distance
- Double Top/Bottom: Retest provides lower risk entry. Target = pattern height
- V-Reversals: Common after limit moves in commodities. Use tight stops
- Key Volume: Climactic volume marks exhaustion. Look for 200%+ average
Continuation Patterns
ā¼
Trending futures markets pause to digest gains before resuming.
- Bull/Bear Flags: 3-5 day consolidations ideal. Enter on breakout
- Wedges: Decreasing volume confirms pattern. Trade the breakout
- Success Rate: 65% in trending markets, 40% in ranges
Futures-Specific Indicators
Volume & Open Interest
Unique to futures, OI reveals market positioning:
| Rising Price + Rising OI | New longs (bullish) |
| Rising Price + Falling OI | Short covering (caution) |
| Falling Price + Rising OI | New shorts (bearish) |
| Falling Price + Falling OI | Long liquidation |
Market Profile & VWAP
Institutional traders use these for key levels:
- Value Area: 70% of volume traded range
- POC: Point of Control - strongest S/R
- VWAP Bands: 2-3 std deviations for extremes
- Single Prints: Fast moves leave gaps to fill
Market Structure Analysis
Trend Structure
- Higher highs + higher lows = uptrend
- Break of structure signals reversal
- Pullbacks to broken resistance = entries
- 20/50/200 EMAs define trend strength
Support & Resistance
- Previous contract highs/lows
- Round numbers (psychological)
- Fibonacci retracements
- Volume nodes from profile
Time Analysis
- Seasonal patterns
- Time symmetry in swings
- Economic release schedule
- Contract roll periods
Advanced Volume Analysis
Order Flow Analysis
Footprint Charts
- ā¢ Delta Analysis: Buy volume - Sell volume
- ā¢ Imbalances: 3:1 ratio signals absorption
- ā¢ High Volume Nodes: Future S/R levels
Volume Profile Strategies
Naked POC Strategy
- ā¢ Previous untested POCs act as magnets
- ā¢ Enter on approach, stop beyond POC
- ā¢ 80%+ success rate for touches
Supply & Demand Analysis
Energy Fundamentals
| EIA Weekly | Wed 10:30 AM ET |
| API Reports | Tuesday preview |
| Rig Count | Friday 1:00 PM ET |
| OPEC+ Meetings | Monitor quotas |
Agricultural Reports
| WASDE | Monthly, noon ET |
| Crop Progress | Monday 4:00 PM ET |
| Export Sales | Thursday 8:30 AM ET |
| Planting Intent | March 31 critical |
Metals Drivers
- Real interest rates (inverse to gold)
- Dollar Index (strong negative correlation)
- Central Bank buying (monthly IMF data)
- Industrial demand (China PMI critical)
- ETF holdings (daily flow data)
Economic Calendar Priority
| Rank | Event | Impact | Markets Affected |
|---|---|---|---|
| 1 | FOMC Decisions | High | All markets |
| 2 | NFP/Employment | High | Indices, bonds, FX |
| 3 | CPI/PPI Inflation | High | Bonds, gold, indices |
| 4 | GDP Releases | Medium | Broad market impact |
| 5 | PMI Data | Medium | Industrial metals, energy |
Seasonal Trading Patterns
Q1 & Q2 Patterns
| Q1 (Jan-Mar) | |
| Gold | Chinese New Year demand |
| Energy | Winter heating peaks |
| Grains | South America harvest |
| Q2 (Apr-Jun) | |
| Gasoline | Summer driving prep |
| Grains | Planting weather critical |
| Nat Gas | Injection season begins |
Q3 & Q4 Patterns
| Q3 (Jul-Sep) | |
| Grains | Weather market peak |
| Hurricane | Energy risk premium |
| Cattle | BBQ season strength |
| Q4 (Oct-Dec) | |
| Grains | Harvest pressure |
| Energy | Heating oil demand |
| Gold | Diwali & year-end |
Critical Market Relationships
Primary Correlations
| Relationship | Correlation | Notes |
|---|---|---|
| USD vs Commodities | -0.7 to -0.9 | Strong inverse |
| Bonds vs Stocks | Variable | Regime dependent |
| Oil vs Inflation | +0.6 to +0.8 | Leading indicator |
| Gold vs Real Rates | -0.8 | Strong inverse |
Spread Relationships
Crack Spread (3:2:1)
- ā¢ Buy 3 crude, sell 2 gas + 1 heating oil
- ā¢ Normal range: $15-25/barrel
- ā¢ Seasonal peaks: April-May, Sept-Oct
Gold/Silver Ratio
- ā¢ Historical mean: 60-65
- ā¢ >80 = Buy silver, sell gold
- ā¢ <50 = Buy gold, sell silver
Capital Flow Analysis
Risk-On
- ā Stock indices
- ā Industrial metals
- ā Risk currencies
- ā Bonds, Gold, USD
Risk-Off
- ā Bonds
- ā Gold, Silver
- ā Safe havens
- ā Stocks, Oil
Inflation Regime
- ā Commodities
- ā TIPS vs nominal
- ā Energy, agriculture
- ā Long duration
Position Sizing Models
Fixed Fractional
Contracts = (Account Ć Risk%) / (Stop Ć Point Value)
- ā¢ Standard risk: 1-2% per trade
- ā¢ Reduces size in drawdowns
- ā¢ Compounds gains automatically
Volatility-Based
Contracts = (Account Ć Risk%) / (ATR Ć 2.5 Ć Point Value)
- ā¢ Adapts to market conditions
- ā¢ ATR multiplier: 2-3x
- ā¢ Smaller size when volatile
Kelly Criterion
f* = (pĆb - q) / b Ć 0.25
- ā¢ Use 25% Kelly for safety
- ā¢ Requires accurate win rate
- ā¢ Maximum growth formula
Stop Loss Strategies
Technical Stops
| Support/Resistance | Beyond key levels |
| ATR-Based | 2-3x ATR from entry |
| Swing Points | Below/above pivots |
| Moving Averages | Key MA violations |
Advanced Stop Methods
| Time Stops | Exit if no profit in X bars |
| Chandelier Exit | ATR-based trailing |
| Parabolic SAR | Accelerating stops |
| Structure Stops | Below key levels |
Risk Metrics & Calculations
Sharpe Ratio
SR = (Return - Risk Free) / Std Dev
Target: >1.0 (good), >2.0 (excellent)
Max Drawdown
MDD = (Peak - Trough) / Peak Ć 100
Acceptable: <20% for most traders
Risk of Ruin
RoR = ((1-p)/(1+p))^(Capital/AvgLoss)
Target: <1% probability
Emergency Procedures
Platform Failure
- ā¢ Phone broker ready
- ā¢ Mobile app backup
- ā¢ Position sheet updated
- ā¢ Emergency flat number
Limit Move
- ā¢ Don't panic exit
- ā¢ Check correlated markets
- ā¢ Consider options hedge
- ā¢ Scale out gradually
Black Swan
- ā¢ Preserve capital first
- ā¢ Exit all positions
- ā¢ Wait for volatility drop
- ā¢ Document everything
Common Psychological Biases
Loss Aversion
Holding losers too long, cutting winners early
- ā¢ Solution: Predetermined exits
- ā¢ Use trailing stops for winners
- ā¢ Accept losses as cost of business
Confirmation Bias
Seeking info that confirms existing views
- ā¢ Solution: Devil's advocate analysis
- ā¢ Track opposing viewpoints
- ā¢ Regular strategy reviews
Revenge Trading
Aggressive trades after losses
- ā¢ Solution: Daily loss limits
- ā¢ Cooling-off periods
- ā¢ Reduced size after losses
FOMO Trading
Fear of missing out on moves
- ā¢ Solution: Wait for setups
- ā¢ There's always another trade
- ā¢ Stick to your plan
Mental Edge Development
Process Focus
- ā¢ Judge by execution, not P&L
- ā¢ Document decisions
- ā¢ Regular refinement
- ā¢ Probabilistic thinking
Emotional Control
- ā¢ Pre-market meditation
- ā¢ Breathing techniques
- ā¢ Comfortable position sizing
- ā¢ Regular breaks
Continuous Improvement
- ā¢ Detailed journal
- ā¢ Monthly reviews
- ā¢ Mistake analysis
- ā¢ Peer feedback
Trading Journal Template
Pre-Trade
- Market context & bias
- Setup quality (1-10)
- Risk/reward calculation
- Position size reasoning
- Alternative scenarios
- Emotional state check
Execution
- Entry price vs plan
- Slippage encountered
- Order type used
- Time of entry/exit
- Management decisions
- Exit reasoning
Post-Trade
- What went well?
- Improvement areas
- Rule adherence score
- Lessons learned
- Strategy adjustments
- Psychological notes
Trend Following Systems
Donchian Channel Breakout
| Entry | 20-day high/low break |
| Exit | 10-day opposite channel |
| Filter | 50-day MA direction |
| Position Size | ATR-based |
| Best Markets | Commodities |
Dual Moving Average
| Fast MA | 20-50 periods |
| Slow MA | 100-200 periods |
| Entry | Cross + momentum |
| Risk | 2-3 ATR stop |
| Target | Trail with slow MA |
Mean Reversion Systems
RSI Extreme Reversal
- ā¢ Setup: RSI <30 or >70
- ā¢ Confirm: Divergence present
- ā¢ Entry: Price action reversal
- ā¢ Target: 50% retracement
- ā¢ Best in: Range-bound markets
Bollinger Band Squeeze
- ā¢ Setup: Bands inside Keltner
- ā¢ Entry: Breakout direction
- ā¢ Confirm: Volume expansion
- ā¢ Target: 2-3x band width
- ā¢ Works: All liquid futures
Spread Trading Strategies
Calendar Spreads
- ā¢ Buy far, sell near month
- ā¢ Best in grains, energy
- ā¢ Risk: delivery squeeze
- ā¢ Edge: roll yield capture
Inter-Commodity
- ā¢ Gold/Silver ratio
- ā¢ Crack spreads
- ā¢ Corn/Wheat spread
- ā¢ Lower risk than outright
Butterfly Spreads
- ā¢ +1-2+1 structure
- ā¢ Middle contract moves
- ā¢ Pre-report positioning
- ā¢ Limited, defined risk
Options on Futures Strategies
Volatility Strategies
| Straddles | Pre-report positioning |
| Iron Condors | Range-bound markets |
| Calendar Spreads | IV differentials |
| Ratio Spreads | Directional with protection |
Hedging Applications
| Protective Puts | Portfolio insurance |
| Covered Calls | Income generation |
| Collars | Zero-cost protection |
| Synthetic Futures | Capital efficiency |
Order Types & Usage
Market Orders
When to Use:
- ā¢ High conviction entries
- ā¢ Liquid markets only
- ā¢ Emergency exits
Avoid: Low liquidity, news
Limit Orders
Strategies:
- ā¢ Join bid/ask for fills
- ā¢ Iceberg to hide size
- ā¢ Pegged orders float
Note: Time priority matters
Stop Orders
Types:
- ā¢ Stop-Limit: Price protection
- ā¢ Stop-Market: Guaranteed
- ā¢ Trailing: Lock profits
Use: OCO brackets
Execution Algorithms
TWAP/VWAP Execution
| TWAP | Equal slices over time |
| VWAP | Volume-weighted execution |
| Implementation | Break orders into clips |
| Benchmark | Compare to VWAP |
Smart Order Routing
| Liquidity Seeking | Find hidden orders |
| Price Improvement | Better than NBBO |
| Dark Pools | Large block trades |
| Latency Arbitrage | Speed advantages |
Optimal Execution Timing
Session Characteristics
| Session | Best For |
|---|---|
| Asian (5PM-2AM ET) | Position building, low vol |
| London (2AM-11AM ET) | FX volume, Gold fixing |
| NY (8AM-5PM ET) | Peak liquidity, all markets |
| Key Times | 8:30 data, 10:30 EIA, 2PM FOMC |
Execution Tips
- ā¢ Never chase - let market come to you
- ā¢ Scale in/out over time
- ā¢ Factor all costs into targets
- ā¢ Have backup execution methods
- ā¢ Pre-market order preparation
- ā¢ Review execution quality
- ā¢ Avoid obvious stop levels
- ā¢ Use alerts vs watching screens
Top 10 Technical Indicators for Futures Trading
Master these essential indicators used by professional futures traders.
1. Moving Averages (SMA/EMA)
ā¼
Calculation & Overview
SMA = (P1 + P2 + ... + Pn) / n
EMA = (Close - Previous EMA) Ć (2/(n+1)) + Previous EMA
EMA = (Close - Previous EMA) Ć (2/(n+1)) + Previous EMA
- SMA: Equal weight to all periods
- EMA: More weight to recent prices
- EMA reacts faster to price changes
Professional Settings
| Scalping | 5, 8, 13 EMA |
| Day Trading | 20, 50 EMA |
| Swing Trading | 50, 100, 200 SMA |
| Position Trading | 100, 200 SMA |
Pro Tips: Use EMA for short-term, SMA for long-term. Volume should confirm MA breakouts. Slope indicates trend strength.
2. RSI (Relative Strength Index)
ā¼
Calculation & Levels
RSI = 100 - (100 / (1 + RS))
RS = Average Gain / Average Loss
RS = Average Gain / Average Loss
- Range: 0 to 100
- Overbought: Above 70
- Oversold: Below 30
- Standard period: 14
Advanced Strategies
RSI Range Shifts:
- ā¢ Bull market: 40-90 range
- ā¢ Bear market: 10-60 range
- ā¢ Buy at 40 in uptrends
- ā¢ Sell at 60 in downtrends
3. MACD (Moving Average Convergence Divergence)
ā¼
Components & Signals
MACD Line = 12 EMA - 26 EMA
Signal Line = 9 EMA of MACD
Histogram = MACD - Signal
Signal Line = 9 EMA of MACD
Histogram = MACD - Signal
| Signal Line Cross | Primary trade signal |
| Zero Line Cross | Trend confirmation |
| Histogram Flip | Early momentum warning |
| Divergence | Most powerful signal |
4. Bollinger Bands
ā¼
Bollinger Bands measure volatility and provide dynamic support/resistance...
5. Volume Profile
ā¼
Volume Profile shows trading activity at different price levels...
6. Fibonacci Retracements
ā¼
Based on the golden ratio, these levels act as natural support/resistance...
7. ATR (Average True Range)
ā¼
ATR measures market volatility, crucial for position sizing and stops...
8. Stochastic Oscillator
ā¼
Stochastic compares closing price to price range over time...
9. VWAP
ā¼
VWAP shows the average price weighted by volume...
10. Ichimoku Cloud
ā¼
Ichimoku provides a complete trading system in one indicator...
Master Strategy: Combining Indicators
Professional traders combine 3-4 indicators for confluence:
- Trend: Moving Averages or Ichimoku Cloud
- Momentum: RSI or MACD for timing
- Volume: Volume Profile or VWAP for levels
- Volatility: Bollinger Bands or ATR for targets/stops
Example: EMA trend + RSI divergence + Volume Profile POC + ATR stops = 75%+ win rate
Complete Markets Guide
Essential knowledge for trading all major markets - from traditional to digital assets.
š Stocks Trading 101
ā¼
Stock Market Basics
- Ownership shares in companies
- Trade on exchanges (NYSE, NASDAQ)
- Market hours: 9:30 AM - 4:00 PM ET
- Pre-market: 4:00 AM - 9:30 AM
- After-hours: 4:00 PM - 8:00 PM
Key Concepts
| Market Cap | Small <$2B, Mid $2-10B, Large >$10B |
| P/E Ratio | Price/Earnings valuation |
| Dividends | Quarterly distributions |
| Earnings | Quarterly reports drive price |
š Futures Trading 101
ā¼
Futures Fundamentals
- Contracts to buy/sell at future date
- Standardized specifications
- Trade nearly 24 hours (Sun-Fri)
- Leverage: 5-20x typical
- Daily mark-to-market settlement
Key Differences
- Expiration: Monthly/quarterly contracts
- Margin: 3-12% vs 50% for stocks
- Settlement: Physical or cash
- Size: Large notional values
š± Forex Trading 101
ā¼
Forex Market Overview
| Market Size | $7 trillion daily volume |
| Hours | 24/5 (Sun 5PM - Fri 5PM ET) |
| Major Pairs | EUR/USD, GBP/USD, USD/JPY |
| Leverage | Up to 50:1 US, 500:1 offshore |
āæ Cryptocurrency Trading 101
ā¼
High Risk Warning: Cryptocurrencies are extremely volatile and speculative. Never invest more than you can afford to lose.
Crypto Basics
- Digital currencies on blockchain
- 24/7/365 trading
- 10%+ daily volatility common
- No central authority
Major Cryptocurrencies
- Bitcoin (BTC): Digital gold
- Ethereum (ETH): Smart contracts
- Stablecoins: USDT, USDC
- Altcoins: High risk/reward
š Stock Options Trading 101
ā¼
Options Greeks
| Delta | Price movement sensitivity |
| Gamma | Delta change rate |
| Theta | Time decay (enemy of buyers) |
| Vega | Volatility sensitivity |
Your Path to Trading Success
Getting Started
- Choose ONE market first
- Paper trade 3-6 months
- Start with $5-10k capital
- Risk only 1% per trade
- Keep detailed journal
Common Mistakes
- ā Over-leveraging
- ā No stop loss
- ā Revenge trading
- ā Following tips
- ā Too many markets
Success Traits
- ā Discipline
- ā Patience
- ā Education
- ā Risk focus
- ā Psychology
The Ultimate Truth
90% of traders lose money. The 10% who succeed have discipline, patience, continuous education, and always protect capital first. Trading is a marathon, not a sprint.
Professional Trading Platforms
| Platform | Best For | Key Features |
|---|---|---|
| CQG | Institutional traders | Advanced analytics, spreader |
| Trading Technologies | Professional scalpers | Advanced algos, fast execution |
| Sierra Chart | Custom programming | C++ support, market profile |
| NinjaTrader | Retail professionals | Strategy development, backtesting |
| Bookmap | Order flow traders | Heatmap visualization |
Data & Analytics Resources
Data Sources
| CME DataMine | Historical futures data |
| Quandl | Alternative data sets |
| FRED | Economic time series |
| CFTC | COT reports |
Analysis Tools
| Python/R | Backtesting & analysis |
| TradingView | Social charting |
| Seasonalgo | Seasonal patterns |
| Optuma | Advanced technical |
API Trading & Automation
API Integration
- ā¢ REST APIs for position management
- ā¢ WebSocket for real-time data
- ā¢ FIX Protocol for institutions
- ā¢ Respect rate limits always
- ā¢ Robust error handling required
Automated Strategies
- ā¢ Mean reversion: RSI extremes
- ā¢ Trend following: Breakouts
- ā¢ Market making: Spread capture
- ā¢ Arbitrage: Price differences
- ā¢ Always use risk controls
Daily Trading Routine
Morning Prep
- ā¢ Overnight summary
- ā¢ Economic calendar
- ā¢ Key levels marked
- ā¢ Correlation check
Intraday
- ā¢ Volume profile
- ā¢ Sector rotation
- ā¢ News monitoring
- ā¢ P&L management
End of Day
- ā¢ Journal update
- ā¢ Performance review
- ā¢ Next day prep
- ā¢ Risk assessment
Ā© 2024 ETTFOS Professional Trading Education. All rights reserved.
This material is for educational purposes only. Trading involves substantial risk of loss.