Any of the swing traders here who keep positions for at least 1-4 days or more. What are the biggest dangers of holding positions this amount of time. How do you protect yourself other than stops if possible? What are your favorite futures to trade? Why?
After I find the high/low of the move, I will put on add-ons and looking to keep till end of entire move, many rollovers. Only way it becomes a swing trade is it stops out or so many days later it not going anywhere and I get out. The risk would be the same for me if I stayed in long or shorter term. And except for less than hourly charts, I hedge everything, stocks and commodities. I don't have a favorite, just take all the signals. Have traded the same basic system since late 1992, have made many improvements to increase profits over 100% of what was doing in the beginning.
wheat and corn spreads, months at a time, no stops, you protect yourself by trading small but risking it all. Stops aren't protection and force you to make the worst trade of selling at the market on a dip or buying at the market on a rally. Best stop is to stop trading with more money than you can afford to risk. Spread protects you from black swan but only up to the spread amount. You are still naked anything over and above that. Which brings us back to trading small.
I swing trade futures long/short holding for days/weeks/months - up to 8 different contracts at any given time. First of all you need a solid risk mgmt plan for swing trading futures - I never risk more than 1% of capital on any trade or have more than that exposed in the over night market on the sum of all positions. The only contracts I will not trade are live-stock because I am vegan and O.J. because of the movie 'Trading Places'. I like stock indexes since that is were I started out on - they offer a lot of data like sentiment, internals, and react well to seasonal influence. The protection comes from being properly capitalized and having a real good risk mgmt plan that you follow perfectly - every time. I think you need at least $100K for this but might be o.k. with maybe $50k trading the contracts with smaller price moves. I am very aggressive in cutting out losses fast and locking in a break even point on new trades. I use mostly a mechanical system which also helps - everything I do is a process that is well planned out. Kowing your plan inside and out including how you plan on dealing with draw downs is key to make it long term. A good book from one of the best futures swing traders is 'Diary of a Commodities Trader' - Peter Brandt. Here is a list of the most common futures contracts I trade to give you an idea.
The biggest danger of swing trading futures is the possibility of some overnight news event that send prices into a tailspin. On the flip side, this is good if you're on the right side of the trade. I.E: The Swiss Franc debacle a couple of years ago. As for protection...besides a stop loss, the only other protective measure I can think of is that of getting in near the danger point and trading at a comfortable position size. I don't have a favorite contract to trade. I trade whatever I think is in a position to move. I don't even have to know the name of the market. Thankfully, Thinkorswim has a feature that allows you to calculate the exact amount of potential profit and loss of any trade before hand.
The biggest danger of swing trading futures is the possibility of some overnight news event that send prices into a tailspin. ____________________________________________________________________________ How about the risk of not capitalizing on the many overnight gaps in your favor you will miss. Price movement with good momentum most often moves in the same direction after hours which far outweighs the gaps that go against you.
overnight can be a trip. You see how the whole world would work if everybody traded at a limit. I've been in bidding spats where both the bid and the ask were above the last and keep going higher yet the last never changes because nothing ever trades. Sometimes it looks good on the screen for your side, but you can't get out. They need a preconfigure where your size is the bid/ask size.
I've looked at some of those, but those with low volume scare the crap out of me. Thanks for the tip on the book. I've listened to one so far "Market Wizards", and am currently listening to "Trading the zone". I'll add that one next.