Learning About Finance and Money

Thee Important Tips For Making Money By Day Trading Eminis

23 February 2016

Jordy De Pijper

It's possible to make good money — or even to make a living — day trading, but it's also possible to lose a lot of money quickly. Day trading eminis is a good strategy for reducing risk, because eminis cost less thanks to the reduced margin requirements they offer in comparison to full-size contracts.

If you're looking to get started day trading eminis, you should definitely take the following three tips to heart. These are some of the most basic rules to follow to succeed with emini day trading:

Make sure you're entering trades with a combination of both low risk and high probability

When you trade, you're looking to minimize your risks while still enjoying a high potential reward. "Trend trading" is a technique that does this by putting yourself in a position to take advantage of a pull back when you anticipate that the stock will in fact continue following its original direction.

If you want to take advantage of this tactic, you'll need to look out for an emini investment that offers multiple factors that point toward a line up at the same price. If you're looking for investment tools that can help you with this, try simple price structures, moving averages, and Fibonacci retracements.  

Avoid picking either tops or bottoms

Picking tops or bottoms is an easy way to lose money when it comes to emini day trading. This is because it's too difficult to tell when an emini trading trend is coming to an end. You're not going to be able to accurately and reliably guess when an emini future is at a top or bottom no matter how experienced a trader you are. 

One important piece of proof of the difficulty of predicting tops and bottoms is the fact that divergence indicated on a MACD indicator is frequently considered a piece of proof that a trend is ending.

However, it's important to note that divergence is really just a pattern that could potentially foreshadow the end of a trend, but does not indicate that actual pressure to sell is already being seen in the market.

Know when it's time to simply sit back and watch

One of the biggest mistakes that traders who are new to day trading make is making too many trades in a day. While day trading is typically about short term investing, you'll still have to sit on your hands occasionally and simply observe the market environment. 

For the most success, make sure you're clearly seeing a statistical edge in the market before you mobilize and put your trading strategy to use.  

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