Understanding Dow Futures – Part 1

When the YM or Dow emini contract was introduced a few years ago, many futures traders moved over to the emini Dow futures leaving behind both the S & P 500 and NASDAQ futures, although both are still popular with traders. The Dow emini offered something new that appealed to traders new to the market since it was not quite as volatile as the other two emini futures contracts.

The emini Dow futures contract trade at five dollar increments for each point which made them more accessible to newer traders that were very often nervous about trading the other index future contracts. However, traders soon learned that what they used to be successful in the other index futures markets also worked with the Dow futures. Mechanical systems trading was and is utilized by traders across all futures markets and has been proven to be the best way for a trader to be profitable when trading across all financial markets.

Mechanical systems trading alert the trader when possible profitable trade setups are signaled by the market. Traders use different types of systems, with many building their own system based on indicators and chart patterns that have proven to be successful for them, while others utilize systems developed by others. Once new traders learn that in order to be successful at futures trading they need a system in place that eliminates human emotion, they seek out proven trading systems used by others.

Until such time that the new trader has the experience and knowledge to design and implement their own systems, a proven mechanical trading system is recommended. A canned system, designed by another successful trader and utilized by the new trader can be the key to success as the new trader learns the dynamics of the market and gains the expertise that will allow the trader to design and develop their own system based on their personality and risk tolerance levels.

Next : Understanding Dow Futures – Part 2

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