Planning a futures trading session

Futures trading planning before and after a trading session

Futures trading is a serious challenge for every beginner who came to the futures market in order to gain financial independence. It requires from him active preparation for a forthcoming trading session and a thorough analysis of the current market situation. A beginner will feel more confident every next day on his way to the set goal if he spends enough time both for active trading and preparation for trading.

The modern futures market functions in the environment of electronic trading platforms working 23 hours a day and 5 days a week. Independent of duration of your trading day each trading session consists of three periods: pre-market, live-market and post-market sessions.

Ability to adapt to the changing market conditions is a key for achievement of a long-term success in trading. In simple words, a trader needs to understand where the market has been before the current moment and in what direction it would, most probably, move in order to save his competitiveness. Also a trader should be able to achieve optimum results of his trading in the process of development of market movements.

In this article we will try to step aside from the classical definitions of sessions in trading without linking them rigidly to the exchange working hours. We will focus our attention on main tasks a trader should perform during each of these periods in order to ensure profitable trading.

In this article:

  • Pre-market session
  • Live-market session
  • Post-market session

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Pre-market session

Every trader has his own certain period of time when he actively trades in the futures market. This time period could include a whole trading day as well as several minutes a day. However, it is better to get prepared for active trading beforehand. In classical understanding, the period of 30-60 minutes before the live-market session is called the pre-market session.

Amat Victoria Curam (Victory Loves Preparation) is a famous Latin saying and it is exactly about the pre-market session. We will consider a number of important tasks execution of which would lay a basis for a confident active trading during a whole day:

  • Check your system: make sure that your computer, required software and Internet connection function properly. Also it makes sense to check the speed of work and quality of the connection of your trading and analytical platform with the exchange or your broker.
  • Analyze the market for the night: analysis of the market from the moment of its closure the day before is important for consideration of the forthcoming trading session in a wider context.
  • Calibrate the strategy: identify important support and resistance levels before the beginning of the live-market session and forecast favourable scenarios of development of the market situation. This would allow you to efficiently realize trading opportunities which would emerge during a live-market session.

In the broad sense, the pre-market session may take place at any time since, independent of time, preparation for executing a trade is a key element of efficient trading.

For example, if you use the E-mini S&P 500 strategy for futures trading, the opening of the cash market in New York at 9:30 EST may play an important role. It is extremely important to perform the above described preparation stages if you want to start trading immediately after opening of the New York Stock Exchange (NYSE) where you can trade the majority of the companies that form the S&P 500 index.

Live-market session

The live-market session in the futures market is a period of time when a trader executes trades for buying or selling futures contracts with the aim to make a profit. The futures market participants perform their direct duties in accordance with the rules of their own trading strategies during all this time:

  • Trade identification: receipt of trading signals, conduct of the market volume analysis and finding trading setups in real time are the main prerequisites for opening a trade.
  • Order posting: limit, market and stop orders are posted on the exchange in accordance with the clear rules of the trading strategy.
  • Position management: correct posting of a stop loss and take profit and also correct calculation of the size of a futures position are main prerequisites of a profitable trading. Control over the behaviour of an open trade in accordance with the required parameters is an important part of a trader’s operation for minimization of losses and maximization of profit.

The live-market session may last a whole day as well as several minutes a day depending on the trading style of every individual trader. For example, a scalper can consider as trading sessions only those periods of time which precede the issue of important economic news while a trader who uses electronic trading systems can trade practically round-the-clock. Some other traders consider only first hours of trading in London or New York to be good for executing trades.

In the end, a trader himself decides when it is better for him to start actively trading one or another financial instrument.

Post-market session

Futures electronic trading platforms are nearly always open for round-the-clock trading. Still, every time a trader stops trading for the current day the post-market session starts for him.

The post-market period is crucially important for assessment of the trading results and it consists of a number of important tasks:

  • Market analysis: an analysis of what was going on during the live-market session and detection of catalysts of the market behaviour will be able to help a trader to improve his trading strategy.
  • Trading results: a deep study of all trades executed during the live-market session could be used for development of a statistically checkable trading history.
  • Trader’s log: a thorough registration of his trading activity during the whole live-market session by a trader will become a very valuable contribution in detecting weaknesses and strengths of his trading strategy and personal qualities. Starting from the fine tuning of the trading system and ending with the elimination of the negative factor of emotional trading, a trader’s log would also help to identify directions and spheres which need improvement.

Surely, the post-market session could be quite a sobering part of a whole trading day. If a trader made significant losses during the live-market session, the post-market will become a period of intensive analysis of the mistakes for him. Namely this time is good for learning bitter lessons and drawing conclusions about a day’s trading in the futures market.

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