How to build up sustainable futures trading strategies?

In the futures market, in addition to accurate market analysis and good capital control, the most important thing is to formulate a good futures operation strategy. Lack of a perfect operation strategy, even if the market analysis is 100% correct, it may lead to a tragic ending at a loss; if a perfect strategy is formulated, even if the market research and judgment is not always correct, it can still lead to a positive outcome in the market.

1.Time setting

First, consider the direction of the market's short, medium, and long-term trends, and decide which type of operation you want to use, so as to make an operational plan. The long-term operation direction focuses on trend. It emphasizes on following the trend of the market, without presetting the top and bottom.

The mid-line operation is more volume-centric, that is, the coordination of the volume and price in the market. In the mid-term trend, the relationship between volume and price reveals a very important signal, and the technical trend analysis is used as an operational reference.

In terms of short-term operation, the focus is breakthrough, such as a breakthrough after a long time, to seek the best entry point purely from a technical perspective, and use short-term technical analysis as the basis for entering and exiting the market.

2. Funding planning

After deciding on the direction of operation, an overall financial plan must be made. First, decide how much fund you want to operate. Long-term parts can be invested in a higher proportion of funds, and short-term parts should not exceed one-third of the total investment funds.

In terms of capital control, it is best not to make a desperate move. If all the funds are lost when the market is misread, there will be no funds for future operations.

In addition, when the strategy is set, the profit-loss ratio must be calculated first. Usually 3:1 is more in line with the principle of speculation. From a long-term perspective, the probability of loss is almost zero. Therefore, a good financial plan almost determines the good or bad of the operation strategy, and it must not be underestimated.

3. Offense/defense switch

A good strategy should first focus on defense, and with a solid defensive plan, it is possible to attack. It is like fighting between the two armies. Without a strong backing or flexible retreat, the odds of winning are low.

At the beginning of trading, you will often face the embarrassment of the market scouring up and down, sometimes gaining and sometimes losing. If you do not reach the defensive bottom line, you must have patience and self-discipline, to avoid emotional ups and downs affecting the success or failure of the operation.

On a solid basis of the defensive strategy, an offensive strategy must also be built up. An offensive plan can increase profits, and it may also cause greater losses. Don't harry to top up when you lose money. From the perspective of doing business, when you buy a batch of goods but cannot sell them, and the market price is steadily falling. When the market operation is in a state of loss, it is like a slow-moving purchase, and we can only figure out ways to deal with the loss, and then we can add to the positions when we have the spare capacity.

Therefore, a sound offensive and defensive plan can preview the maximum loss of each transaction before entering the market, so that traders can better handle the short-term market fluctuations.

4. Stop loss setting

In different stages of operation, the stop loss setting is also different. In terms of long-term operation, the choice of stop loss requires a higher proportion and a higher proportion of funds to prevent being swept out of the market due to a temporary reverse market.

The choice of mid-term operation stop loss usually leans towards the technical analysis, with the current trend or previous high and low points as the reference basis. The choice of stop loss tends to be smaller, often using the previous day's high and low points or opening and closing prices as a reference.

In addition, it is still necessary to consider the setting of time stop loss. Before formulating an operating strategy, it is necessary to assume the duration of the market in this trend. When the market trend is misread, the loss must be stopped by time. This type of stop loss is mostly used in false breakthrough trends, which are difficult to set and require rich market experience. However, investors can observe from historical trends, look for the number of occurrences of such false breakthroughs in the past trends, and count the number of days that occurred, as a reference for setting the stop loss point of future operating strategies.

In summary, in the high-risk futures market, without a complete strategy, you should not enter the market. After the operating strategy is set, it cannot be changed due to temporary market fluctuations, and must be followed by a good self-discipline. In this way, if a proper strategy can be insisted over a long period of time, considerable rewards will be obtained in the futures market.