The Futures Trading Strategy relies on buying and selling futures contracts for commodities, indices, currencies, or others with the aim of profiting from price changes. Below is a simplified explanation of the main strategies used:
1. Trend Following:
Idea: Enter a buy trade in an upward trend or sell in a downward trend.
Tools Used: Moving averages, trend lines, ADX indicator.
Goal: Take advantage of momentum and the continuation of the trend.
2. Counter-Trend:
Idea: Buy at support or sell at resistance based on a potential price reversal.
Tools: RSI or Stochastic indicator to determine overbought/oversold conditions.
3. Hedging Strategy:
Idea: Reduce risk by opening opposite positions (Long and Short) to protect the portfolio from volatility.
Example: If you own stocks, you can sell futures contracts on them to reduce loss in case the price falls.
4. News Trading:
Idea: Take advantage of strong market fluctuations resulting from economic or political news.
Precautions: Requires speed in execution and control over risks due to high volatility.
5. Arbitrage:
Idea: Exploit the price difference between the spot market and futures contracts.
Example: Buy the asset and sell its futures contract if the futures price is higher than the spot price.
