| The basic principle of technical analysis in futures is | | | | 3. Lower Margin Requirements |
| the same as the stock market, but there are some | | | | This is probably the most important difference |
| significant differences: | | | | between stocks and futures. All futures are traded |
| 1. Pricing Structure | | | | on margin, which is usually less than 10% of the value |
| 2. Limited Life Span | | | | of the contract. As a result, these low margin |
| 3. Lower Margin Requirements | | | | requirements are big power, but, maybe, we make |
| 4. Time Frame Is Much Shorter | | | | or lose large sums of money very fast in futures. |
| 5. Greater Reliance on Timing | | | | Because a trader puts up only 10% of the value of |
| At first, the principles of technical analysis were | | | | the contract margin, then it will become double 10% |
| performed in the stock market and only later | | | | or wipe it out. |
| adapted to futures. You can use some of the basic | | | | The correct timing of entry and exit points is more |
| tools in both of them. Anyone who learns these | | | | important in futures trading and much more difficult |
| concepts wouldn't have any trouble in these markets. | | | | and frustrating than market analysis. Technical trading |
| 1. Pricing Structure | | | | skills are crucial in a successful future trading program. |
| The complication of the pricing structure in stocks is | | | | 4. Time Frame Is Much Shorter |
| less than in futures. Any goods express in different | | | | Stock market technicians may talk about where the |
| units and increments, like: Grain markets and | | | | market will be in three or six months. Futures traders |
| Livestock markets . | | | | want to know where prices will be next week, |
| Learning the contract details of each market is so | | | | tomorrow, or maybe even later this afternoon. |
| important for traders. | | | | You can look at the moving average as an example: |
| Some of the contract details are: | | | | -In stocks, the most commonly watched averages |
| 1. Exchanging and trading goods. | | | | are 50 and 200 days. |
| 2. Contract's expressing. | | | | -In commodities, most moving averages are under 40 |
| 3. Minimum and maximum price increments. | | | | days. |
| 4. The worth of price increments. | | | | -A popular moving average combination in futures, |
| 2. Limited Life Span | | | | for example, is 4, 9, and 18 days. |
| Future contracts have expiration dates, i.e. this | | | | 5. Greater Reliance on Timing |
| contract can be out of dates but stocks no. The | | | | Timing is everything in futures trading. If you |
| future contract trades for about a year and a half | | | | determine the correct direction of the market, you |
| before expiration. | | | | solve on of the trading problem's portion. If the |
| You have some problems with this limited life feature | | | | timing of the entry point is off by a day or even |
| for longer range price forecasting. | | | | minutes. It means the difference between a winner |
| You need continue new charts and stop trading of | | | | or a loser and if you are on the wrong side, you lose |
| old contracts and you can't use an expired contract. | | | | a lot of money. If you are on the right side, but you |
| New charts have new contracts with own technical | | | | still lose your money, you are disappointed. These are |
| indicators. Making an ongoing chart library by this | | | | frustrating and unnerving aspects of futures trading. |
| contract rotation is a good idea but difficult. | | | | So, the fundamentals of futures trading are timing |
| Computer users spend so much time and money for | | | | and correct direction. |
| making new historical data as old contracts expire. | | | | |