Futures are a popular way to trade and invest. Futures prices vary based on the underlying financial instrument. A lot of people who hear about futures trading and options trading strategy are interested in giving it a try, but they feel nervous to get their feet wet. One thing that all successful futures traders have is futures trading strategies.
What Are Futures?
Futures, in essence, are contracts. They obligate two parties to engage in a transaction once a set price has been reached and by a predetermined date. Futures are different than options. With an options trading strategy, a buyer has the right to choose to buy. However, with futures, both parties are obligated to carry out the terms of the contract at the time the contract comes to an end.
The Power of the Trading Range Strategy
When people talk about the trading range strategy, they are discussing the bounce off important support and resistance levels seen in a chart. There are a lot of markets that follow a trend, for example, stocks. There are also currencies, and these have a range that they trade in.
Even though trading bots are used today, most trades are still done by humans. And humans are moved by emotions and by their memory. The markets may have difficulty going above a certain price level. When that happens, market participants see what they feel to be a resistance level. If the market seems to be inching up to the same level again, some traders will opt to take profits while others open short positions in the market.
