With football season here, I wanted to give you a fun little analogy.
Why trading Futures is just like playing football.
First off, our main objective in both football and trading is to score points.
In order to do that, we have to move the ball down the field. We need the market to move in the direction we’re playing. We’re looking for price – or the ball – to get from point A to point B.
We’re aiming for directional movement in our favor. We want the price (or the ball) to go from where it is now – down the field as far as possible. We’re looking to gain yardage on as many plays as possible.
The “line of scrimmage” is our entry point.
The game itself is a weeks worth of trading.
Each play is one of our trades.
Our goal is to get the football to the other side of the field and score a touchdown. In trading our goal is to catch a big trend move, where the price moves all the way to the “opposite side of the field” – and hits our targets to score the big points.
Ideally we’re looking to score a touchdown as frequently as possible, but the reality is that on many plays we’re just attempting to get some decent yardage – where price hits our first target.
Our quarterback can choose to go for a safe running play or a long pass at any time, depending on the characteristics of the game in progress at that point in time. Same with the market. We can choose to take a quick profit or shoot for a way-out target, depending on the behavior of the market as the session unfolds.
On occasion, our quarterback is going to get sacked. That’s when we take a full stop out and lose some yardage. It’s better than a fumble.
As professional players we know we’re not going to score a touchdown on every play, so we keep our expectations in check and just work our strategy play by play – with full confidence in our play book.
We try and make our best plays when the Momentum is going in our favor. We play defense when the market is dull or extremely volatile. We might scale back the number of contracts we’re trading – or just take the safer running play and try to shoot for small yardage.
Right after the snap, there’s a short period of time where things are hectic and erratic. Players are scrambling all over the place and anything can happen. In trading that’s the volatility we experience right after at the point of entry. Right after we enter a trade there’s typically some volatility and zig-zagging up and down before price starts actually heading in one direction or the other.
The setup isn’t always conducive to making a huge play. Maybe the market is dull that session – or it’s raining out and the field is muddy. Many times we have to run plays just looking to score a few points – like just going for the First Down. We always want to play strategically and that’s why every single play / trade we don’t attempt to get a touchdown. We read the market and the field and decide what the optimum play / trade is at that point in time.
We don’t throw a Hail Mary pass on every play. That’s just not a good strategy.
One thing’s for sure – we’re not going to score a touchdown unless we make a play so we have to get the ball moving in the right direction. Market direction is like the movement of the football down the field. You’ve got the ball in your hands and you start running and the “other participants” are coming at you. You’re trying to dodge the volatility and not get stopped-out. Maybe you’ve gained some decent yardage on the play and raised your stop, but sometimes you run to the sidelines and end the trade right there.
As long as you scored some points / yards you can call that play a win, even if you didn’t get a touchdown. You made forward progress and your account size is a little more than it was before. You settled for a field goal.
Try not to get pushed back and lose yardage. It’s definitely going to happen on some plays because it’s just the nature of the game. Stops get hit and there are inevitable drawdowns.
Try not to get intercepted. That happens too – like when you jump in a trade and it immediately goes against you, hitting your full stop. We want to avoid interceptions as much as possible, but like I mentioned, there’s always that volatility at the point of entry.
Conditions on the field are not always perfect
There will be games where it’s freezing cold or snowing like crazy. There will be rainy days where everything is slippery. Market conditions vary too. There are choppy non-trending days and days where the price action is all over the map, swinging erratically with no follow-through in either direction. All we can do is attempt to play our best game in adverse conditions.
Sometimes the play is in motion and we have the ball and take a safe out by running to the sidelines – or just getting out with a small gain. If we raised our stop maybe we scored or lost a few yards, but the play was basically a wash. But we still have the ball to move on to the next play. Sometimes it’s better to play it safe rather than risk a fumble or interception. Breakeven trades where we ran to the sidelines are fine – we didn’t risk getting injured.
Scoring a few yards or points and getting to safety is always a good option.
The play clock is the market hours – cash session. There’s a pre-determined amount of time to run the plays and score your points.
When the opening bell rings and the opening kickoff is in the air – our main goal is to get the momentum started early. If we can put some points on the scoreboard early on in the game we have some breathing room and there’s way less stress going forward. We don’t want to get behind early on but sometimes it happens. With the right plays and strategies we can push through early losses and still win the game – we just have to work our plays and strategy and avoid mistakes that can result in a losing week.
It’s all about “forward motion”.
Once in a while our team will run the kick-off all the way down the field and score a touchdown in one play. That’s like when you take a trade and it immediately starts working – we got in right at the beginning of a major trend move. Those don’t happen as frequently as smaller gains in yardage, but like I said it’s just the nature of the game.
Hitting our first Target is like kicking a field goal. We weren’t able to get a touchdown but we put some points on the board and that’s important. We can actually win the game with enough of these small point scoring plays.
The Alert Software is our head coach. The Momentum System is our play book.
Our Head Coach – the Alert Software – is one of the Best in the League
He has the play book that’s going to help us win the game. And go on to have a Winning Season!
Our team has a defined strategy and has already mapped out the plays that will get us where we want to go. But it’s not always easy. The opposing team is market conditions, so we only have so much control over how each play works out. No worries. If we execute our plays well and keep the right frame of mind all game, we’re confident we will prevail over time. There’s plenty of time left in the season.
We know we’re not going to score a touchdown on every play so we’re shooting for an “easily achievable” first target. We can see the goal line down the field and that’s Target 2. We might run a series of plays, and score some small yardage here and there – hitting the first target a few times.
Eventually we get a little Momentum going in our favor and things open up. We’re in a trade and our runner breaks free of the “congestion” and begins sprinting down the field. The rest of our players are not far behind – protecting the gains we have. We’ve raised our stop and Target 2 is in sight. The forward momentum of the run gets us across the goal line and price hits Target 2. We scored and put big points on the board!
As time goes by we stick to our strategies with full confidence we can win the game if we use our heads and play strategically. We don’t let losses bring us down because we know that’s just the nature of the game. We just had a winning week but we don’t get cocky. We know next week we’re up against a tough team to beat.
The key to our success is keeping our head in the right place and executing our plays the best we can. And knowing that we’ve practiced these same plays over and over. We’re going to win some games and lose some games but we always maintain a positive attitude and play our best.
After all, we’ve scored a lot of points in the past and we just need to stick to our playbook and execute the play as best we can. And if we focus on that, at the end of the season we’ll be in the playoffs. Our star player is you!
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