I would like to create a short post that I can refer to when questions about basic concepts arise. I’m writing in a simplified manner, so this information is not exhaustive. Let’s get started.

Basics of Futures Trading

In the futures markets, there are usually two types of trading operations:

• Short - a selling position. You predict that the price of an asset will decrease, so you sell it now with the intention of buying it later at a lower price.
• Long - a buying position. You expect the price of an asset to increase, so you buy it now with the intention of selling it later at a higher price.

Risk management is what helps you protect your deposit from significant losses. It’s crucial to set a stop-loss (a level at which your position automatically closes if the price moves against you) and to determine the position size according to your risk.

A few words about how I manage risk:

When I start a month, I begin with small risks, gradually building up cumulative profit. As the profit grows, I can afford to increase the risk on trades I feel more confident about.

Conversely, if I experience consecutive losses, I prefer to lower the risk for each trade and gradually recover and earn. Many people advise stopping trading altogether for a few days if things aren’t going well. I’m not a fan of this approach. Instead, I suggest staying focused, not succumbing to emotions, reducing risk, and looking for new opportunities. (If you start running away during a fight when you’re being hit, you’ll protect yourself, but you won’t win.)

Additionally, the size of my risk also depends on the time frame I’m using and how far the invalidation zone is from the entry point.

Let’s agree that risking 5% of your deposit on a 15-minute chart when the entry point is only a few dollars away from the stop-loss isn’t a great idea in the long run.

My strategy is based on trading consolidations/ranges

A few words about ranges:

Ranges are everywhere, on any coin, on any time frame.

Within a range, there can be local ranges (which I use to manage my position).

And the range itself can be just a part of a more global movement (this can be used to assess the narrative of where the price is heading).

That’s why I usually determine where the upper boundary of this range is and where the lower boundary is (RH and RL). Then I observe how the market exits the range, whether it has the strength to break out or if it will return and try to move in the opposite direction.

After I’ve chosen a direction for myself, I make a post where I describe the position size (I specify it in R, as it’s more standardized), the price or conditions that would mean I was wrong (stop loss), and my targets for taking profit (take profit).