There are plenty of compelling reasons to prefer day trading in the ES (e-mini S&P futures). For starters, it is a highly liquid and leveraged product and the ease of exiting by the close of trade eliminates overnight risk.  Further, profits (ideally) and losses are supercharged and fast.  As great as this might sound to the inexperienced, the difficultly of the practice is largely underestimated.

Day trading the ES is most likely one of the most challenging endeavors a trader could embark upon.  This is because there is little room for error; traders must be right about the direction of the market and the limited time window in which the move might occur.  However, for those that have the perseverance to dedicate themselves to the practice, contain the natural ability to eliminate emotions and have enough experience under their belt, day trading might also be one of the most potentially lucrative forms of market speculation.  

There are an unlimited number of strategies day traders might opt to apply, so discussing that aspect in a single article is impossible.  Nevertheless, over the years I’ve noticed a few factors that play a big part in determining day trading success, and failure, that are worth sharing.  Hopefully, you will walk away from this with a better understanding of risks, rewards, and reality.

Day Trading Is Mental

I believe that becoming a successful day trader comes down to instinct and the ability to control emotion.  If you have ever been involved in athletics, you have probably heard the adage that performance is 95% mental and only 5% physical.  I have found this to be true in trading as well, although instead of being physical, trading is technical.  Quite simply, it isn’t which oscillators or indicators you use, it is how you use them; perhaps more importantly how you deal with fear and greed as you are charting your trades.  

Although we cannot control the market, we can control the environment and circumstances we choose to put ourselves in.  The best way to keep your mental demons in check is to avoid compromising situations.  As a trader, this achievement is certainly impossible but if you can merely minimize the exposure to stressful endeavors, it will go a long way toward trading success. 

Make Sure Your Strategy Fits Your Personality

The approach that you take in the markets should be dependent on your personality and risk tolerances, not necessarily what has worked for somebody else.  Let’s face it; there are only about twenty to thirty commonly used oscillators, if there were absolute magic to any of them more people would have discovered the Holy Grail.  Rather than expecting an indicator or an oscillator to do the work for you, I believe it to be more productive that you properly educate yourself to the risks and rewards of the markets in addition to some of the less technical, and thus less talked about, aspects of day trading.   

For example, if you are a hyperactive decision maker prone to ill-advised trade entry and exit, it will be worth your while to choose to work with technical indicators that have the ability to smooth out results and offer relatively slower signals.  Ideally, this will work against your tendency to over-react.  You might even want to consider placing trades by phone with a broker or trade desk.  This sounds archaic, but it is an effected way to temper the urge to trade recklessly.
On the other hand, if you have a hard time pulling the trigger on a trade you’ve spent countless hours dissecting, then you should consider some sort of automatically programmed trading strategy based on your desired parameters.

Patience Goes Further Than Strategy

Regardless of the strategy you choose, waiting for the highest probability set-ups can prove to be challenging in itself.  It is easy to fall into the mindset that suggests being on the sidelines is equivalent to missing out on profits.  However, the best advice I can give to traders is that “it is better to be on the sidelines wishing you were in, than in the market wishing you were on the sidelines.”  If you pass on a signal that turns out to be accurate, don’t fret; trading off of mediocre signals will work sometimes but the risk of them not working is far greater than the potential reward might be.  In fact, some day traders will argue that there are only about two to three “good” trading signals per week.  

Simply put, if you are exercising patience there might be several days per month in which you do not place a single trade.

Position Sizing Is Key, Trade Within Your Means

Futures brokerage firms offer “cheap and easy” leverage;  many firms advertise the ability to trade a single e-mini S&P futures contract intraday for as little as $500 per contract. Unfortunately, novice traders often assume that is a reasonable amount of leverage.  In other words, if they are trading a $10,000 account they might opt to trade 20 contracts ($10,000/$500) for no other reason than “they can.”  In my opinion, this is a horrible idea that will most likely result in massive losses.  Traders are far better off trading with less leverage than is available to them.

Not only does trading the maximum allotted size reduce your room for error and, therefore, your odds of success, but it dramatically increases the probability that you will become an emotional wreck.  After all, if you are holding 20 contracts in a $10,000 account it would take a mere 10 point move in the ES to blow out your trading account; further, it would only take a 5 point move to lose 50%.  If you’ve followed the ES intraday, you know that it can move five points in the blink of an eye at times.  One might argue that trading such size leaves the door open to double an account on a single trade but the odds are highly against it.   Even the most sophisticated and experienced traders require room for error in their trading.  

In addition, assuming a starting balance of $10,000, it is possible to double an account in a little less than a year with a profit of just $50 per day.  Realistically, $50 per day is far more achievable than attempting to double a trading account in a day or two.  Even those that succeed via the former method are highly prone to giving it back to the market (plus some).  I think we all agree that doubling an account in a year would be an extremely respectable outcome.  Further, it doesn’t take a large contract size trader to achieve a $50 per day profit.  In fact, I would presume the odds of accomplishing this goal as a 1 lot trader, would exceed that of a multi-lot trader.

The Only Thing We Know For Sure, Is That We Don’t Know

Some of the sharpest minds in the trading industry have expressed sentiment suggesting that they enter each trade with the idea that they are probably wrong.  This gives them the proper mindset to avoid crippling losses, and keeps them humble and willing to take profits at reasonable levels when things go in their favor.
Each and every day, market prices are influenced by a theoretically unlimited number of factors.  With this in mind, it shouldn’t be surprising that predicting how prices will move at any given time is extremely difficult to do.  After all, the tools we are using to gauge market direction are all the result of historical pricing.  As we’ve been reminded throughout our lives, “past performance is not indicative of future results.” 


Many will view this as a pessimistic view on day trading, or even an anti-trading piece.  Nonetheless, my intention isn’t to dissuade you from day trading leveraged futures contracts.  After all, I make my living through commission paid by my brokerage clients; but I’ve made it a personal undertaking to ensure that the general public is privy to the hardships of trading futures along with simple steps they can take to put them at better odds with the market.   

*There is substantial risk in trading options and futures.  It is not suitable for everyone.  


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