All Futures Best Trading Strategy Are Born in the Currency Markets

Best Trading Strategies When people trade a Futures best trading strategy, they normally just use technical support and resistance levels without regard to what’s going on in other markets, like the Bond and Forex Markets. Examining all markets can really separate the beginners from the pros. I recently viewed a forum post where someone asked other forum members if they’d be interested in creating a forum thread specific to Inter-Market Analysis. Unfortunately, there was very little interest. After seeing the results of using Inter-Market Analysis as a basis for my Futures Trading Strategies, this is so sad to me.

Best Trading Strategy

For example, if you are trading Crude Oil or Gold and you mark a significant support or resistance level from the prior days price action, naturally you’d expect price to stop there. That type of trading analysis is part of many Futures best trading strategy. But, in overnight trade, if the US Dollar depreciated by a quarter of a percent, the value of the asset you are trading should have inflated by a quarter of a percent. This means that your support levels should all be moved up by that amount. This is a very basic example.

Futures Trading Strategy

Because the biggest risk to any US Dollar denominated liquid asset (like Gold or Crude) is inflation or deflation, the most natural hedge for a long Gold or Crude Futures Trading Strategy is a long dollar position. The next thing to consider in this trade is that on the other side of your long dollar position, there will be a counter currency. The counter currency that should be used depends on current and anticipated Foreign Currency yields.

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Now, I am not a Fundamental trader. So don’t get scared off! I only utilize technical Futures Trading Strategies in my approach to trading. The important thing about this type of analysis is for you to know that the currency markets leave foot prints that show what the intentions are of the larger traders. Let’s face it, before you make any big purchase (house, boat, car, etc.), you don’t just look at the price of the asset. You also look at the insurance. That’s exactly what we’re talking about here. In fact, you’d be surprised to know that the larger players in the markets have entire divisions set up solely for the purposes of hedging. No large firm will take on a new Futures Trading Strategy without a hedge.

In the Equities Markets, these types of footprints are a little less vague. Mostly because prices move in the equities markets for more than one reason. Yes, equities assets inflate and deflate but the other (larger) reason equities prices move is because of anticipated earnings. Earnings are not a liquid asset like a Barrel of Oil or an Ounce of Gold. I am not saying that there isn’t some Equities to Currencies correlation, but I have found that it’s not nearly as reliable in the Equities Markets as it is in the Forex and Commodity Futures Markets. I started my trading career as an Equities Trader at a Proprietary Trading Firm. I couldn’t get this type of correlation to work with equities so I found myself constantly trading commodity or currency ETF’s. Eventually I moved over to a Futures account and started trading Futures best trading strategy exclusively. I just found so much more transparency in these markets.

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If you are running to your platform to open up a US Dollar Index chart, let me save you the time. If you find correlation between the US Dollar Index and commodities, it’s going to be hit or miss at best. There is a much more mathematical approach to this analysis and I make my living trading and teaching it to traders.