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E-mini Market Place: Who is Involved

By: Jeff Niles


The e-mini futures markets are full of different investors looking to profit for different reasons.  Each and every individual who opens or closes a position does so for a very specific reason.  Good traders constantly think about who is on the other side of their trade and why that person is acting the way they are.  The information they pick up on can help them make educated decisions regarding their own trading.


So what are the possible calls to action a trader can make inside the markets?


1.  Entering a New Position


Traders have to initiate a position in order to profit from it.  The easiest behaviour for a newer trader to understand is action in the markets based on a new position acquisition.  Trades can either buy contracts to enter a new position or sell contracts (go short) to enter a new position.


2.  Taking Profits


Once a trader is in a position they look for an area to take profits.  Throughout the course of the E-mini trading day this series of initiating new positions and taking profits happens hundreds of thousands of times over.  The experienced trader can use simple candlestick charts to identify who is doing what.  Individuals can take profits by selling if long or buying (covering) if short.


3.  Stops Being Hit


When a trade doesn't go the way a trader planned it goes against them and this is when the third type of participation occurs.  Stops are in place to control risk and protect profit.  When a stop is hit it triggers a market order to exit the position immediately for the best price.  Contracts are bought and sold because a position went against the trader.


Although it may look relatively simple on a basic candlestick chart, there is so much happening at any one time in the e-mini markets, that it is almost impossible to keep track of it all.  So many people in the market for so many different reasons results in very technical price action.  Astute traders have the ability to channel all the information they need on the current participants and cross check that with their current bias.  Trading without thinking about who else is in the market at that time and their motivation for being there is like trading with one hand tied behind your back.

For more info on this chart and others like it don't forget to stop by and learn all about how pros trade forex and the e-minis.

Disclosure: No Positions