A major problem for the position trader in futures is the risk of getting shaken out of what becomes an ultimately successful trade. Even in a trending market with good underlying fundamentals and a good technical setup to back up the trade, intraday noise, routine retracements or sudden shocks from outside markets can derail the best analysis. We all have found ourselves in the following position: You put in the time, do the analysis and develop a scenario for a particular market. You then carefully initiate the trade, maybe even catching the short-term move just right, and show an immediate profit. The market unfolds just as you had envisioned, until a day of extreme volatility, where a nasty reversal wipes out your existing profits and turns it into a loss. It hits your stop-loss trigger and you are closed out. The market then stabilizes, and resumes the trend, moving to the price level you had originally targeted for first exit. This is a common dilemma in the futures markets. The inherent volatility of the markets, which makes those markets attractive to trade in the first place, can work against even well thought-out strategies.
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