Singapore futures trading is a complex and volatile form of investing that requires sophisticated strategies to navigate the market successfully. This article will provide an overview of successful strategies for Singapore futures trading, ranging from technical analysis to fundamental analysis, so traders can make informed decisions about their investments. By understanding these basic concepts and implementing them in practice, traders can improve their chances of doing well in the Singapore futures markets.
Technical analysis
Technical analysis is a market analysis used to study a security’s movement and price behaviour over time. Technical analysts rely on chart patterns, volume, momentum oscillators, and other indicators to make informed decisions about entering and exiting positions in the Singapore futures markets. By studying these metrics, traders can identify critical support and resistance levels and develop strategies for trading around them.
Fundamental analysis
Fundamental analysis analyses a company’s financials and other data to assess its value. Fundamental analysts use this information to make informed decisions about when to buy and sell securities in the Singapore futures markets. They look for earnings, cash flow, debt levels, and dividend yields to determine whether security prices are overvalued or undervalued relative to their intrinsic value. In addition, fundamental analysts use macroeconomic indicators to gauge the direction of Singapore’s futures markets.
Range Trading
Range trading is a strategy traders use to capitalise on price movements within a predetermined range. Traders often buy and sell securities at either end of the range or in the middle if there is strong support or resistance. Range trading works best when there is no clear trend in the market and prices are likely to stay within a specific range for an extended period. Furthermore, range traders should always use a stop-loss order to protect against significant losses if the market moves outside its predetermined range.
Momentum Trading
Momentum trading is a strategy used to capitalise on short-term price fluctuations by taking advantage of increasing buying or selling pressure in the Singapore futures markets. Traders look for securities that have recently broken out of sideways price patterns and are starting to form solid trends, either up or down. Momentum traders try to enter these positions early and ride the trend until it reaches its peak before exiting, thus maximising their advantages.
Swing Trading
Swing trading is a medium-term strategy designed to take advantage of intermediate price movements over several days or weeks. Swing traders use technical indicators such as pivot points, support and resistance levels, and momentum oscillators to identify buying or selling opportunities. They then enter these positions at the beginning of a swing move and attempt to profit from price movements until the trend reverses or reaches its peak. Moreover, swing traders often use stop-loss orders to protect against significant losses if the market turns against their position.
What are the advantages of futures trading?
While there are several advantages to any trading, futures trading has some that stand out. Traders should research the advantages and disadvantages of trading various instruments before deciding which one they want to trade, to ensure they make the most suitable decision. Saxo Bank has a range of resources to help you make this decision.
Leverage
With futures, traders can increase their buying power with a relatively small amount of capital using leverage. It allows them to take on more significant positions in the market than they would otherwise be able to without risking more of their own money.
Low costs
Futures trading has some of the lowest cost structures in the market, typically consisting of only a small commission or spread. It allows traders to keep their funds when they make successful trades instead of paying higher costs for other instruments, such as stocks and options.
Diversification
Traders can diversify their portfolios by trading different futures contracts at once. It limits their risk exposure as losses on one instrument may be offset by gains on other instruments. Furthermore, futures allow traders to gain exposure to different asset classes and markets worldwide without owning them outright.
Liquidity
The Singapore futures market has a high level of liquidity, allowing traders to quickly enter and exit positions without worrying about slippage or high spreads. This liquidity also helps traders avoid significant losses if the market moves against them, as traders can close their position before hitting their stop-loss order.