Is trading futures compared with stocks the better idea? Both have their points. Stock markets offer thousands investment stories to choose from, futures only a handful. Yet, stocks often move coherently. They get dragged down or pushed up by the general market sentiment.
At times the various underlying commodities, currencies and stock markets of future contracts may offer the greater diversity. Nowadays there are ETFs that enrich the stock market with almost all currencies and commodities. So, finally the stock trader lives in the biggest universe again.
There is one interesting overlap and that are of course the futures on stock market indices like the EMini. You can trade them alone as if there were no stocks at all, but they could be also used differently. One operation is hedging. Buy some stocks with relative strength and sell the EMini or another stock future. Or do it the other way round.
More interesting is the usage of the whole market and especially the index futures as a signal to time stock entries. Instead of buying the index, buy only specific stocks. This is a verified entry strategy for individual stocks that results in a low work trading operation. Statistically all stocks get influenced by the indices and trading is statistics anyway. Most likely you cannot do it better with judging the single stock chart or situation. Just look at your gain to loss ratio. It will be somewhere around 50%.
For implanting your stock market index signal indicator you first would have to identify the leading index. For the U.S. markets that would be the NASDAQ. However, due to its broad nature it is legging the action a bit.
This is were the futures come in. Watch the index futures instead of the NAS and derive your trading signals from the future contract. Then enter either your favorite growth stocks or stocks with relative strength for that day, provided that you are day trading.
For exiting a growth stock position a special form of buy and hold seems to be the best trading system. Just start your stop loss strategy with a tight stop, say 1%. Move the stop up to break even on a gain of 1% and then let it simply sit there. You will make many small losses but some huge gains! All you need are working trading signals for the EMini, for example.
