Futures Trading Risk Management Tools
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Trading Risk Management Tools for Futures
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In today’s post I want to get into risk management in trading and I will give you a real life example from the trade I just completed (see the video above) and show you my set ups, take profit and risk management I used.
You will see that I used my favorite indicators which are the EMA and MACD’s to plan out and execute the trade and also how I use the charts to read the market direction to get in on a higher probability trade.
Of course we can’t always be right as traders so that’s why risk management in trading is so important. Risk management is important to limit our losses when we do lose (and losing is all part of trading) as well as ensuring the amount we lose is appropriate for the size of our trading account.
Risk management in trading is a crucial aspect that all traders must have and is part of the fundamental knowledge in trading principles traders absolutely must have learnt in order to succeed.
And further down in this post I give you 5 practical tips for risk management in trading.
But let’s take a look at this particular trade and the risk management I implemented and watch the video so you can see how the trade played out especially with regards to the risk management.
The ‘233 EMA Initial Instant Reaction Trade’
So here is one of my favorite types of trades. I call this the ‘233 EMA initial instant reaction trade’.
So what happened here? We’ve been kind of in a sideways movement. The market flew down, and then it started to go back up.
And every time I look at it, it’s going higher and higher. And now I’m starting to notice that the market has completely switched the momentum, switched direction.
It’s way above the MACD lines and so I entered
And my Emini trading strategy says it’s a good signal.
So I entered it. I entered with two contracts. And when I enter a ‘233 trade’, I only look for my first contract to be one point, which is four ticks.
Both of the contract’s risk is at four ticks as well or at one point as my risk management.
Related Read: ES Mini Futures Contract Rollover
So what happens now? It starts to go down a little bit further, and I actually liked it so much that I re-entered it at the 610 and the 1597, which was still above 0.3.
So now I have added on contracts. I am at four contracts right now. I moved my risk just one tick below.
So that I give it more space to work. I give my trade a place to work. You need to always give your trade a chance to work. And look what happened.
It just moved down a little tiny bit. And here is my first target which is 4 ticks which is one point.
Once I get filled on my first target and I have three contracts there, so I’m talking at $150 profit right away.
So BAM, I got filled. The second I got filled there, I immediately put my risk at where I entered.
So at this point, I have nothing at all on the table.
At this point, whatever happens, if it continues up, which is my next target, which is at $100 at two points, I could get filled.
Or if it goes back, if it pulls back to here, I’ve already taken my profit.
I have no more risk on the table.
So after a lot of consolidation here I decided to put my target at the exact pivot as where it was at the last pivot.
And this to me is a great exit because at this point, it’s another point and a half which is about $75 extra.
So at this point I’m already sitting at $150 profit with another $75 extra so I’m good.
What else do I need? At this point it’s $225 that I have come out with as a profit and I’m done for the day.
The entire trade took me no more than 30 minutes.
And this is one of my favorite types of trades, there’s no divergence in the pivots, everything is way above the MACD’s and I’m in.
So that was the summary of a profitable trade and the risk management in trading that I use. But I want to also give you some practical tips for risk management that you can use in your own trading.
5 Tips for Risk Management in Trading
#1 Use Stop Loss Orders: Set stop loss orders to automatically sell a security when it reaches a predetermined price. This helps limit potential losses on a trade.
#2 Use Appropriate Position Sizing: Determine the appropriate amount of capital to allocate to each trade based on your risk tolerance and the size of your trading account. Avoid risking too much on any single trade.
#3 Always Assess Risk-Reward Ratio: Assess the potential risk versus reward of each trade before entering. Aim for trades with a favorable risk-reward ratio, where potential profits outweigh potential losses.
#5 Have an Exit Strategy: Define clear exit points for each trade, whether it’s based on technical indicators, profit targets, or risk thresholds. Knowing when to exit a trade can help limit losses and lock in profits.
Related Read: Advantages Of Trading Futures: Is Futures Trading Worth It?
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Last Updated on July 28, 2026
