Trading systems can be roughly divided into two large categories: counter-trend systems and trend-following systems, although it is possible to combine the elements of both to produce a more complex system that handles more trading situations.

In some markets, such as emini futures for S&P 500, counter-trend systems can be profitable, in other markets it makes more sense to focus only on trend-following systems. Trend-following systems should work reasonably well in most emini markets, although some are more suitable for this approach than others.

In this age of electronic trading, most emini traders are involved in daytrading, taking positions for several minutes to several hours, always closing them before the end of a daytrading session, that usually is not far away to the closing time for the major US stock exchanges.

Any sound trend-following mechanical trading system that operates as a daytrading system should rest on the following three pillars:

1. it is selective (it trades at most twice a day, but not necessarily every day),

2. it cuts losses relatively short (a suitable stop-loss that is a function of the market's volatility should be chosen by testing),

3. it lest profits run.

While the last two conditions are quite obvious and are used routinely in the design of trend-following systems, the first one is usually overlooked, yet it is as important, if not even more, as the other two, in this author opinion. It is, in fact, much easier to design a profitable trading system when this condition is taken into account. This is so simply because there are really not so many good daytrading opportunities every day that could be easy to first identify and then to exploit profitably. On the other hand, when this condition is taken into consideration, it is relatively easy to find one or two good trading opportunities per day frequently enough to design a working profitable trading system.

You can find more information about eminis and how to trade them, including some simple free trading system on the author's website at: http://www.eminimethods.com

Waldemar Puszkarz, Ph.D., is a web veteran with 15 years of web surfing under his belt. By training, he is a theoretical physicist, but his interests are much broader than science and include trading financial markets, sports betting, poker, and researching online business opportunities. He is also an avid book reader and sports afficionado. Currently he is making his living mostly as a day trader. He has been in the trading trenches for almost a decade during which he has traded a variety of financial instruments. He is the owner and webmaster of Eminimethods.com (http://www.eminimethods.com) which provides free common sense trading education and simple trading systems for e-mini and stock markets as well as reviews of honest online business opportunities in Meet HOBO (http://www.eminimethods.com/HOBO.html) section of his site.