While you might want to follow and analyze as much markets as you can master (which is usually a plethora), I did learn – the hard way, what else – that one shouldn‘t try to go and trade more than say two to four at once.
And very often it may be a good idea to try to specialize in one area and concentrate on a group of markets – such as say soybean complex or the meats, the metals, or what have you.
Diversification in the futures markets isn‘t exactly the best idea, since the demands of doing a perfect analytical job are far too great.
Better to put all your energies into two or three markets than try to keep track of two or three dozen.
If the interest-rate futures appeal to you, then why not follow all of those, like Bonds, T-Bills and Eurodollars for instance. But don‘t mess up with OJ. At least unless your last name is Simpson. I mean, OJ, which is affected by completely different factors in the economy.
You will find that after a certain exposure to a market you will develop a sort of feeling for how that market performs. This will enable you to keep your hand on the pulse of the market and trade it more effectively.
But on the other hand, don‘t let this specialization keep you from opportunities that may exist elsewhere. From time to time, you may want to switch your trading interest as one market segment loses its steam and another begins to become better active.
There is a story, perhaps apocryphal, of a certain soybean trader, who, having lost all his money trading soybeans, was walking off the floor of the Board of Trade one day when he spotted a friend in the corn pit. Hearing his friend lament the fact that he would now have to sell his Exchange seat, the corn trader said, „Look buddy, you can come over here and trade corn, okay?“ But the soybean trader replied, „Oh yeah I sure could, but I don’t know anything about corn…“
So, make sure your knowledge of your specialization stands you better stead than did this traders knowledge of soybeans!
To sum it up, after some time most traders tend to develop a certain affinity for certain markets. If you find you are having a lot of success, in say, coffee, dont confuse yourself by jumping into stock index futures. Put all your eggs into this java basket and let your profits run.
Just something to ponder on.