Futures Trading Tips: Avoid Losses By Remaining Patient

The majority of account meltdowns occur because of a very simple principle being overlooked or ignored

. These "common sense" indicators are often seen as too primitive or basic to actually be effective and are therefore pushed to the back of a traders mind when in fact, those are the very things that should be at the forefront of their trading plans.

An important aspect of trading that is often misunderstood by novice and experienced market donors is the idea of patience. They hear about it, read about it, and they think they understand it but they ignore it because it seems to simple an idea to be of any effectiveness in our modern complex market systems. Let's start by getting one thing straight, when we say patience, we are referring to the skill of trade stalking. It is a skill. It is hard work like anything that is worthwhile and it takes dedication to master the art of patient trading. Let's take a look at how retail traders continually donate to professional traders by not understanding the role patience plays in high probability system trading.

Getting In Too Early

Jumping into the market before your level has traded is a common mistake amongst newer traders. They see a certain level trade and even though their rules or plan told them to wait for the market to show its hand the pressure mounts and they simply can't hold back any longer. Fear of missing the move means they jump in too early. What happens next is the market does exactly what they thought it was going to do but now instead of being up in a trade they are put under the pump because price is moving towards their stop. They end up either stopped out or panicking when price returns to their entry level and quickly cut their trade even though they were correct in their market analysis.

Getting In Too Late

The flip side of jumping in too early is getting in too late. Typical amongst traders who have just experienced a draw down in their account, not pulling the trigger can have disastrous results. Patience doesn't mean waiting for all the stars to align and then pulling the trigger. It simply means waiting to see your set ups and then entering the trade and your predetermined level. That is how a patient trader operates and if you follow that principle it will help you achieve great results inside the markets.

Holding On Too Long

Once you've entered into a trade that doesn't mean your job is over. You need to have all of your profit targets in place and you need to be constantly monitoring your risk on the trade. Novice traders will often forget about the tactics as soon as a trade starts to go in their favor. They believe they have found the one trade that will go on forever. The market operates in very short term cycles and if you plan on being around for any length of time you have to get out when the time is right. Don't ruin a good trade by holding on for too long. Know what your reward will be before you enter. Be patient and wait for that level and then act swiftly to ensure you come away with profits when price reaches that level.

Retail traders will always struggle with patience. Many are drawn to trading for the wrong reasons and think it should be fast paced and exciting. Unfortunately, these traders probably won't last long enough to full understand how wrong they are. Trade your plan and have the discipline to wait for your high probability set ups and you are well on you way to becoming a profitable trader.

by: Jeff Niles

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