Tips For Futures Trading
Futures trading can be a very worthwhile and successful endeavor
. However, there is a lot of risk involved and it must be done with caution a good strategy.
There are many tips to help you become successful in your futures trading. It is very important that you are concerned about the survival of your accounts.
If you are not concerned about survival, you will make some very risky and very poor decisions regarding your accounts. You will lose and you will be out of the game very quickly.
Every market savvy trader that is asked will say that what made him successful were the skills he developed for survival. While risks do need to be taken, it is healthy to have a normal dose of defensiveness.
These survival techniques will help you to recognize the best options and when to go for them. There will still be losses, but you will survive.
Part of developing these survival skills is creating and implementing your own strategy and know it thoroughly and why you came to the methods you are using. While this strategy will be vital to your success, there will be occasions when you will need to break the rules.
Know when these occasions present themselves and when you should stick to your strategy. Base your strategy on the markets past trends.
Part of the strategy should detail how much should be spent on each account. You do not want to put too much in a few accounts because if they go wrong, you will lose all of it.
It is a very bad idea and very risky to put all of your money in one account. It will be tempting to risk more, the more extra money you earn.
However, successful traders do not completely change their strategy once they become successful. They do make minor adjustments as the markets evolve, but they do not risk everything they have learned.
It is also very important that your strategy does not involve over-trading. While you want to spread your money around, you do not want to try to be an expert in too many markets.
The best traders leave and re-enter the futures market as little as possible, while keeping to their personal method.
The successful contract day-trader usually does not trade more than two to four times in one day. An intra-day trader who is working short-term typically trades 10-20 times per month.
Meanwhile, a long term commodity position trader will only make three or four trades per month depending on the size of an account. Whatever type of trader you are, it is vital to keep the positions small.
Once of the tricky things in the futures market is recognizing what would be a good or bad trade. As you learn you will develop more of what is called 'traders intuition' to help you navigate the market.
It is also important to have an edge on the market. Many investors believe they have an edge, but when asked they are unable to define what their edge is.
If you are unable to clearly detail what your edge on the market is, then you do not have a good edge. In order to be successful in futures you have to take commodity futures and commodity option speculation very seriously.
The markets simply become a gambling system if you do not plan, study, develop a plan and edge, and stick to the plan and only modify it as needed. You might as well throw your money away as more people get struck by lightning than win the lottery.
Other traders are following the right path and trying to become successful. You have to be better than most of these people to win.
It is very possible to become successful at trading, but you have to put in the effort to earn the reward. It is vital to study the markets and develop a plan if you want to earn on your investments.
by: Jack Landry
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