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Futures Trading

Updated on January 26, 2016
one2get2no profile image

Philip retired from investment banking to write. To date he has written 9 books on trading forex, 3 short stories, and one poetry book.

Futures Exchange
Futures Exchange
Open Out Cry
Open Out Cry


The five biggest mistakes that futures traders make are the same five mistakes that forex and commodities traders make. For all the training and advice that traders get before they start trading once they start using real money they fall into the same basic pitfalls over and over again. They start to incur losses and their capital is eaten away and they don't understand why and they can't work out what it is they are doing wrong. All successful traders have a system which helps them make winning trades and avoids them making losing trades. Success can be improved by keeping to a system and avoiding the four or five most common mistakes.

Don't Change Strategies

One of the most common mistakes many traders make is that just as their trading strategy is beginning to earn some winning trades they decide to stop following the system they are using in favour of another strategy which they think might do even better and make them more profits. Or they start deviating from one they are using by tweaking it so much that in the end it does not resemble their original strategic plans. These changes can lead them to emotionally start evaluating the market instead of being logical, which then inevitably leads to incorrect decisions and eventually losses.

I Reckon Five but Other Traders Think Four

Use Stops

Every trader is out to make as much money as he can. However, traders can also lose trades and losing too much on each trade very soon wipes out risk capital. Usually a trader builds into his strategy the percentage loss he can bear on any given day. If a trader does not put in the necessary sell or buy stops to minimise his losses he risks deviating from his strategy and suffering heavy losses. (a stop loss order is an order to buy or sell a security when the price reaches a specific level)

Don't Get Distracted

When trying to evaluate when and where to enter a trade, a trader needs to be able to concentrate 100 percent on the business at hand and avoid any distractions. Of course minor distractions are unavoidable but a trader must ensure that there are no major distractions around to make him lose focus and ultimately lose a winning trade.

keep Abreast of the Latest Ideas

Successful traders are always learning about their trade and keeping up with the latest ideas. A trader who believes that he knows all there is to know and is not willing to learn anything new will inevitably find that they start to be left behind and their trades change from winning to losing trades.

Futures and Technology
Futures and Technology
Futures Deal Book
Futures Deal Book

The Futures Markets

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Increase Your Knowledge

The last of our trading sins is trading with a lack of knowledge or too small a base of knowledge. You must understand that in choosing to enter the trading arena, you are stepping into the largest financial market in the world. The forex market is larger than almost all other markets combined with a turnover of trillions of dollars traded each day. Forex is also one of the most competitive markets on earth. As such it attracts the most brilliant trading and mathematical genius minds. Like Mr Geko of Wall Street fame it is the ultimate power game, trading money.

The trading arena is filled with many incredibly intelligent people who have very deep pockets and are phenomenally well equipped.

As you may or may not know, there are two main types of tools which traders use to analyse the markets. Technical Analysis (time and price analysis based on past futures charts), and Fundamental Analysis (based on various market factors – (PE ratios, product inventories, economic indices, global demand, etc.).

If you’re a technical analysis type, invest some time and learn more about the specific “fundamentals” affecting the currency pair or other Futures commodity you may be following.

See if it adds some new value into your trading decisions, maybe as another, distinct trade entry confirmation point.

The same advice goes for primarily ‘Fundamental’ analysis traders. Learn more about what economic factors have an effect on the markets and to what degree.

A little knowledge could go a long way.


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    • one2get2no profile image

      Philip Cooper 6 years ago from Olney

      Maybe my articles will help you learn. Also please feel free to ask me anything regarding trading...I would be glad to help.

    • sligobay profile image

      sligobay 6 years ago from east of the equator

      These are five good guidelines to apply in life as well as commodities trading. I am involved in learning and selling mobile marketing strategies to local businesses presently. I would like to begin to learn how to trade.