I have had many ups and downs in trading, but I truly can say that it is the hard times when you learn the most about yourself. I feel that when things are going well you tend to become slightly less focused on the reasons why you’re being successful. It is only when you go through the hard times that you really become introspective and this is when you discover what makes you a successful trader and what allows you to go forward and get through the difficulties.”
A common problem that many traders run into is that they start trading, make some decent profits, then all of the sudden they encounter what seems to be an endless stream of losses. From 26 Nov to 03 Dec a Student of Mine Made 10 lakh Rs and he Eventually lost all his profits in just 2 trading sessions. He called me today as he struggle to try and figure out what they are doing wrong. To be successful at trading futures, you must know what the common pitfalls are and what you can do to profit in the different futures markets. Here are the most common mistakes of futures traders and what you need to do to be a good futures trader.
All successful futures traders have a system in place that will help them make better trades and effectively keep losses to a minimum. These strategies have been developed over time by the traders themselves or in combination with other trading systems. You can improve your odds of success by avoiding the common mistakes that many make when their new strategy is starting to work for them. These include:
Not Sticking With Your System
Just when a trading strategy is starting to show promise, many traders will deviate or abandon the system that they are using. This change means that you will not be able to unemotionally evaluate the market, leading to incorrect analyses and ultimately, losses. As market trend changed from Bullish to Bearish you should start going by your system you should be prepared to adapt your strategy to the changing conditions. This gives you the flexibility to make consistent profits in any type of market.
Not Protecting Yourself
Trading does involve a certain degree of risk, so it is important to protect yourself. The most common Trading mistakes tend to be self-inflicted. Lack of impulse control allows our hyperactive id to grab the trading joystick. Having a max Loss is a great way to protect your trading account. A max stop loss is a trading loss that instantly tells you that you were wrong about the trade and need to get out. This number will vary per person depending on their account size. For example, one trader may have a max stop loss of 1000 while another may set theirs at 5,000. If your max stop loss is 500, you need to immediately exit the trade when you are down 500. There is no rationalizing – no ifs, ands or buts. You get out of the trade and move to the next one. It’s easy to start rationalizing, but that defeats the purpose of this money management strategy.
Not Staying Focused
To trade successfully, your undivided attention is required to be able to read and evaluate the markets effectively. Sometimes distractions are unavoidable, but you always want to have as few distractions as possible when you are trading. This will help you to focus properly, thus increasing your odds of more profitable trades.
Not Being Open to New Ideas
The markets are always changing. No matter how great you think you are as a trader, there’s always a new idea that can help you improve your trading results. Too often, traders get caught up in thinking that they already know enough and they aren’t willing to learn anything new. As the market conditions change, this type of trader is left behind with nothing to show but losses. However, if you remain open to new ideas, you will be able to change with the markets – and profit consistently, no matter what they do.
Not Investing in Trading Education
Just as “castles made of sand, fall in the sea, eventually,” traders who ignore the fundamental ideas of
1) trading a sound concept
2) having a trading plan
will soon find themselves adrift in the “Sea of Losers.” Don’t let that be you.
It always good to have a Mentor who can guide you on these things. A mentor can ensure that your trading practices get off on the right foot, as well. If you develop bad habits or emotional triggers early on in your trading career, it’s going to be that much harder to “shake” them later on. Remember: your mentor has likely had the same fears, the same apprehensions and the same mistakes under their belt — learn from their mistakes and the student might even surpass the teacher, in time.
Not Focusing on Money Management
They study trading strategies and chart setups in attempts to have a better chance of mastering the markets. This focus is great, however many traders forget that they need to focus on money management skills as well. When you get started trading, the last thing you want to do is blow up your account and get taken out of the game. Your focus should be on preserving capital and trading intelligently. Even successful traders can get taken out of the game if they do not manage their money properly. Make sure to spend some time focusing on money management skills as well as trading skills.