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Part 1: Successful Futures Trading Means Taking Losses In Your Stride
Provided
By Ultimate Trading
Systems
If you are to be successful at your futures trading endeavors you must be willing to take small losses
No one likes to lose. But losing is a fact of life for those involved
in futures trading; they key is to limit your losses and maximize your
successes. Losing money in futures trading is not a failure. It isnt
a reflection of you or of your overall judgment. (If it was possible to
be right every time, wed all be rich.)
The only way losing money when futures trading is really a failure is
if you arent willing to take the loss, without hesitation, and move on
to find winning trades. By accepting that theyve made a loss while futures
trading, and getting out of the position, successful traders focus on
making money not on being right all the time.
Many involved in futures trading feel they dont want to lose money
on any trade, and they stay in losing positions in the hopes that it will
recover to at least the break-even point. There are three problems with
this approach:
- The position may never recover to the break-even point.
- Holding on to a losing position ties up capital that could be placed
into winning trades.
- Holding on to a losing position is an example of unfocused futures trading
and a lack of discipline.
If you are to be successful at your futures trading endeavors you must
be willing to take small losses. If you arent willing to take small losses,
or dont have the discipline to take small losses, dont get involved
in futures trading.
You must Stay Focused During Rapid Swings to be successful in Futures
Trading
Most of us were raised to think that it takes years of hard work in futures
trading to acquire wealth. That viewpoint doesnt apply to futures trading
in the markets; you can make thousands of dollars in minutes under the
right circumstances.
To be successful in futures trading, you must understand that money can
be made or lost extremely quickly, and then stay calm and rational. Why
is that attitude important? Lets say youve made several thousand dollars
over the course of an hour of futures trading. Youre thrilled and excited,
and you may lose your composure and start making irrational trades. You
may stay in the position longer than you should, for one of two reasons:
- You think the market will keep going up, and you dont want to limit
your gains.
- The market falls, and you dont want to give up all the gains youve
made, so you hold on in hopes your position will rally.
If you accept and understand that huge amounts of money can be made in
a short period of time, you are less likely to become undisciplined in
your futures trading. Those that are successful in futures trading take
their gains in stride, no matter how large. They quickly move to protect
their positions by setting stops, or covering a percentage of a short
position. To be successful in futures trading you must stay rational and
disciplined in the face of rapid gains or losses and understand the nature
of futures trading.
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