3 pitfalls to avoid for staying in profit from futures trading
In many futures trading scenarios, we see some traders making good profits at the initial stages of trading but suddenly within a few months see the blues. Some even lose their trading capital, yet fail to understand what is wrong that they have started placing their feet in pitfalls!
Here are three reasons noted below that may drag a trader to taste failure in futures trading.
Not sticking or giving time to any system of investment – Every successful futures trader is found to have a specific trading system which they follow for a specific time backed by analysis. If a trader does not give any budding success time to flourish and change to a new plan, a loss could be unavoidable. A change in the plan means newly analyzing the market with new thought process which may prove loss making. On the contrary, a profit making strategy could have given a good return as set tracks of unemotional evaluation of market are proven to success.
Not protecting investment: Every trading process involves high risks, futures are no exceptions. You need to protect your trading capital and profits to face extreme losses. A trader could apply ‘stop losses’ or hedge investment through buying puts to prevent bleeding losses. It is better to minimize losses than exit trading market with losses.
Not keeping focus grab to new ideas: A futures trader has to be very much focused on the market movement. There could be some distractions of investing in new opportunities but do not invest at the cost of a profit-making strategy. On the contrasting side, your analysis shows that your profits are going down and a new area is showing consistent growth with future possibilities, accept it. It is always a better idea to put eggs in different baskets instead of taking a high risk of putting all in a single big one!
Be an independent thinker who is not distracted by others than his strong analysis and market focus. Attention to the mistakes of others and learning from those open your doors to success as a futures trader.