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Discount Futures Trading - Don't Make These 7 Mistakes
1. Not getting enough basic education. It's common for new traders to jump straight in to trading without learning enough to enable them to avoid traps for the unwary. Find a successful futures trader and see if he is willing to teach you. Many now offer courses or video DVDs that explain how to trade. Make sure he is genuinely successful and not just a salesman who sells the product but doesn't "walk the walk". 2, Not getting enough practice before trading with real money. Most brokers now offer "demo" accounts, so you can trade the futures markets without risking real money. What often happens is that the new trader becomes impatient and starts trading for real before he's ready, and as a result usually loses his money. Use your demo account as if it were real money. Don't be tempted to trade recklessly just because it's not real money. You won't learn that way. Wait until you have several winning trades under your belt with your demo account before risking real money. 3. Taking too much risk. Never trade with more than about 5 per cent of your capital. True, your profits will be smaller, but then a few bad trades will never wipe you out. Aim to have at least 5 or 6 trades open at once, so as to spread the risk. It's actually more of a risk to have only one or two trades open at a time. 4. Having all your trades in the same market, e.g. corn. Diversify your investments for greater safety. If you have a couple of losing trades, never "go for broke" and try to recover the losses with one trade. That's how so many new traders fail. 5. Not having a proper trading system. You should know when to go into the market and when to come out. You should have at least an approximate target when you open a trade. And if the trade goes against you then you should know if and when to come out. If you are spread trading you should have proper stop loss and limit orders in place. Otherwise the erratic movements in the market can make you undecided and confused as to whether to close the trade or not, and this can cost you dearly. 6. Becoming greedy or complacent. Always remember that futures trading is high risk, and the market is ruled by greed and fear. Making a small profit whilst managing your risk well is preferable to making a large profit whilst having put too much of your capital at risk, because if you do this once too often you may get wiped out. Never try to buy at the bottom and sell at the top because you'll never succeed. The aim is to make a steady profit month by month or year by year. 7. Not doing your homework. Never skip on research. This can make all the difference between success and failure in discount futures trading. With the advent of the internet research has never been so easy. Get to know your markets as if you were intimately involved in them, as an actual merchant is. Article Directory: http://www.articledashboard.com Philip Gegan is a retired UK lawyer who has studied the financial markets since 1991. You too can make profits such as 70% in less than a week on gold at www.onlinefinancialtrading.com |
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