The Seven Top Secrets To Trading Futures Successfully

It is no coincidence that the most successful floor traders are in general those with the most experience. This is because I believe that trading is essential a skill based activity which requires both practice and experience. There are many similarities between very competitive skill based sports, like golf or tennis, and trading. Here are 7 of the key skills that you must develop as a trader.

1. Futures markets are just like any other market wether it be stocks, options or bonds. They will obey the laws of techincal analysis as well as any other market, providing there is enough volume to make the market liquid. So when trading futures look for support and resistence, trendline and chart patterns. Learning techincal analysis is not as hard as most people think, you just need to spend enough time looking at charts because it is really a visual skill.

2. Always have a trading plan before you enter the trade, and more important than your entry point is your exit point. Your exit strategy could include multiple points including several price targets where profits are taken and a stop loss point.

3. Ask any experianced trader who makes money every month and they will tell you the number one secret of trading is to keep your losses small. Amateurs take a long time to learn this. By doing this your small losses will cancel your small wins and you will be left with your big wins which is how you will make money over time.

4. Professional traders tend to be more patient than amateurs and wait for the market to come to them, amateurs on the other hand tend to over trade, which is a big mistake. Learn to be patient and cherry the best opportunities, this requires both patience and discipline but they are skills that can be easily mastered.

5. Keep both a daily and weekly log of all your trades. It is essential that you follow up with all your trades, both good and bad, to learn what your mistakes were. To become a very good trader it is simply a case of eliminating all your mistakes. This does not mean that you don’t have loses but it means that you followed your trading plan and kept your losses small.

6. Only trade when you are both physically and mentally prepared. This is often overlooked but is very important. Do you think a tennis star can win a game when they are tired and mentally not focused?, it’s unlikely. Being prepared means getting a good nights sleep, having your trading station and charts well prepared before the market opens, taking the time each and every day to review your trading plan and rules. Finally you must have the mental frame of mind and confidence that you are going to be successful today in your trading.

7. Paper trading is a good way to test out your trading system. Many people discount paper trading as not being realistic as when using real money because of the emotions involved. However here is one very important point to understand, if you cannot make money paper trading you absolutley will not do it with real money, the converse is not true however.