Something important, that You should Know about Trading 

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Something important, that You should Know about Trading



Many books on trading attempt to boost traders' confidence by suggesting ways to make trading success easier to come by. And certainly most traders would prefer that trading success be "easy" to achieve. The purpose of this site, however, has been quite the opposite. One of the goals of this site has been to strip away all of the hype and hope and pretense and to lay bare the fact that success in futures trading is no easier to achieve than success in any other field. By now you have hopefully rid yourself of the notion that trading futures is going to line your pockets with "easy money." If you are to make money as a futures trader, make no mistake: you will earn it.

One primary goal of our site has been to instill the realization that there is only one person who can control your success or failure as a futures trader (as well as everything else in life for that matter). And that person is you. In the end you are responsible for your own trading success or failure. You now know that the futures markets, while seductive and very accommodating at times, can be cruel and unforgiving and will cause you to suffer greatly from time to time no matter how great of a trader you might end up to be. How you deal with this simple fact of reality will determine if you join the 10% of winning traders or the other 90%.

One of the most common pitfalls in futures trading is for something to go very wrong for a trader, for that trader to blame the markets rather than himself, and for a negative experience to cause a downward spiral in his trading. Working past a bad trading experience is doubly difficult because not only does it leave you emotionally feeling (lousy, angry, or frustrated, it leaves you with less money to your name. Now that really hurts. The key is to understand and accept the simple fact that this is part of life as a trader and to not allow a bad experience to have a negative residual effect on subsequent trades. This is easier said than done.

For example, say you are long Crude Oil, which closed yesterday at $21.60/barrel. Today you enter an order to sell short at $21.00. Crude Oil trades down to exactly $21.00 and you get reversed into a short position. Crude Oil then rallies back up to close unchanged at $21.60. For the day you lost $600 on the long side plus $600 on the short side for a total loss of $1,200. The next day you pick up the paper and the story reads "...and Crude Oil closed unchanged in dull trading." "Dull trading?" you might scream. "I lost $1,200 bucks. What's so dull about that you !©#$%!." This is but one of many possible examples, but the common result is a maddening feeling of frustration and a desperate need to "act" to somehow make things "right."

A trader is left wondering why he or she was so "unlucky." "How could I sell short at the exact low of the day? Why did the market single me out? I can't blame myself. I placed my stop right where my system told me to." The danger here is that a trader may suddenly feel a compelling urge to "act" in order to compensate for the bad experience just completed. This is a mistake.

Losing traders follow through on this urge to act. Winning traders do not. Winning traders do what they are supposed to do.

If a bad trade leaves you wanting to double up to get even or to widen your stops next time around, etc., etc., you are in danger of making a critical error. And doing so can send you down a very slippery slope. Think back to when you were a kid and you stole a cookie out of the cookie jar despite specific instructions not to do so. The first time you did it you were wracked with guilt. But wasn't it so much easier the second time around? And by the third and fourth time it was almost fun to figure out new ways to do something that you knew you should not do. This is an appropriate analogy for a futures trader.

The first time you violate your trading plan it involves a tremendous amount of angst. You know you are contemplating doing something you should not, but eventually you come up with enough reasons to "justify" (or more accurately, rationalize) violating your plan. And so you do. And you find that it's not that hard to do after all. No one questions you or tries to stop you. The trading police don't show up and haul you away. You just call your broker, place an order (or change an order or cancel an order) and the deed is done. No muss, no fuss.

And the next time you find yourself contemplating another deviation from your trading plan, you find it is "way easier" than the time before. In the shortterm it couldn't be much easier. In the longterm there is one drawback: In so doing you have stepped down the path of the 90% of futures traders who lose money. Whatever the market did to you to cause you to act this way is not relevant. What is relevant is this: only you can make the decision to turn around and head back toward the right path and to stay there.

We hope that the material on our site helps you to do so.





Categories in Trading Mistakes

Lack of Trading Plan
Planning plays a key role in the success or failure of any endeavor

Using too much Leverage
Determining the proper capital requirements for trading is a difficult task

Failure to control Risk
Refusing to employ effective risk control measures can ensure your long-term failure

Lack of Discipline
A lack of discipline can destroy even the most talented and best prepared trader

Useful Advices to Beginning Trader
You can control your success or failure

All about Stocks
Encyclopedia about Stocks. That you should know about Stocks before starting

Forex Glossary
All terms about Forex market

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