Futures traders should observe these points in their trading.
Requires management of the emotional states.
Emotional imbalance impairs the ability to make good decisions.
The most optimal state is one of complete emotional detachment.
To remain calm and to follow your trading system.
The Key word is to stay "COOL".
Like most things in life, without it you won't succeed. Discipline is sticking to your trading system,
including your "stops" and "entry points". It is the hardest, but most important rule of all.
Following a proven system will help you acquire the discipline you need to succeed.
TRADE ONLY WHAT YOU CAN AFFORD TO LOSE - and never ever over trade.
Futures trading is risky, so don't fund your trading with money which, if lost,
could put you into financial difficulty.
MAINTAIN MENTAL CLARITY
One of the keys to successful trading is mental independence and clarity - the ability
to free yourself from concerns that might distract you from trading. Whether they be
family, friends, or financial concerns, always aim for a complete clarity of mind in
your trading. Being clear in your goals and maintaining your mental focus will help
you stick to your trading system and not make rash decisions based on emotion.
WALK BEFORE YOU CAN RUN
Learned knowledge and practical experience in the markets are the best teachers in
the longer term. It is best to start with small amounts of contracts and less volatile
markets and build from there. You must do your homework. Nobody can do this for you.
"Paper Trading" will not help either. You must put your money at risk and see how you react.
DON'T PLACE ALL YOUR EQUITY IN ANY SINGLE POSITION
One of the keys to success in trading is lasting in the game. Don't overcommit
your account to any single position. You must have the proper funds for every contract traded.
ACCEPT THAT THE MARKET IS ALWAYS RIGHT
The market cannot be controlled by one person so it has to be accepted that it will
move regardless of what you want it to do. Fear, greed and hope can cloud your judgement
of the market and can cause emotional responses detrimental to your trading. The market
will go where it wants to go. A computerized system has no emotions. It will just measure
the forces driving the market and act accordingly.
TRADE WITH DEFINITE GOALS IN MIND
Profits belong to those who make decisions and act, not those who react.
Your trading system should signal when to get in and when to get out.
STICK TO YOUR SYSTEM
Easier said than done. That is why you need a Good Trading System. Never second guess your system. Take all signals. And never over trade.
A good trading system has to be adaptive to changing market conditions.
If you have certain indicators and analysis you feel are worthwhile, make certain you
use them in the right conditions.
DON'T FOLLOW THE CROWD
When the paper calls a bull market it's possibly time to sell. Most traders are uncomfortable when the
position is popular with the general public. However the opposite may be true if the "crowd" is made up
of mostly institutional traders.
ADMIT THAT YOU ARE WRONG
Don't fall in love with a losing position. If you get it wrong, admit it, get out, conserve
your equity and wait for another opportunity. Use a good system to control your emotions and stay focused.
LET PROFITS RUN UNTIL YOU HAVE A REASON TO CASH IN
Let profits run until your trading system gives you a siganl to get out.
BE CAREFUL WHEN PLACING "STOP LOSS" ORDERS
It is smart to use stops so that losses can be limited if the market moves against you.
A good trading system can calculate the best stops to place in any market.
WATCH CAREFULLY FOR MARKET DIVERGENCE
Professional traders are always on the lookout for market divergence. If the market sentiment
is bearish but then breaks through resistance levels, it can often be a good indicator to buy.
PICKING HIGHS AND LOWS
Let the ATS-ZB32 take care of this.
This is not easy for anyone to do. Instead it is much better to use a good trading system.
THINK LONG TERM
Long Term Trading is the least stressful. You do not have to follow the market everyday.
Trading can be stressful and if done every day, you can become tired and your judgment dulled.
When that happens, you'll begin to lose money. It makes sense to have a break every now and again
and do something completely unrelated to trading.
STAY IN GOOD SHAPE
You will think clearer if your trading activities are blended with physical activity.
Trading is time consuming and can be mentally stressful, but provides opportunity for growth,
both financially and personally. It therefore makes
sense to give yourself every chance to be successful by incorporating exercise into your trading day.
Take a break. Get away from trading on a regular basis. Do whatever you like to do to relax and enjoy yourself.
When I want to take a break I go for a ride in the countryside in my red covertible corvette or go dancing with my friends.