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50 Important Tips From Professional Futures Traders

Reprinted with permission from XPRESSTRADE.

Reasons 11-20

11. Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.

12. Many traders break a cardinal rule: "Cut losses short; let profits run." Too many traders allow losses to grow large, yet they exit winning trades too quickly. This is a sure recipe for failure.

13. Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That's why they should have a plan first, and stick to it.

14. Often traders have bad timing, and not enough capital to survive the shake out. It's not enough to be right in the end -- timing is everything. Have enough capital to ride out small moves against you, so that you can profit from the larger trend.

15. Too many traders perceive futures markets as an intuitive arena. The inability to distinguish between price fluctuations that reflect a fundamental change and those that represent an interim change often causes losses.

16. Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken. Know what your profit objective is, and know what your risk management plan is -- before you establish a position in any market.

17. Emotion makes many traders hold a losing position far too long. Many traders don't discipline themselves to take small losses and big gains.

18. Too many traders are under-financed, and get washed out at the extremes.

19. Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really a lack of discipline -- you should have a profit objective in mind, and when the market reaches this price, close out the position and enjoy your reward. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed.

20. Trying to trade inactive markets is dangerous. In thinly traded, illiquid markets, the chances for manipulation increase, and your ability to exit your position at a fair price might be impeded.

Next chapter: Reasons 21-30

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