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50 Important Tips From Professional Futures Traders

Reprinted with permission from XPRESSTRADE.

Reasons 41-50

41. Getting out of a rallying commodity too quickly, and holding losers too long, is a trading methodology that surely will result in losses over time.

42. Trading against the trend is a common mistake. This may result from overtrading, too many day trades, and under-capitalization, accentuated by failure to use a money management approach to trading futures. There's an old saying in futures trading: "The trend is your friend."

43. Often, traders jump into a market based on a story in the morning paper; and in many such cases, the market already has "discounted" (priced in) the information. Remember, news flows around the world quickly, and there are many people watching the futures markets closely. Your chances of receiving significant information before others are very, very slim.

44. Lack of self-discipline on the part of the trader creates losses. Create a plan before you enter the market, and stick with it.

45. Traders don't clearly identify and then adhere to risk parameters; i.e., stops. If you establish a position, and the market moves against you, and your stop price is reached, get out. There's no shame. So what if you were wrong this time? Save your capital and look for the next chance to make a profitable trade.

46. Most traders overtrade without doing enough research. They take too many positions with too little information. They do a lot of day trading for which they are under-margined; thus, they are unable to accept small losses.

47. Many speculators use "conventional wisdom" which is either local, or "old news" to the market. They take small profits, not riding gains as they should, and tend to stay with losing positions. Most traders do not spend enough time and effort analyzing the market, and/or analyzing their own emotional make-up. Futures trading is hard work. It requires a significant amount of time and energy, not only studying the markets, but coming to terms with your own personal strengths and weaknesses.

48. Too many traders do not apply money management techniques. They have no discipline, no plan. This means that many overstay when the market goes against them, and won't limit their losses.

49. Many traders are undercapitalized. They trade positions too large, relative to their available capital. They aren't flexible enough to change their minds or opinions when the trend is clearly against their positions. They have neither a good battle plan nor the courage to stick with it.

50. Don't make trading decisions based on so-called "inside" information. Not only is it illegal, but it's also usually wrong. Keep in mind that it someone truly is in possession of inside information that potentially could result in a very profitable trade, they're not likely to share it with anyone.

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