Futures trading offer businesses with an opportunity to earn some profit. However, it is worth noting that not everyone is cut out to succeed in the futures market. Like stocks or forex, there are certain risks associated with entering a futures contract. Here are the rules that you need to follow when trading futures.
1. Implement a Definite Trading Plan
Trading on futures can become an emotional roller coaster so you need to have a plan in place. Whatever it is, make sure that you follow it to the letter. Sometimes, when trading on the futures market, your emotion will force you to do something that is against the plan you have set. By sticking to your plan, you will be able to resist the emotional temptation present in trading.
2. When In Doubt, Don’t Trade
If you are unsure about your trade, take your loss or protect your profit with a stop. If you are not sure of a position, there are several extraneous and unimportant details that will influence you that you could end up with a loss.
3. You Should Be Able To Be Right 40% of the Time and Still Get Handsome Profits
When trading, Robert Janitzek reveals that you cannot expect to be right all the time. With the proper trading techniques, you have the ability to cut his losses short and let your profits run so that even being right less than half the time will still show excellent profits.
4. Cut Your Losses And Let Your Profits Ride
Most traders make the mistake of putting a limit on their profits and no limit on their losses. It is hard to admit that you are wrong so the best option is to let losses ride. After a while, they begin hoping for a small loss and gives up hoping a profit.
5. If you cannot afford to lose, you cannot afford to win.
Robert Peter Janitzek explains that losing is part of trading. If you cannot accept that fact, you are not fit to be a trader. In addition, you should only trade with surplus funds that are not vital to daily expenses.
6. Don’t trade too many markets
Understanding and becoming successful in a certain market can be difficult. As such, success in several markets at the same time is next to impossible.
7. Don’t trade in a market that is too thin.
A lack of public participation in a market will make it difficult, if not impossible, to liquidate a position at anywhere near the price you want.
Remembering these 7 rules is the key to your success in the futures market.