If you want to be a successful trader, you must train yourself with consistent habits to avoid some common pitfalls. Lack of planning and discipline are bad habits that must be broken early. When entering a trade you must have both your exit routes already mapped out. You should simultaneously enter your stop-loss and your limit order to exit. By assessing your risk, and knowing exactly what your risk is on any particular trade, you can create a profitable trading system for yourself.
One common mistake is either modifying your stop-loss or adding to a losing position. What is it in our nature that motivates us to throw more money at a losing trade. People are more susceptible to add to a loser than add to a winner. If we quickly see profits, we tend to take it off the board quickly rather than letting your winning trade ride or even adding to it. If our trade turns out to be a loser, rather than accepting we were wrong, we add to the position and tell ourselves that we are averaging out. Folks! Leave your ego’s at the door! We must all go into a trade knowing that it is OK to be wrong.
Since futures contracts are highly leveraged, greed tends to become the root of all evil and the main cause behind losing. Individuals tend to over-leverage themselves for various reasons. Margin requirements are in place for a reason, and for the longevity of your account you must not over expose yourself to any particular market. If at any point you do feel like adding more positions, why not diversify into a different market?Placing all your eggs in one basket is widely known as a poor investment strategy.
Most importantly, as a beginner, do not hesitate to ask for assistance. Sometimes the thought of paying an additional fee for the assistance of a broker diverts individuals from asking for help, and in turn could lead to a considerable loss in regards to their account. We are in business to service accounts and maintain and grow our companies assets. Most brokers willingly help beginners without any additional fees.
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