Top 4 Common Mistakes Futures Traders Make
November 29, 2017

By Chris Seabury | Updated April 18, 2018 — 10:45 AM GST

The most frequent issue that many futures traders face after earning initial profits is a sudden fall, which can seem to be an endless stream of losses. Eventually, they end up losing their profits and trading capital. They struggle hard to figure out what went wrong. So it’s really important to understand what the common mistakes are and what can you do to profit in the different futures markets.

Here are the top 4 common mistakes futures traders made by a futures trader.

1. Not Sticking With a Strategy

Just when a promising trading strategy is starts to show some negative trends, many traders will deviate or abandon the system that they are using. This change means that you will not be able to unemotionally evaluate the market, leading to incorrect analyses and ultimately, losses. Instead, when you start to see signs of a change in trend taking place, you should be prepared to adapt your strategy to the changing conditions.

2. Not Protecting Yourself

Futures trading (like all trading) does involve a certain degree of risk, so it is important to protect yourself. There are a few ways to do this, such as using a sell or buy stop to limit your losses to a comfortable level, or by using heading strategies like buying puts. This will keep your losses to a minimum while maximizing your profits.

3. Not Staying Focused

To trade successfully, undivided attention is required to be able to read and evaluate the markets effectively. Sometimes distractions are unavoidable, but you always want to have as few distractions as possible when you are trading. This will help you to focus properly, thus increasing your odds of more profitable trades.

4. Not Being Open to New Ideas

The markets are always changing. No matter how great you think you are as a trader, there’s always a new idea that can help you improve. Too often, traders feel that they know enough and they aren’t willing to learn anything new. As the market conditions change, this type of trader is left behind with nothing to show but losses. However, if you remain open to new ideas, you will be able to change the markets – and profit consistently with right moves.

The Bottom Line

Being a good futures trader means staying informed.

Follow these experts’ tips :

  1. Educate yourself about different forms of analysis, different strategies and learn from the mistakes of others.
  2. Trust in your well-researched strategy and your diligence will pay off.  

By following these simple tenets, you are increasing your odds of seeing more profits and fewer losses in these challenging yet rewarding markets. 

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