Your Education Starts Here!

Your Education Starts Here!

Learn how to trade stock index futures with Trade Center's COMPLIMENTARY, easy-to-follow information package and tutorials. Futures trading can be complex. These tutorials are meant to enlighten and empower you to make informed decisions. Sign up now and also receive the 106 page Stock Index Futures guide from the Chicago Mercantile Exchange.

Your mind will be one of the biggest obstacles while trading especially for a new trader. This reason alone is why you need to have a realistic approach and trading plan. I see a significant difference between traders who use a simple approach versus someone who is on the search for the "Holy Grail" and constantly changing their plan.

When deciding to trade futures there are many things you have to consider; which markets, chart time frame, indicators, capitalization amount, and trading software. Since every individual is different there are literally thousands of set-ups. What you as a trader needs to figure out are what approach you will use and what works best for you based on your personality. The more successful traders seem to keep things simple (K.I.S.), in my opinion.

For smaller trading accounts ($20,000 or less), realize that the odds are probably against you for making money. In my opinion there are still exceptions. For larger accounts you can endure larger swings in the market and not second guess yourself with small losses. For the smaller traders it's even more important to have a plan or strategy.

One pitfall I've noticed for some traders is that they will set up a chart with ten different indicators at one time. To me this makes no sense. Most indicators are lagging and will often contradict other indicators. When I see clients with this set-up it often looks like to me a Star Wars maze! Based on my experience I've never seen this strategy be successful. It looks more like a mind warp to me, getting constant buy/sell signals from different directions. So once again keep things simple "K.I.S."!

What I've seen be successful in the last few years for the self directed trader is they use a trading plan that is so simple you don't need a PhD to figure it out. Once you scale back and simplify the trading process your brain can understand what you're looking at.

Another factor most traders don't consider is what I call "Time Element". It's the amount of time you will be in a particular trade. This can vary dramatically depending on your style of trading, day, swing, or position. More specifically for day traders, I see people risking $300 to make $200 when in reality you need to do the reverse. Why do we exit our profitable trades so quickly? So my suggestion again is to practice, practice, and practice. Keep it simple.

Also you must mentally learn how to handle what I call "Noise". These are the gyrations the markets make while you second guess everything you have done. If you have a plan, it should almost be emotionless and enjoyable. This is why with my clients I'm always preaching to use limit and stop for exits and entries. When I see a client using market orders for all of their trading I can automatically tell the markets are running them vs. the other way. I believe you must place exits for every single trade. This is probably the #1 reason I see people fail. The successful traders once again always have a known risk factor realizing they will not be 100% profitable. The worst case scenario I see is someone that "falls in love" with a trade, and then sits there with what I call trader's paralysis. I've even personally been there, but learned quickly.

Also I've noticed that some markets trend much differently than others. Based on your personality you should carefully consider if you're trading the right markets. The market you initially start trading actually may not be the best for your personality type. For instanc,e 80% of my new clients come in for the emini S&P. Which, even for me I find difficult to trade, while other markets I find trend much better, increasing my success.

The last thing I would like to leave you with is "Price". So many of us focus on price thinking it can't go any lower or it can't go any higher then try to buck the trend. I've even gone so far as to turn off the prices in my charts and trade directly from a picture. I'm going to leave with something I'm sure you've heard numerous times; "The trend is truly your friend". Remember to always keep it simple and you're here to make money not lose your mind.

Happy Trading!

Your Education Starts Here!

Learn how to trade stock index futures with Trade Center's COMPLIMENTARY, easy-to-follow information package and tutorials. Futures trading can be complex. These tutorials are meant to enlighten and empower you to make informed decisions. Sign up now and also receive the 106 page Stock Index Futures guide from the Chicago Mercantile Exchange.