There are many futures traders who initially enter the market to make some really big profits and later on, to their utter surprise they start being subject to a string of losses which seems to be endless for the disheartened traders. Once they start incurring such losses, this eats up their initial capital that they had invested for trading and they keep striving to figure out what mistake they’re committing.
If you’ve successfully traded options, you may think that both the concepts are similar. But the prime difference between futures and options is that the latter lets the trader to sell off the asset before its expiry while the former is liable to fulfill the entire terms and conditions of the contract. Nevertheless, you can still make profits if you realise your mistakes. Here is a list of the common blunders to avoid in futures trading.
Mistake #1: Not abiding by your system
Each and every futures trader will have a pre-set system to choose the right trades and to keep losses at the minimum. Then why do the traders fail? This is because whenever they find a specific trading strategy to flourish, the traders start abandoning the trading system which they use. This way they even let in emotions while trading and which consequentially leads to losses which you can’t avoid.
Mistake #2: Not being able to safeguard yourself
Like all other trading options, futures trading too involve a definite amount of risk from which you have to protect yourself. You can do this by leveraging the buy or sell stops to restrain your losses to an affordable level or by utilizing hedging strategies like purchasing puts. It is only when you take proactive steps to safeguard yourself that you can keep losses at the minimum level and maximise your profits. Just as there is a worthy trading app for capital trading, you also get apps for futures trading as well.
Mistake #3: Not being open to new opportunities and strategies
We can’t deny the fact that the markets are constantly changing. Irrespective of how great you may think yourself to be as a trader, there will always be brand new ideas and opportunities waiting for you to boost your results and performances. Most often, it is seen that the traders get caught thinking they know enough and aren’t open to new information. Now that the markets keep changing, they are left behind and hence all they incur are losses. Hence, you should be open to new ideas.
Mistake #4: Not being focuses on your trade
When you trade futures, you have to invest your unswerving attention to be able to evaluate the market in an appropriate manner. Though there will be some unavoidable distractions but you should keep as less distractions as possible while trading.
Being a worthy futures trader means remaining informed about the changes, sticking to your support system and sharpening your skills. Avoid the above listed mistakes and take the right steps to become successful.