Why Most E-Mini Futures Traders Fail
The e-mini markets are full of depressing stories about traders who should have done this or could have done that.
Failure is a key component of the free market system.
You can't have winners without losers.
For those traders looking to learn from these horror stories of trading accounts gone bad, the mistakes to avoid are crystal clear.
99% of retail traders fail because they ignored three very basic principles.
A successful trader has the ability to recognize the advantage that he or she holds over other market participants and is able to exploit that edge in order to pull consistent profits.
Knowing your strengths and weaknesses allows you, as a trader, to confront certain issues in your trading before they start to affect your bottom line.
Let's take a look at some of the common mistakes retail traders make in the markets so that we can analyse our own trading to see if there is something we need to change.
1.
Lack of Capital Trading is an expensive endeavour.
Although there is no perfect or set amount of capital needed to ensure success in the markets it is often understood that anything less than 5,000 is unrealistic.
Commissions have been drastically reduced since the advent of the electronic exchanges but retail traders are still exposed to serious back end costs.
Day traders are the most affected because they will usually take three or four trades a day in order to turn a profit.
Even with low commissions that frequency of trading can quickly eat into a trader's bottom line.
If your trading capital is low look to start out in futures or forex trading as it usually requires less capital to open an account.
***WARNING***Be very careful when trading futures and forex as you can lose more than your initial investment.
Trade within your limits.
*** 2.
No Clear Trading Strategy No business would ever open its doors without first knowing what it was going to sell yet time and time again I see individuals open e-mini trading accounts without any knowledge of the trading strategy they are going to employ.
Traders make money in this business by employing very specific strategies.
A good trader will rely on one or two set ups to make consistent money.
You need to know what your plan is before you start trading.
This will save you from over trading and random trading.
3.
Uneducated About Price Action and Market Behaviour The vast majority of traders who fail do so because they didn't understand how the markets operate or how to spot a good set up.
You can save yourself an enormous amount of time and energy by seeking out experienced traders who will educate you on market behaviour.
Don't limit yourself to one individual.
Get out there and find the trading coach or system that best fits your personality.
Take the time to learn the pros and cons of each trader's style and then incorporate the good into your own strategy.
E-mini trading isn't an easy venture but if you set yourself up for success early on you can avoid a lot of the disappointment and frustration that is often experienced by traders new to the futures market.
Failure is a key component of the free market system.
You can't have winners without losers.
For those traders looking to learn from these horror stories of trading accounts gone bad, the mistakes to avoid are crystal clear.
99% of retail traders fail because they ignored three very basic principles.
A successful trader has the ability to recognize the advantage that he or she holds over other market participants and is able to exploit that edge in order to pull consistent profits.
Knowing your strengths and weaknesses allows you, as a trader, to confront certain issues in your trading before they start to affect your bottom line.
Let's take a look at some of the common mistakes retail traders make in the markets so that we can analyse our own trading to see if there is something we need to change.
1.
Lack of Capital Trading is an expensive endeavour.
Although there is no perfect or set amount of capital needed to ensure success in the markets it is often understood that anything less than 5,000 is unrealistic.
Commissions have been drastically reduced since the advent of the electronic exchanges but retail traders are still exposed to serious back end costs.
Day traders are the most affected because they will usually take three or four trades a day in order to turn a profit.
Even with low commissions that frequency of trading can quickly eat into a trader's bottom line.
If your trading capital is low look to start out in futures or forex trading as it usually requires less capital to open an account.
***WARNING***Be very careful when trading futures and forex as you can lose more than your initial investment.
Trade within your limits.
*** 2.
No Clear Trading Strategy No business would ever open its doors without first knowing what it was going to sell yet time and time again I see individuals open e-mini trading accounts without any knowledge of the trading strategy they are going to employ.
Traders make money in this business by employing very specific strategies.
A good trader will rely on one or two set ups to make consistent money.
You need to know what your plan is before you start trading.
This will save you from over trading and random trading.
3.
Uneducated About Price Action and Market Behaviour The vast majority of traders who fail do so because they didn't understand how the markets operate or how to spot a good set up.
You can save yourself an enormous amount of time and energy by seeking out experienced traders who will educate you on market behaviour.
Don't limit yourself to one individual.
Get out there and find the trading coach or system that best fits your personality.
Take the time to learn the pros and cons of each trader's style and then incorporate the good into your own strategy.
E-mini trading isn't an easy venture but if you set yourself up for success early on you can avoid a lot of the disappointment and frustration that is often experienced by traders new to the futures market.
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