Learn To Trade
Futures Without Letting
Emotions Lose You Money
One of the first
lessons when you learn
to trade futures is know
when to exit the market.
Don't be a gambler. If
your system requires you
to exit, than without
thought or hesitation
you should exit. This is
a good habit to get into
as you remove emotions
from your trading. When
you can remove emotions,
you enhance your chances
for a better trade. A
mistake that many
traders make is that
they second guess
themselves. They realize
that maybe the market
came back and they would
have made money, so if
they would have stayed
just a little longer
they would have made
money. Big mistake. Do
not do this or you will
always trade by emotions
instead of your system.
A good method to exit
the market if your
position is losing
money, is to use
stop-loss orders.
Basically this type of
order allows you to
predetermine a price in
which you will exit this
trade if the market
moves up to this point.
By limiting your losses,
you can live to trade
another day. This is
very important. Now if
you happen to make money
on a trade, you should
use what is called a
trailing stop-loss
order. Let's assume that
you are profiting from a
trade to the tune of
$1200 dollars. You can
move your initial
stop-loss order closer
to the current price so
that you can lock in
those profits. This way,
you can profit if the
market continues higher
and also make a profit
if the market retraces.
Use Futures Trading
Charts For Exit And
Entry Prices
The most important
trading tool when you
learn to trade futures
is the use of futures
trading charts. Futures
trading charts let you
see prices move and
allows you to analysis
where stop-loss orders,
profit targets and
market entry points can
be set and made. This
allows you to create a
trading plan before you
actually enter the
trade.
Another benefit to
using commodity charts
is to look for specific
trading patterns to
decipher when an
opportunity actually
exists. There are many
profitable futures
trading setups as far as
chart formations and
when a specific chart
actually happens, you
will be able to test and
see for yourself if that
particular pattern works
for you.
Here are four futures
trading setup formations
that you can use to
trade:
1. 1-2-3 bottoms - a
bottoming formation that
presets a market move
higher once the
formation is complete.
2. 1-2-3 tops - a
topping formation that
presets a market move
lower once the formation
is complete.
3. sideways breakout
- price consolidation
where the market trades
within a tight range and
then explodes in a
specific direction.
3. continuation
breakouts - a market
that is in a trend, but
makes a small pullback
before continuing on
that current trade.
4. gap setups - price
gaps when not filled
usually indicate a
strong trending market
in a particular
direction. If you can
enter either before or
right after a price gap,
you could make big
profits as the market
moves in one direction
with a lot of strength.
There are many
others, but these are
the basics. They can be
used in any time frame
and have worked for many
years. Of course,
nothing is 100%
guaranteed, but plan
your trades with solid
entries along with
establishing a good
sound money management
system without using
emotions, you can tilt
the odds in your favor
as you learn to trade
futures and hopefully
profit from them.
