Trading futures can be exciting. But it can also be a little daunting at first. Whether you’re hoping to make futures trading an important part of your life over time or to pursue a supplementary income now that you have money to invest, there is a lot for you to learn. After all, you are dealing with your own money; you don’t want to be careless as you move forward with trading.
While often dependent on complex algorithmic trading systems, futures trading can offer the opportunity to make a significant profit. The more you know about different aspects (like fully automated trading systems), the more you stand to gain rather than lose. However, it’s best that you begin with a strict regimen. Good habits are easy to form, but bad habits are difficult to drop when it comes to futures trading. Let’s explore some of the things you should keep in mind as you trade futures.
1. Create a Plan
You should establish your trading plan as early as possible and stick to it. Firstly, you need to be aware of your profit goals. While these may not be reached immediately, having these goals can make it easier for you to stick to your objectives and stay focused. You should also have a bailout plan in case things don’t go the way you expected. Profit goals and bailout plans allow traders to make good decisions more easily. You should think of these as your road map.
It’s easy to let your emotions get the best of you when dealing with money. Taking advantage of fully automated trading systems and sticking to your plan allows you to avoid letting those emotions take control. Furthermore, you may want to consider picking up a book and reading about how to map out an efficient plan.
2. Guard Your Positions
You need to stick to your positions and make sure that you don’t move beyond a point where you feel secure. That’s why a bailout plan is so important. You will want to trade with stop-loss orders, setting your stop at your bailout point. One-triggers-other orders are also useful, as they allow you to place both a primary order and a protective stop at once. This means that you don’t need to constantly watch the market, as the protective stop sets off automatically when the primary order executes.
Stops do not guarantee that you will not lose money. However, they can help you create safeguards within your money management systems, and once again, make it easier for you to move forward with your decisions.
3. Stay Focused
One of the reasons why fully automated trading systems are so favored is that they can help you stay focused. You shouldn’t try to trade within too many markets at once, as this will make it harder for you to dedicate the time that a single market really deserves. Each market will require a good bit of study and dedication from you and it’s impossible to responsibly apply the same level of focus to multiple markets. Furthermore, some markets correspond better to some money management trading systems than others, and it can all become too complex.
It’s okay to explore. You’ll want diversity within your portfolio. But don’t spread yourself too thin.
4. Pace Yourself
It’s easy to get excited and start trading more than you really should, especially when you’re working with fully automated trading systems. But don’t get too excited and get carried away. Begin with just one or two contracts as you begin to develop your trading strategies.
If you do happen to struggle at some point, remember that downsizing your contracts is an option. E-mini futures and micro e-mini futures stand as opportunities for those that want to continue trading but on a smaller scale.
Trading futures requires a good deal of dedication and learning. You’ll essentially need to become a student as you prepare to trade. But eventually, it also requires a bit of risk as well. You can only prepare so much until you begin to require on the job learning. Do what you can to protect yourself, trade wisely, and enjoy what you do.