5 Steps Utilized by Successful Futures Traders

5 Keys to Becoming a More Successful Futures Trader

If you’re a seasoned futures trader, you know that variance is part of the game. Everyone, no matter how skilled or unskilled, runs hot and cold.

Sometimes, however, if a cold streak seems to be lingering, a self-evaluation may be in order. The best traders are usually those who seek continual improvement and assess their progress at regular intervals.

With that in mind, let’s review five keys to improving as a futures trader.

1. Manage your risk effectively

Managing risk is an essential part of any futures trading strategy. If you’re not protecting your investments through the smart use of buy and sell stops to limit losses -- or adopting hedging strategies such as buying puts - it might be time to reevaluate your tactics.

You should also understand that while these protective stops are important tools for money management, they aren’t perfect. Your stop price may not always get filled, and you should be ready for this possibility.

One more point: Don’t sit on your losses too long, or send too much good money after bad in an effort to average down a losing position. While each trade is different, in most cases you’re better off setting tighter loss parameters and moving along to the next opportunity.

2. Master your Trading Psychology

Futures Trading Pack

Maintaining discipline and emotional distance is a key component of smart trading. Successful traders have the discipline to stick with their trading plan, while also maintaining the flexibility to seize upon developing opportunities.

The more you can remove emotion from trading, generally speaking, the better off you’ll be. Red numbers can spook a trader and lead to an ill-advised sell; greed, on the other hand, can result in a trader hanging onto a winning position for too long.

This is why it’s critically important to stick with your rules. Remember, if you can maintain discipline during periods of turbulence, you’ll have a competitive advantage over others who can’t manage their emotions.

3. Sharpen Your Trading Skills

A good trader has many tools in his toolbox -- and knows precisely the right one for any situation. If technical or fundamental analysis isn’t your strong suit, make an effort to improve your knowledge.

It’s also important to find the right mindset. Are you an independent thinker who isn’t afraid to go against prevailing market trends? Do you have comprehensive strategies designed to help you prosper in bullish, bearish or sideways markets? Are you committed to rigorous self-evaluation and continuous learning? Are you aware of the cognitive biases that can trap traders and create suboptimal outcomes?

Once you can answer in the affirmative to those questions, you’ll be close to finding your best form as a futures trader.

4. Avoid the Urge to Trade with Excessive Frequency

It’s easy to get the itch to trade if you haven’t done so in awhile, but circumstances sometimes favor caution or inactivity. Let the market come to you -- never trade simply to trade.

If you’re running cold and you’re trading in multiple markets, consider streamlining your positions. Successful trading requires patience, discipline and strong knowledge of individual markets. Sometimes it’s better to move with deliberation.

5. Use the Proper Futures Trading Platform

A builder is only as good as his materials -- and a trader can be made or broken by his choice of trading platform. Choose one that’s unreliable, and you might miss out on your best trading opportunity of the year.

To give you the best chance at success, you need a platform with 24/7 trades, high-end analysis, a wide range of platforms and services designed to meet the needs of each trader and the technological tools to spot market opportunities as they develop.

With the appropriate support from a reliable, full-featured futures trading platform, you’ll have the resources required to become a better trader.

The Takeaway

The best traders are committed to continuous improvement and willing to exploit any edge or advantage, no matter how small. We encourage you to examine the ideas outlined above in an effort to achieve better results in the market.

 


 

Trading success requires hard work. Try and do something every day to achieve your trading goals. Study the markets, analyse your trades and learn everything you can. You have every chance of being a successful trader - if you are prepared to do the work. Check out our free Futures Trading Pack.

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.