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Truth about Futures Trading |
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Repeated studies have shown that over 90% of all futures traders lose money over time. Although this sounds like bad news, and of course it is bad news and a big problem for most traders, it is actually good news. It proves that the markets are not random. In futures trading, there is a buyer for every seller, giving each trader a 50% chance of being correct on any given trade. Therefore, this large disparity (90% versus 50%) cannot occur by random chance. It happens because most traders make and repeat the same basic trading errors again and again - throwing the odds of winning against them. The 90% majority who lose and the 10% who win, are either unsuccessful or successful for definite, identifiable, and predictable reasons. This reality presents a fantastic money making opportunity for the disciplined trader who is seeking positive results, rather than thrills or entertainment from trading. If you use a good trading system with proper trading plan to protect you from these common trading pitfalls, your chances of long-term trading success will increase dramatically. You can choose to trade like the winners. In addition, because futures trading is a "zero-sum game", all of the money that the 90% lose (minus commissions) is paid, through the exchange clearing houses, to the 10% who win. Although there is a risk of substantial loss in trading, the rewards for successful trading can also be substantial. But don't fall for any of the marketing hype out there that makes promises of rates of return that are unrealistic, regardless how much of a "Super Trader" the guy is or how "Amazing" the method is supposed to be. If it sounds too good to be true, it is. From the outside, the markets and trading seem mysterious and complicated. Trading "Guru's" like to perpetuate this myth so you'll buy their "Super-Star" services. They want you to believe that you need to be extremely intelligent, expert, have special insider information, market savvy, etc., to "trade like the pro's". This is not true! The real professionals trade with simple, trend and momentum trading systems with sensible money management skill.
Most people would approach day trading with full of enthusiasm hoping to strike rich within a short period of time only to realized how much money they had lose after a few months. Some of them gave up trading because they can’t afford to lose anymore while others that persist will start buying books to read or attend trading seminar. Trading seminars are usually very impressive and convincing. You walk out feeling like a new person full of confidence and all ready to conquer the market. The truth is, most of them who paid thousands of dollars on Day Trading seminar would still end up feeling frustrated and confused over their trading performance. While some will never even bother to try their hands on real-money trading. Being successful in day trading is not an easy task. You will need 3 important criteria:- 1) A good trading system - Good technical indicators and money management skill. 2) The most suitable futures product - Not all futures product are suitable for day trading. Some are too volatile and unpredictable while others do not have trading volume. 3) Self discipline - being able to control your emotion and following a strict plan is the single most important key to trading success. |
