Jake Bernstein: Essential Rules for Successful Futures Trading

If you have even the most limited experience as a trader then you know that the system or method you use is only part of the overall formula for success. The fact is that lasting success as a trader depends on a combination of three primary ingredients. The essential elements for profitable trading are:

1. An Effective System
By this I mean a trading system or methodology which has a demonstrated history of success through all types of markets and which contains definitive, objective, operational rules.

2. Risk Management
I define this element of profitable trading as a method which takes you out of losing trades and keeps you in winning trades for as long as possible. Ordinarily this task is part of the trading system, however, traders often override their trading systems and, therefore, need a failsafe procedure.

3. Discipline
Under this element I include self control, persistence, positive attitude, and more. Last, but certainly not at all least:

4. Trader Psychology
By this I mean self-knowledge, and the ability to resist one’s emotions even in the face of losses. I feel that if you can master or even come close to mastering all four, then you will achieve consistent success as a trader. Moreover, you will avoid the boom or bust syndrome which afflicts so many traders.

Whether you’re a newcomer to futures trading or an old hand at this risky business, you are most likely one of the many individuals who would like to improve, who is motivated to improve, but who doesn’t know how to begin the arduous task of changing your behaviors.

Here are some suggestions as to how you may embark on the road to lasting profits:

Examine your trading results by looking at your statements and attempting to determine why you made the trades you did. This will let you know at once whether your trades were at all systematic or if they were based on a whim, on emotion, on tips, rumors, fear, or greed.

If you’re like most traders then you’ll find that a relatively small percentage of your trades were the result of a system and that most of your trades were prompted by other factors, most of which were totally unrelated to any definitive system, method, or indicator. This will alert you to the first problem area in your trading. It will let you know, without a doubt, that you are not basing your decisions on a consistent approach.

To read more of Jake’s ‘Essential Rules for Successful Futures Trading, click here . . .

Wednesday, August 10th, 2011 Uncategorized

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