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E-mini Futures Trading: Why Most Retail Traders Fail

|Includes:CL, EnergySolutions, Inc. (ES-OLD)

by Lance Burkhart


The financial markets are not an easy place to make a
living. They thrive on inexperience and misinformation.
Novice traders with limited market knowledge act as
permanent ATMs for the big institutional traders ever
present in today's electronic markets. In the end the
majority of retail day traders lose for exactly the same
reasons.


Unlike their unsuccessful counter parts, profitable traders
know how to spot edges in the markets and how to use their
weaknesses as strengths. The ability to take on information
and use it to your advantage is what will separate you from
losing traders. To understand how to get started the right
way we need to go over the mistakes so many traders make
each day.


1. Lack of Capital


Trading is an expensive endeavour. Although there is no
perfect or set amount of capital needed to ensure success in
the markets it is often understood that anything less than
5,000 is unrealistic. Commissions have been drastically
reduced since the advent of the electronic exchanges but
retail traders are still exposed to serious back end costs.
Day traders are the most affected because they will usually
take three or four trades a day in order to turn a profit.
Even with low commissions that frequency of trading can
quickly eat into a trader's bottom line. If your trading
capital is low look to start out in futures or forex trading
as it usually requires less capital to open an account.
***WARNING***Be very careful when trading futures and forex
as you can lose more than your initial investment. Trade
within your limits.***


2. No Clear Trading Strategy


Trading is a business and if you want to be successful you
need to treat it as such. There is no such thing as a born
market guru. Individuals who make a living trading do so
because they have a skill set and they have a plan. The plan
allows them to stay on track and focus on their core money
making set ups. Most retail traders try a little bit of
everything before they settle into a strategy that suits
their style. Do yourself a favour and do your research
before you start trading with real money. Moving back and
forth between strategies can lead to confusion and major
drawdowns in one's account.


3. Uneducated About Price Action and Market Behaviour



Regardless of your trading capital or strategy, if you
don't understand how and why markets operate you aren't
going to be successful as a trader. Learning to walk before
you run is common sense yet time and time again I talk to
traders who jumped into the market without any specific
trading experience. Do yourself a favour and find someone
who is already successful in the markets and learn as much
as you can from them. You don't have to copy their style
entirely but you should take what works for you and makes
sense and tweak it so it aligns with your own trading
personality. Doing this over and over again and exposing
yourself to as many different styles and opinions as
possible will open up your trading possibilities and keep
you from getting stale.


These small details can help you avoid the vast majority of
pain and hardship that so many novice traders face when they
start trading in the e-mini futures market. Use your
knowledge to your advantage and you could be on your way to
a very successful trading career.


For more information on how to become a profitable at e-mini
trading
, visit the #1 source fore-mini trading
education
.
 



Disclosure: longeur/usd
Stocks: ES-OLD, CL