Futures Trading Win and Lose

Futures trading -- win and lose -- is usually a matter of doing your homework. This homework can either be technical or fundamental in nature. Technical means such things as chart reading, moving average crossovers and oversold/overbought situations. Fundamental can be a crop report, supply inventory reports or the current weather predictions. In either case, the better the information, the better the chances of winning on a specific trade.

Many futures traders are advocates of technical trading as these trades are of a short duration. Short time in the trade compared to a stock trade. Fundamental trading is the long-term outlook for the price of the commodity. The grain markets are likely to see this during a crop year as the reports begin to suggest there will be a bumper crop or a shortfall crop.

In futures trading you can win or lose based on their ability to analyze the facts and come up with the right answer. They also have to be aware they may be early in a correct assessment and be forced to get out of trade that goes in the wrong direction temporarily. The one rule that should be followed at all times is you do not fight the market. Take small losses quickly and wait for a better time to enter the trade. Patience is a determining factor in winning and losing.

Do not let stubbornness ruin the chances for success. To be good at futures trading you need to be humble and be quick to admit you are on the wrong side of a trade. A three-cent loss on a grain contract is only $150. A 25-cent win is $1250 per contract. Moves of this size or larger happen every trading year. Be smart about losses and never fall in love with a trade so you can be as successful as possible in futures trading.     Related Sites