E-mini Futures Trading: Why Most Retail Traders Fail
The e-mini markets are full of depressing stories about traders who should have done this or could have done that. Failure is a key component of the free market system. You can’t have winners without losers. For those traders looking to learn from these horror stories of trading accounts gone bad, the mistakes to avoid are crystal clear. 99% of retail traders fail because they ignored three very basic principles.
A successful trader has the ability to recognize the advantage that he or she holds over other market participants and is able to exploit that edge in order to pull consistent profits. Knowing your strengths and weaknesses allows you, as a trader, to confront certain issues in your trading before they start to affect your bottom line. Let’s take a look at some of the common mistakes retail traders make in the markets so that we can analyse our own trading to see if there is something we need to change.
1. Lack of Capital
In today’s modern electronic market trading is getting more and more economical, however, it still takes money to make money. You can’t expect to make a full time living from trading off of a $5,000 account. Far too many novice traders take on too much risk and wipe their accounts out before they are able to pick up any real experience. Do yourself a favour and start small. Set aside enough capital to allow yourself time in the markets. Success is not going to happen overnight and you need to protect yourself and your future career by giving yourself enough time to develop your live trading skills.
2. No Clear Trading Strategy
A quick search online will produce hundreds if not thousands of different trading strategies. 99.9% of them won’t work but at least they are a starting point. Countless traders have been traded out of the market for not having a clear cut trading strategy. You have to know exactly where your edges lie in the e-mini markets in order to consistently make money. Define your trading strategy before you start. When you are just beginning make sure you stick to your plan. Limit yourself to only one or two trade set ups. Doing so will keep you from over trading and getting eaten up by heavy commissions. In the end, you can’t succeed without a well-defined strategy.
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.
To become successful at e-mini trading you need a combination of skills. These skills are developed inside the markets and in order to ensure you have the opportunity to become the best that you can be you need to follow these three tips and set yourself up for success before you start. Starting off on the right foot will help you speed up the learning curve and get you on your way to profitable e-mini trading.
Do you have the skills necessary to become profitable at e-mini trading? Start learning today at the internet’s #1 source for futures trading education.
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