Even though fewer than 15-25% of all people who trade futures are successful over the long haul, there
is a small group of elite traders who consistently make huge profits hundreds of thousands, even
millions of dollars a year!
1 YOU MUST DEVELOP DISCIPLINE:
This may be the hardest "rule" to follow, yet it may be the most important of all. Without discipline, you will
be forced to constantly react to the whims of the marketplace, rather than controlling your fate and acting in
your own best interests.
2 KNOW WHY YOU TRADE:
There are dozens of reasons why people trade futures. Some trade to control their financial fate. Some like the
fast pace. Others like the "hunt" for a big kill. Whatever your reason, you'll trade better and enjoy it more if
you understand why you do it.
3 DON'T BET THE FARM (OR THE HOUSE EITHER!):
Futures trading can be very risky, so don't fund your trading account by committing money which, if lost,
could throw you into bankruptcy. Instead, fund your account with money to be used only for investing.
4 BE MENTALLY INDEPENDENT:
One of the keys to successful trading is mental independence the ability to free yourself from concerns that
might distract you from trading. That doesn't mean you should ignore your friends or family; it simply means
you should avoid putting yourself in a situation where financial fear or "static" from friends and family gets
between you and your trading program.
5 WALK BEFORE YOU RUN:
Don't jump into the markets before testing your abilities. First, try trading on paper, with no real money
involved. Then start trading in single-contract lots. (Ask your broker about smaller lot contracts, such as
those offered by the Mid America Commodity Exchange.) No matter which markets you start with, it's wise
to become thoroughly familiar with the mechanics of trading before graduating to larger contracts and/or
more volatile markets.
6 DON'T PLACE ALL YOUR EQUITY IN ANY SINGLE POSITION:
Many successful traders recommend keeping three times as much money in your margin account as you need
for any single position. Viewed another way, this means you shouldn't commit more than one-third of your
account balance on any single position.
7 DON'T LET EMOTIONS OVERRULE YOUR BRAIN:
Don't hope for a move so much that it clouds your vision. Hope is a wonderful virtue in many areas of life,
but it's often an enemy to futures traders.
8 SET YOUR GOAL, THEN TRADE TOWARD IT:
Profits go to those who act, not those who react. With that in mind, it's wise to decide your entry and exit
points, and your profit objective, well before you place a trade.
9 DON'T CHANGE HORSES IN MIDSTREAM:
You can and should make minor corrections throughout the trading period, but don't let the ups and downs
that always occur during the trading day affect your overall game plan. Unless the market conditions that first
led you to place your trade change, don't abandon your original objective.
10 DON'T TRADE TOO MANY MARKETS:
Many beginning traders feel they must stay on top of all markets, even though they only trade a few. That can
quickly lead to paralysis from information overload something even experienced traders can suffer from. Top
traders, on the other hand, stay focused on a select few markets and completely master them.
11 DO YOUR HOMEWORK:
There is nothing more critical to the process of making money in the markets than fact-based knowledge of
what's going on. Before you place a single trade, you should know the underlying trend, direction, what
triggered it, the current trading range, what signals you should be looking for, and what your trading
objective is. All of these require information that's readily available from a variety of sources. So do your
homework; according to our top traders, it always will be time well spent.
12 DON'T FOLLOW THE CROWD:
Historically, by the time the general public "discovers" a major market move, it's over. For that reason, most
successful traders feel uncomfortable when their position becomes popular with the buying public especially
when it's popular with small-lot traders. Be careful, however; the opposite maybe true if the "crowd" is made
up mostly of institutional traders.
13 NEVER ADD TO A LOSING POSITION:
When your position is losing money, it signals that you are out of step with the market. You are, in a word,
wrong! That doesn't mean the market won't eventually turn around, but it usually means it's time to exercise
extreme caution and begin applying proven money management techniques to conserve your remaining
equity.
Some traders argue that adding to a losing position is nothing more than "price averaging," but the consistent
winners view it as trying to justify the magnification of a trading mistake.
14 CUT LOSSES SHORT:
One of the most dangerous mistakes new traders make is failing to admit when they're wrong. Not so with
savvy, big-money winners; they try to take losses while they're still small, then wait for a better day.
15 LET PROFITS RUN UNTIL YOU HAVE A REASON TO CASH IN:
Successful traders let profits run until they see some indication technical, fundamental or both that it's time to
liquidate only because profits are available. They only close out a profitable position when they see and end
in sight.
is a small group of elite traders who consistently make huge profits hundreds of thousands, even
millions of dollars a year!
1 YOU MUST DEVELOP DISCIPLINE:
This may be the hardest "rule" to follow, yet it may be the most important of all. Without discipline, you will
be forced to constantly react to the whims of the marketplace, rather than controlling your fate and acting in
your own best interests.
2 KNOW WHY YOU TRADE:
There are dozens of reasons why people trade futures. Some trade to control their financial fate. Some like the
fast pace. Others like the "hunt" for a big kill. Whatever your reason, you'll trade better and enjoy it more if
you understand why you do it.
3 DON'T BET THE FARM (OR THE HOUSE EITHER!):
Futures trading can be very risky, so don't fund your trading account by committing money which, if lost,
could throw you into bankruptcy. Instead, fund your account with money to be used only for investing.
4 BE MENTALLY INDEPENDENT:
One of the keys to successful trading is mental independence the ability to free yourself from concerns that
might distract you from trading. That doesn't mean you should ignore your friends or family; it simply means
you should avoid putting yourself in a situation where financial fear or "static" from friends and family gets
between you and your trading program.
5 WALK BEFORE YOU RUN:
Don't jump into the markets before testing your abilities. First, try trading on paper, with no real money
involved. Then start trading in single-contract lots. (Ask your broker about smaller lot contracts, such as
those offered by the Mid America Commodity Exchange.) No matter which markets you start with, it's wise
to become thoroughly familiar with the mechanics of trading before graduating to larger contracts and/or
more volatile markets.
6 DON'T PLACE ALL YOUR EQUITY IN ANY SINGLE POSITION:
Many successful traders recommend keeping three times as much money in your margin account as you need
for any single position. Viewed another way, this means you shouldn't commit more than one-third of your
account balance on any single position.
7 DON'T LET EMOTIONS OVERRULE YOUR BRAIN:
Don't hope for a move so much that it clouds your vision. Hope is a wonderful virtue in many areas of life,
but it's often an enemy to futures traders.
8 SET YOUR GOAL, THEN TRADE TOWARD IT:
Profits go to those who act, not those who react. With that in mind, it's wise to decide your entry and exit
points, and your profit objective, well before you place a trade.
9 DON'T CHANGE HORSES IN MIDSTREAM:
You can and should make minor corrections throughout the trading period, but don't let the ups and downs
that always occur during the trading day affect your overall game plan. Unless the market conditions that first
led you to place your trade change, don't abandon your original objective.
10 DON'T TRADE TOO MANY MARKETS:
Many beginning traders feel they must stay on top of all markets, even though they only trade a few. That can
quickly lead to paralysis from information overload something even experienced traders can suffer from. Top
traders, on the other hand, stay focused on a select few markets and completely master them.
11 DO YOUR HOMEWORK:
There is nothing more critical to the process of making money in the markets than fact-based knowledge of
what's going on. Before you place a single trade, you should know the underlying trend, direction, what
triggered it, the current trading range, what signals you should be looking for, and what your trading
objective is. All of these require information that's readily available from a variety of sources. So do your
homework; according to our top traders, it always will be time well spent.
12 DON'T FOLLOW THE CROWD:
Historically, by the time the general public "discovers" a major market move, it's over. For that reason, most
successful traders feel uncomfortable when their position becomes popular with the buying public especially
when it's popular with small-lot traders. Be careful, however; the opposite maybe true if the "crowd" is made
up mostly of institutional traders.
13 NEVER ADD TO A LOSING POSITION:
When your position is losing money, it signals that you are out of step with the market. You are, in a word,
wrong! That doesn't mean the market won't eventually turn around, but it usually means it's time to exercise
extreme caution and begin applying proven money management techniques to conserve your remaining
equity.
Some traders argue that adding to a losing position is nothing more than "price averaging," but the consistent
winners view it as trying to justify the magnification of a trading mistake.
14 CUT LOSSES SHORT:
One of the most dangerous mistakes new traders make is failing to admit when they're wrong. Not so with
savvy, big-money winners; they try to take losses while they're still small, then wait for a better day.
15 LET PROFITS RUN UNTIL YOU HAVE A REASON TO CASH IN:
Successful traders let profits run until they see some indication technical, fundamental or both that it's time to
liquidate only because profits are available. They only close out a profitable position when they see and end
in sight.