Top 50 Reasons Why Futures Traders Lose Money - Psychology and Money Management | futures io social day trading
futures io futures trading


Top 50 Reasons Why Futures Traders Lose Money
Updated: Views / Replies:1,236 / 2
Created: by iTrade2golf Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Top 50 Reasons Why Futures Traders Lose Money

  #1 (permalink)
Trading Apprentice
Nashville, TN
 
Futures Experience: Master
Platform: Ensign 10
Favorite Futures: TF, 6E, CL
 
iTrade2golf's Avatar
 
Posts: 38 since Jun 2011
Thanks: 5 given, 79 received

Top 50 Reasons Why Futures Traders Lose Money

One of my trading associates within or trading group found this information on a website a couple weeks ago and sent it to each of us. I since have been thinking about using this list to discuss and possibly help steer some traders in the right direction. I think this is a very good list of some problems that keep traders from being successful and keeps successful traders from becoming even more successful.

Yes, I am aware there are some repetitions on this list.

I ask that anyone who would like to discuss a certain subject on this list is welcome to share their knowledge or insight. Anyone who would like to ask questions on a certain subject on this list is certainly welcome. I will only discuss the subjects mentioned on this list, all other topics will not be discussed by myself, as I do not have enough time to digress.


Top 50 Reasons Why Futures Traders Lose Money
A list of the fifty most common reasons why most futures traders lose money.
We surveyed more than a thousand experienced futures brokers and asked what, in their experience, caused most futures traders to lose money. These account executives represent the trading experience of more than 20,000 futures traders. In addition, most of these Account Executives (AEs) have also traded or are currently trading for themselves. Their answers are not summarized because different traders make (and lose) money for different reasons. Perhaps you may recognize some of your strengths and weaknesses. Yet, many of the reasons given are very similar from broker to broker and client to client. The repetitions stand to demonstrate that, alas, many futures traders lose money for many of the same reasons. Perhaps these statements from experienced brokers can make a contribution to you, who make this sometimes fickle, often intricate, always interesting marketplace of futures trading possible. Here is what they said:
  1. Many futures traders trade without a plan. They do not define specific risk and profit objectives before trading. Even if they establish a plan, they "second guess" it and don't stick to it, particularly if the trade is a loss. Consequently, they overtrade and use their equity to the limit (are undercapitalized), which puts them in a squeeze and forces them to liquidate positions.
  2. Usually they liquidate the good trades and keep the bad ones. Many traders don't realize the news they hear and read has, in many cases, already been discounted by the market.
  3. After several profitable trades, many speculators become wild and unconservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that "can't fail."
  4. Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.
  5. Some traders try to "beat the market" by day-trading, nervous scalping, and getting greedy.
  6. They fail to pre-define risk, add to a losing position, and fail to use stops.
  7. They frequently have a directional bias; for example, always wanting to be long.
  8. Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe.
  9. They overtrade.
  10. Many traders can't (or don't) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach...a trader needs to develop and stick with a system.
  11. Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.
  12. Many traders break a cardinal rule: "Cut losses short. Let profits run."
  13. Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. Thatís why they should have a plan first, and stick to it.
  14. Often traders have bad timing, and not enough capital to survive the shake out.
  15. Too many traders perceive futures markets as an intuitive arena. The inability to distinguish between price fluctuations which reflect a fundamental change and those which represent an interim change often causes losses.
  16. Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken.
  17. Emotion makes many traders hold a loser too long. Many traders don't discipline themselves to take small losses and big gains.
  18. Too many traders are underfinanced, and get washed out at the extremes.
  19. Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really lack of discipline. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed.
  20. Trying to trade inactive markets is dangerous.
  21. Taking too big a risk with too little profit potential is a sure way to losses.
  22. Many traders lose by not taking losses in proportion to the size of their accounts.
  23. Often, traders do not recognize the difference between trading markets and trending markets.
Lack of discipline is a major shortcoming.
  1. Lack of discipline includes several lesser items; i.e., impatience, need for action, etc. Also, many traders are unable to take a loss and do it quickly.
  2. Trading against the trend, especially without reasonable stops, and insufficient capital to trade with and/or improper money management are major causes of large losses in the futures markets; however, a large capital base alone does not guarantee success.
  3. Overtrading is dangerous, and often stems from lack of planning.
  4. Trading very speculative commodities is a frequent mistake.
  5. There is a striking inability to stay with winners. Most traders are too willing to take small profits and, therefore, miss out on big profits. Another problem is undercapitalization; small accounts can't diversify, and can't use valid stops.
  6. Some traders are on an ego trip and won't take advice from another person; any trade must be their idea.
  7. Many traders have the habit of not cutting losses fast, and getting out of winners too soon. It sounds simple, but it takes discipline to trade correctly. This is hard whether you're losing or winning.
Many traders overtrade their accounts.
  1. Futures traders tend to have no discipline, no plan, and no patience. They overtrade and can't wait for the right opportunity. Instead, they seem compelled to trade every rumor.
  2. Staying with a losing position, because a trader's information (or worse yet, intuition) indicates the deteriorating market is only a temporary situation, can lead to large losses.
  3. Lack of risk capital in the market means inadequate capital for diversification and staying power in the market.
  4. Some speculators don't have the temperament to accept small losses in a trade, or the patience to let winners ride.
  5. Greed, as evidenced by trying to pick tops or bottoms, is a frequent error.
  6. Not having a trading plan results in a lack of money management. Then, when too much ego gets involved, the result is emotional trading.
  7. Frequently, traders judge markets on the local situation only, rather than taking the worldwide situation into account.
  8. Speculators allow emotions to overcome intelligence when markets are going for them or against them. They do not have a plan and follow it. A good plan must include defense points (stops).
  9. Some traders are not willing to believe price action, and thus trade contrary to the trend.
  10. Many speculators trade only one commodity.
  11. Getting out of a rallying commodity too quickly, or holding losers too long results in losses.
  12. Trading against the trend is a common mistake. This may result from overtrading, too many day-trades, and undercapitalization, accentuated by failure to use a money management approach to trading futures.
  13. Often, traders jump into a market based on a story in the morning paper; the market many times has already discounted the information.
  14. Lack of self-discipline on the part of the trader and/or broker creates losses.
Futures traders tend to do inadequate research.
  1. Traders don't clearly identify and then adhere to risk parameters; i.e., stops.
  2. Most traders overtrade without doing enough research. They take too many positions with too little information. They do a lot of day-trading for which they are undermargined; thus, they are unable to accept small losses.
  3. Many speculators use "conventional wisdom" which is either "local," or "old news" to the market. They take small profits, not riding gains as they should, and tend to stay with losing positions. Most traders do not spend enough time and effort analyzing the market, and/or analyzing their own emotional make-up.
  4. Too many traders do not apply money management techniques. They have no discipline, no plan. Many also overstay when the market goes against them, and won't limit their losses.
  5. Many traders are undercapitalized. They trade positions too large, relative to their available capital. They are not flexible enough to change their minds or opinions when the trend is clearly against them. They don't have a good battle plan and the courage to stick to it.
  6. Don't make trading decisions based on inside information. It's illegal, and besides, it's usually wrong.
There you have them, fifty rules from more than a thousand brokers who have handled more than 20,000 accounts. Theyíve seen what worked, what didnít, and why. Following these rules will not necessarily lead to success. Breaking them could increase your chances of failure. Futures trading is not for everyone. Futures trading involves the risk of loss.

Reply With Quote
The following 11 users say Thank You to iTrade2golf for this post:
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Trading Apprentice
New York, NY
 
Futures Experience: None
Platform: Ninja Trader
Favorite Futures: Currency futures
 
Posts: 12 since Jan 2011
Thanks: 8 given, 10 received

Top 50 reasons why futures traders lose money


Hey iTrade2golf

Big list, I'll start reading it.
Thx.

Reply With Quote

Reply



futures io > > > Top 50 Reasons Why Futures Traders Lose Money

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
How The FAZ-Mobile Promises To Lose 99.6% Of Your Money Even If The Market Crashes By Quick Summary News and Current Events 0 December 25th, 2011 11:10 PM
TOP 3 REASONS I APPRECIATE THIS FORUM tigertrader Off-Topic 9 November 1st, 2010 06:57 PM
ARE WE NEARING A CYCLICAL TOP IN THE S&P 500? tigertrader Traders Hideout 10 October 13th, 2010 02:50 PM
Top Ten Reasons I'm Ready To Leave My Home Office tigertrader Off-Topic 8 August 26th, 2010 11:32 AM
How Much Money Are You Willing To Lose Today? hondo69 Psychology and Money Management 3 December 16th, 2009 06:15 AM


All times are GMT -4. The time now is 05:28 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-13 in 0.12 seconds with 19 queries on phoenix via your IP 54.92.194.75