A Guide to Profitable Futures Trading

All derivatives in the forex market require strategic planning, and the futures are no exception. Indeed, more planning and strategizing is required here, because while the profits can be immense, futures contracts also entail great risk.

Therefore, when devising a futures strategy, it is important to keep the following in mind.

First, you cannot profit in the forex without risking some money; that is a fact. Hence, do not spend money in futures trading that you cannot afford to lose. That seems like stating the obvious, but the fact is that a lot of neophyte traders get into the futures market without even taking this into account.

Another part of your futures strategy should be the establishment of realistic goals and targets. By that we mean accepting the realty that there will be times your futures contracts will not always work out. Researching all the fundamental economic issues and analyzing all the indicators and oscillators is no guarantee.

A good gauge of how well your futures strategy is working in the forex is to apply the 40-60 rule; if your futures cntracts are correct 40%, then you are doing very well.

A great deal of your futures strategy, of course, involves the 60% (or lower, preferably) wherein you are incorrect. The basic rule here is, if all the indicators are telling you that the position is lost, then make your exit. Do not commit the mistake that novice forex traders often do, that is waiting for the market to somehow reverse.

The longer you stay in, the bigger your loss will be, and the harder it will be to generate a profit. As your loss increases, the money you will eventually earn will go towards restoring the balance of you initial deposit, instead of being a profit.

Of course, any futures strategy should include the implementation of Stop/Loss and Limit Orders. Also take nito consideration margin calls; when you get one, it is the final caution to depart the market.

Futures strategies should not be limited to facts and figures; it is vital that emotions are kept in check. When your emotions get the better of you, the effect is that your feelings will determine your actions, instead of the facts concerning the futures contract. If you are starting to get emotional, or unsure of how to proceed, cut your losses and get out.

Do not conduct futures transactions in a slim market, because it will be near impossible to cash in, as the lack of activity makes implementation of strategies difficult.

That being said, it should emphasized that the purpose of futures trading is to make money. It would be a mistake to exit once a profit is made; there might more coming. Be willing to stay in the market. Once the trend goes down from the peak, that is the time to depart. While you may have lost some amount, at least you will come out with more than what you came in with.

All futures strategies by traders include following the trend. The trend is your friend, it is said, and it is true.

The aim of all forex tactics is to maximize profits and reducing the risks that should be undertaken. By employing the abovementioned elements into your futures strategies, you will have a better chance of surviving and making profits in the futures market.

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