How to Avoid Mistake "lack of trading plan"?
The only way to avoid mistake "lack of trading plan" is to devote as much time, effort and energy as needed to develop a trading plan that addresses all of the key elements of trading success, all the while knowing full well that doing so does NOT guarantee your success. This daunting task moves futures trading back from the realm of fantasy squarely into the realm of reality. Your plan will serve as your road map to guide you through the twists and turns that the markets will throw at you.
There are many factors to be considered before one delves into futures trading and which need to be revisited and possibly revised as your experience and expertise grow. Yet for far too many individuals these issues are dealt with on an "as needed" basis, usually when there is money on the line, and usually when money is being lost. This is exactly the wrong time to be making critical decisions because they are more often than not based on emotion rather than on sound thinking. In developing a trading plan there are many questions to be answered and many different possible answers.
The Litmus Test
The first question to be answered is not "how should you trade futures?" The first question to be answered is "should you trade futures in the first place?" One of the keys to success in futures trading is being able to risk some amount of money which, if lost, will not adversely affect your lifestyle. In order to assess your level of readiness in this regard, you should take the following test which will tell you if you are truly prepared emotionally and financially to trade futures.
Step 1. Go to your bank on a windy day.
Step 2. Withdraw a minimum of $10,000 in cash.
Step 3. Walk outside and with both hands starting throwing your money up into the air.
Step 4. After all of the money has blown away, go home and sit down in your favorite chair and calmly say, "Gosh that was foolish. I wish I hadn't done that."
Step 5. Get on with your life.
If you actually can pass this test then you truly are prepared, both emotionally and financially, to trade futures. If you cannot pass this test then at the very least you need to go into it with your eyes wide open (you may also take some comfort in knowing that most new traders cannot pass this test at the time they start trading). Once you have decided to go ahead and trade futures there are a number of issues that need to be addressed.
Categories in Trading Mistakes
Lack of Trading Plan
Planning plays a key role in the success or failure of any endeavor
Using too much Leverage
Determining the proper capital requirements for trading is a difficult task
Failure to control Risk
Refusing to employ effective risk control measures can ensure your long-term failure
Lack of Discipline
A lack of discipline can destroy even the most talented and best prepared trader
Useful Advices to Beginning Trader
You can control your success or failure
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