E-mini Trading: Top 3 Reasons 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.

Unlike their unsuccessful counter parts, profitable traders know how to spot edges in the markets and how to use their weaknesses as strengths. The ability to take on information and use it to your advantage is what will separate you from losing traders. To understand how to get started the right way we need to go over the mistakes so many traders make each day.

1. Lack of Capital

It is true that setting up a trading account for the e-mini markets is very economical. Most quality brokers will only require a 5,000 minimum account deposit and will allow traders to trade with a $500 contract minimum. Leverage is a very powerful mechanism and one of the real beauties behind e-mini trading but you have to look at it from both sides. IT can be very dangerous. Accounts can be completely wiped out in minutes if a trader is testing uncharted waters. Commissions can eat away at your bottom line as well. Short term traders will be in and out of the markets several times a day. To effectively trade you need to have a solid capital reserve. This will take the pressure off of you to make immediate gains. Trading is a skill and it will require a little bit of learning time to become proficient at it. Make sure you have enough capital to last through this period.

2. No Clear Trading Strategy

Trading is a business and if you want to be successful you need to treat it as such. There is no such thing as a born market guru. Individuals who make a living trading do so because they have a skill set and they have a plan. The plan allows them to stay on track and focus on their core money making set ups. Most retail traders try a little bit of everything before they settle into a strategy that suits their style. Do yourself a favour and do your research before you start trading with real money. Moving back and forth between strategies can lead to confusion and major drawdowns in one's account.

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.

These small details can help you avoid the vast majority of pain and hardship that so many novice traders face when they start trading in the e-mini futures market. Use your knowledge to your advantage and you could be on your way to a very successful trading career.


Article Source: FxTradingStock.com

About the Author

Interested in e-mini trading? Get to know all the ins and outs of successful e-mini trading at the internet's #1 source for trading education.

by: Lance Burkhart

Total views: 26 Word Count: 627 Date: Sat, 18 Sep 2010

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