500 experienced futures brokers were asked what caused most futures traders to lose money to trading futures. Find out what they said in Top 50 Futures Trading Rules.
500 experienced futures brokers were asked what caused most futures traders to lose money when comes to trading futures.
Their answers reflected the trading experience of more than 10,000 futures traders. Download the PDF and find out what they said.
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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. 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.
After several profitable trades, many speculators become wild and nonconservative. 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."
Traders often try to carry too big a position with too little capital and trade too frequently for the size of the account.
Some traders try to "beat the market" by day trading, nervous scalping, and getting greedy.