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bluejaytodd
Common Mistakes Futures Trader Make.
lhorgic
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2024-02-24 09:58:18
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Good day guys! Welcome to my blog, trust me am very happy to have y'all back here to read my beautiful piece. We have been discussing Futures trading for the past few days, touching different aspect of Futures Trading.
Today I would love to talk about common possible mistakes futures trader make. The goal of this lesson is to eqquip ourselves with knowledge and avoid this very pitfalls. Of course we all would love to make profit and remarkable progress in our trading journey but then these little mistakes here and there could hinder us.
Hence the need for these knowledge. So do well to carefully digest this piece and make the best use of it. Let's get into it right away guys.
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• **Over Leveraging**: Leverage is an amazing trading feature which future traders like to use. Just as it name implies, it gives trader leverage and edge in their trading adventure. Simply put, leverage trading give trader the benefit of having more capital for the type of trade they desire thereby bringing them massive profit.
However, leverage can be a double edged sword. The same feature that should bring them massive profit could bring them loss especially when the trader goes greedy by over leveraging. Leverage is to be used with caution. The parameter used on most exchange are 10×, 20×, 30×.....50× or even more.
Leverage should not be used the way it is seen. It just like someone who sees honey in abundance and then decides to consume all of it at a go. Well you can be sure that the same honey that is meant to benefit the body system will then cause tha body harm. I hope you get the picture.
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• **Revenge Trading**: Here is another mistake made by futures traders. It is true that sometimes the market goes south and then we make some losses, every pro do sometimes when they miscalculate or when market happens. The problem now is that some trader do not really know how to handle these losses.
You see then storming the market again and again even when it totally against their trading plan or routine, just in a bid to recover the loss. Focusing too much restoring your loss when you've obviously loss some trades would lead you into more loss.
The reason is not far fetched, you are most vulnerable at this point and you're not stable emotional. When your emotional intelligence and stability is gone, you're not safe as a trader. You need to exit the market and learn from your loss.
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• **Trading Without a Plan**: This is a pitfall that most novice futures trader fall into. If you ask the pros today how they have come this far, they would sure mention what we call Trading Plan because they have been victims at a point for ignoring this particular point.
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Many people trade without a plan hence the multiple loss they have to bear, it's not like they ain't good, just that they do not have a good trading plan...even if they make so much, they could blow it up suddenly or even gradually due to poor trading plan.
Proper trading plan include mapping out strategy that minimizes your losses to the least.Trading plan can also save you from approaching the market emotionally.
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• **Lack of Proper Research**: You must have heard DYOR over and over again. DYOR is very important, as a pro trader, you are not supposed to jump into every trade you perceive will do well. Perception is good only when you have properly researched whatever you want to trade.
Some folks have the habit of over relying on what expert advices or perceives about an asset. Now am not trying to downplay the role and activities of experts in this field. What am saying is that you should also take your time to check out facts yourself as it relates to futures Trading.
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• **Inadequate knowledge about Margin**: Every crypto trader should know what margin is and how it should be used but one of the mistakes most Future traders fail to do is to understand how it works. We have two basic types.
We have the **cross margin** and the **Isolated margin**. Both have their advantages and disadvantages but what is important is to know which suit the kind of trade you want to. Many have used margin wrongly to execute certain trade and this has affected them in no small way.
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A cross margin allows one single deposit to cover multiple trade. This seems to be very good for a novice trader but in isolated margin, a trader is allowed to set different margin for different position, just as he seems fit. We can now see why it's important to have sufficient knowledge about Margin.
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• **Other subtle Mistakes**: We have other subtle but grave mistakes futures trader make and this includes ignoring **stop loss** order which plays a major role in risk management and not having proper knowledge about **risk reward ratio**. All of these are very important and must be duly considered if we do not want to end up being failures in the market.
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There you go friends.I would love to wrap it up at this juncture. I want to believe you've gotten so much from this piece. As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.
Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!
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**Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.**
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Regards
@lhorgic♥️
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