Being a futures trader isn’t for the faint of heart. Achieving success, also known as sustainable profitability, can be an exhaustive endeavor. Long days filled with mental gymnastics and stress typically define an active traders lifestyle. It’s due to the unconventional nature of the profession that the best futures trading strategies involve preserving mental acuity.
Since the late 1990s and early 2000s, the world’s markets have become digital. Gone are the days of open outcry pit trading and placing market orders over the telephone. Now, trade is conducted via the click of a mouse on a near 24/5 basis. The contemporary atmosphere has placed an emphasis on trader discipline, temperament and preparedness. In order to consistently exhibit each of these attributes, a trader must be centered and mentally fit.
Mindset Is Everything: Thrills Kill Profitability
If you have ever been to a horse race, then you’re familiar with the characters sitting in the grandstands. Some are even-keeled aficionados of the game, scanning their racing forms for opportunity. Others are reckless gamblers after a big score. Believe it or not, the futures markets attract many of the same personalities found at the racetrack.
Futures trading provides individuals with a vast offering of products, markets and opportunities. From crude oil to Bitcoin, there’s something to suit nearly everyone’s fancy. However, no matter the market or instrument being traded, there’s one elemental truth ― if you are in it for the thrill, failure is assured.
The best futures trading strategies account for the negative impacts of a timely adrenaline rush. Concrete guidelines for trade selection, leverage and open position management eliminate thrill seeking before it starts. A strong strategy promotes a positive mentality by ensuring disciplined and measured market participation.
Strong Decision-Making Is the Key to Salvation
No matter if you’re a discretionary or systems trader, strong decision making is a key determinant of profitability. Dealing with financial gain and loss, while crafting trade-related decisions in real time, takes mental toughness.
In the face of adversity, human emotion can compromise the development of a strong mindset. When it comes to surviving in the markets, two emotions must be held firmly in check:
- Fear: Fear is a complex emotion that can stem from any number of stimuli. In active trading, losing money and failure are the two primary issues that prompt fear in the trader.
- Greed: As a motivator, greed can be a positive influence. However, unbridled greed can lead to excessive risk-taking and unreasonable market-related goals. Ultimately, both negatively impact sustainable profitability.
Without a doubt, the best futures trading strategies include provisions to manage fear and greed. Mastering you own psyche can be a monumental challenge ― having a plan in place to ensure these factors do not negatively influence decision-making is invaluable.
Perspective Is a Necessity
The day-to-day trade of futures can be an intense and engrossing endeavor. From premarket preparation to active trading in the live market, the profession can take a mental toll on even the strongest individuals.
However, there are many ways to preserve a winning attitude and stay fresh in the face of daily trials. Here are a few:
- Exercise: Believe it or not, physical fitness is a big part of enduring the mental strain of prolonged trading. Exercise is a great way to release stress, remain alert and fight the sedentary nature of being in front of a computer monitor 10 hours a day.
- Hold a daily recap: Closure is a key element of gaining perspective. Through recapping the happenings of a day, week or month, a trader is able to view events in context. This is a key part of moving forward with a positive and prepared mindset.
- Take a periodic sabbatical: Sometimes the best way to recharge your batteries is to take a vacation. Getting away from the markets from time to time is a great way to step back and get some much needed rest.
While you may adhere to a comprehensive trading plan, adopting habits that promote a positive mindset is a critical part of achieving longevity in the marketplace. One of the best futures trading strategies that you can implement advocates your physical and mental well-being.
Taking the Best Futures Trading Strategies from Theory to Practice
In order to play the guitar, you have to learn the chords. In futures, you need to understand the basic mechanical aspects of the market before jumping in with both feet.
A great place to get up-to-speed quickly is through Daniels Trading’s comprehensive collection of blogs, educational materials, and webinars. Developing a rock-solid knowledge base is the first step to building a strong trading mentality.