More and more traders are opting to enter the futures trading market because of the possibility of high rewards. And this is true, because futures trading does have a lot to offer compared to other trading schemes. However, the lure of big returns often overshadows the risks and realities linked with this type of trade. It is for this reason that a lot of traders fall into major losses — because they focused too much on the good to try to overcome and get around the bad.
There are two basic truths to futures trading. One is that market movements are very difficult to predict and monitor and the other is that losing is a natural part of the game. If you don’t get these two into your head at the onset of your trading frenzy, then you might encounter shock when twists of fate happen. Realize that trading futures is not a set and perfect deal. There ARE risks involved, as well as pitfalls. Getting yourself prepped from the very start will make the pain of losing money easier to bear and will allow you to make intelligent guesses as to where the market is headed next.
Market turns are sporadic and impossible to accurately forecast
There are many analysts and experts in the financial market that offer guidance’s or outlooks based on different market movements. This practice has become so prevalent that traders often mistake these forecasts as truths and anchor their decisions on them. This is where the problem lies. The truth is that markets’ future actions can never be predicted, because something, somewhere is bound to happen at the very last minute and turn everything around and upside down.
Some traders trade futures carefully, fully knowing that a problem could arise at intermittent times. However, there are some that move on hope. They ‘hope’ that what the ‘experts’ predict will become reality and force themselves to hold on, even when alarm bells are already ringing in their ear. When you really think about it, has there ever been a time in person’s life, not just his financial business, where a future occurrence has been predicted with ease and accuracy? There has been none. And this goes out also to futures trading.
Losing is part of the game
While futures trading holds the promise of a massive win, it can also spiral you down to a major loss. As with any risky business, there are winners and there are losers. Sometimes you’re up and sometimes you’re down. This is a reality that you have to deal with before you step into the world of futures trading. If you come in expecting to win all the time, then you’re in the wrong system.
Futures trading is a gamble. While you will be able to make intelligent guesses as to whether the market will be moving in your favor or not, you will most definitely not be able to see what happens until it actually happens. Once you are able to accept this fact, you will be able to concentrate on making trends depending on the trends you’ve noticed in the market. Because over the long haul, your knowledge of market movements, no matter how inaccurate, will still lord over having to depend on other people’s predictions to determine your next move.