Top 10 Trading Tips – Futures Online Trading

You will certainly lose money sometimes, no matter how much you studied and analysed. There is always the systematic risk which cannot be diversified. However, as long as you define a set of rules for yourself and stick to that, you will be able to make decent profit.

Here are some of the guidelines that you can use. Remember that some times these guidelines too may not save you from losing  because of unknown factors or market risks.  Hope you don’t mind if I give 11 tips instead of 10

1. Define a plan and stick to it: You must define a plan where you set your limit for buying and selling the futures. For example, you anticipated that a stock price will go up and hence you bought futures to benefit from it. But the stock went down in a week by 10%, will you wait for more time or reverse the position by selling the futures. Whatever you decide, stick to the plan.

2. If you do not have enough info, don’t trade: If you cannot get vital information about a business, don’t trade. Gut feel is no substitution of research. Of course, you do not have to get into paralysis by analysis mode but you should make sure that basic information about financials and management should be available before you make a decision.

3. Sell your losers to cut losses, keep the winners and ride profits: This is a simple rule but so difficult to follow. Most of traders and investors show reluctance in selling their losers and cut further losses. They think that market will reverse the loss. At the same time, they sell the winners immediately to take profit even though the winners can give more returns if only they wait little longer. This strategy is wrong. Don’t attach your emotions with losers. It is fine to accept that you may not always be right, come out of losers, and cut the losses. After all a stock doesn’t know that you own it.

4. Trend is your friend, observe it: In futures market, trend is the most important factor. An ability to spot the trend and play upon it may do wonders to you. This comes by experience though. You need to watch and trade for sometimes before you can have an handle on the trend in prices and volume.

5. Don’t wait for the bottom or top: The fact is nobody has any idea what is bottom and top of a stock. If you think the price is reasonably low, go and buy it. If you think prices have gone reasonably up and there could be risk of falling down, sell it. It is fine to risk 10% further gain than to wipe out all the gains.

6. Avoid answering margin call: If you get margin call from your broker, ask him to go ahead and liquidate the position. Margin calls are warning signs that your guess has gone wrong. Instead of putting more money, come out of it.

7. There is no such thing as euphoria or bottomless pessimism: When the market is down, people becomes extremely pessimistic and think of market as the worst investment. When the market is close to peak, people get euphoric about it. Be little reasonable. Market is not as pessimistic as it looks at the bottom and not as euphoric as it looks at the top.

8. Look at the portfolio returns and not on individual stocks’: Always look at the returns of your portfolio rather than worrying about return on individual stocks. There will be some stocks in your portfolio that will go down and some will make profit. You have to look at the bigger picture to see whether you are making money.

9. Ask, Research, Discuss: You have access to humongous information on stocks, businesses, and markets. Use this to your advantage. Call your friends working in the sector or company to find out the general trend. Search on internet. Join a forum where you can discuss about stocks and investments. Visit http://lastbull.com often.

10. Don’t trade too many stocks: It is difficult to keep track of so many businesses. You may not keep track of all the stocks and information related to them.

11. Question the advices: Well… question everything that you hear or see that seem too good to be true. Investing is never so simplistic. You can even question this article. However, this article is based on our experience (the lastbull team).