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There are many different reasons that people may want to get involved in futures trading. It could be because they have seen the success of other traders, or maybe they think it’s a good way to make money while still sleeping at night. One thing is certain: futures trading can seem very complicated and intimidating for beginners. That is why we created this helpful list of six tips that will help you get started in futures trading today.
Table of Contents
1) Start with a demo account.
It’s important to build your confidence and skills before you start trading real money, so we recommend starting by opening a demo account. A demo allows you to practice trading without risk on an electronic platform that looks almost identical to the actual futures market environment. After all, what works in the simulator will work just as well on the real market, so it’s important to build some skills first.
2) Start small.
Futures are a powerful tool for investing, but they can also be dangerous if you don’t understand them well before trading with real money. That’s why we recommend starting by only trading one to five contracts at first until you get the hang of things. After all, it doesn’t make sense to trade many contracts if you don’t understand what you’re doing.
In addition to that, it’s important not to get too greedy when trading futures. You should never trade more than one contract per dollar in your account balance because the margin rates are very high compared to other types of investments out there today. That means a small mistake can wipe out your entire account, which is why it’s important to trade small when you’re just starting.
3) Keep a trading diary.
Trading is not an easy thing to do, and it’s even harder if you don’t keep track of what you’re doing. That’s why we recommend keeping a trading journal so that you can see your past successes (and failures) to help guide future trades. This doesn’t have to be anything fancy or complicated. You can use a notepad to jot down your thoughts.
It’s also important to write down why each decision was made first because it’ll help you understand what works and what doesn’t over time. That way, when things don’t go well for you one day, all you have to do is look through the diary to see what you did wrong.
4) Be disciplined.
Trading is very emotional, and it’s easy to get carried away by emotions when dealing with money. That’s why we recommend being extremely strict about your entry and exit points every time. This will ensure that even if the market goes against you or throws up some surprises along the way, you’ll still be able to follow your trading plan because it’s been written down from the beginning.
5) Keep learning.
To keep getting better, you have to expand your knowledge base by reading books and watching videos about futures trading. By doing so, you’ll be able to stay up-to-date with the latest trends in this field as well as understand how other traders are thinking about things these days. The more often you learn, the more opportunities you’ll have to discover new things about futures trading.
In addition to that, never stop learning from your own mistakes because there’s always a lesson waiting for you if you look hard enough. From our perspective at Financial Trading School, we recommend using past mistakes as an opportunity to grow and learn rather than beating yourself up over them.
6) Stay proactive.
In our experience, the best traders are always proactive because they’re constantly looking for new opportunities to trade daily, even when there isn’t much going on in the market itself. For example, you can use tools like Economic Calendar or Market Maker Watch to find out what’s happening with commodities and futures contracts before prices move.
In conclusion, always remember that futures trading is not just about making money because it’s also about risk management. Even with the best entry and exit points, there are no guarantees in this business, so you have to be prepared for anything every time you trade by keeping your mind open at all times.
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