There is a general perception that day trading futures contracts is a highly risky business and not for the faint of heart. Day trading can be a very risky business, especially when traders use poor money management techniques, faulty trading technique, and improper risk assessment for trades. For the uninitiated, day trading is a great way to lose a nice chunk of money.

It doesn’t have to be that way, though. Far too many traders charge into the markets and improperly prepared for the challenges they will face. It’s easy to understand why. A casual examination of a future chart shows a serpentine pattern, up and down, that ought to be fairly simple to trade. There is also a tendency to assume that the serpentine patterns follow some sort of organized pattern. Figure out the pattern, and you ought to make money.

Wrong!

Study after study has shown there is a high component of randomness to futures trading charts. I do think there are some identifiable patterns buried in the random patterns, but they are not as obvious as one might think. No, learning to trade is far more than a perfunctory glance at a chart and placing trades when you think the market is moving one way or the other.

The very essence of trading is containment of risk. There are many components traders utilize to minimize risk, and most center on the concept of probability. The idea is to take high probability trades, and pass on low probability trades. Through training and experience traders learn the characteristics of high probability trades as well as the characteristics of low probability trades. Further, careful management of your futures trading account is essential. In order to minimize risk, a trader should never trade more than 8 to 10% of his account on any given trade.

But there is even more. I get ample opportunities to watch traders practicing and am amazed at how many traders enter trades without stops. It is essential to determine your level of risk on a given trade and set an appropriate stop loss order to assure you do not lose an excessive amount of money on a trade gone badly. In my opinion, this is the most frequently violated risk management tool. Frankly, it baffles me.

Day trading is far from living on the edge. The goal of the day trader is to both profit and minimize risk. Obviously more risk increases the likelihood of losing trades, and losing trades are not what traders want. For that reason we employ a variety of risk reduction procedures to increase our likelihood of success.

The more adept a trader adapts risk management techniques, the more prosperous he will be in the long run. Risk containment should be the primary goal of every trader, and lack of proper risk containment is the number one cause of trader failure. While it is very romantic to think of day trading in the same light as being a gunslinger, just the opposite is true. A good trader avoids confrontation with excessive risk and cowers against low probability trades.

- About the Author: I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit. Would it be convenient to receive valuable trading tips every night in your email? You can sign up for our free video series by Clicking here These videos contain advanced trading strategies and will enhance your trading knowledge immeasurably. Best of all, they are free! So get your free videos and start trading like the pros. Article Source

There are an adventurous few who plow headlong into trading with the style and grace of a Brahma bull. These are the brave few who neglect to take the time to develop a trading methodology and personal self-discipline to trade effectively. The end result is almost always the same; complete and utter failure. Of course, this group of people seem to trumpet the pitfalls and difficulties of trading to anyone who’ll listen.

I hear stories like this, and similar stories, on a consistent basis. People tell me they knew “so and so” who tried to trade and lost a fortune. It seems everyone knows someone who has lost a considerable amount of money trading in the futures market. Unfortunately, there is a never ending supply of those adventurous few who plow headlong into trading with the style and grace of a Brahma bull. So the story perpetuates itself over and over.

I’d like to take a moment with these frightened souls and explain to them that there is a controlled and methodical technique for profiting in the futures market. You don’t need to charge into the markets like a mad bull.

But for many, the damage has been done and rumor can be much more powerful than fact. The average American is, by nature, averse to excessive risk. Most individuals work hard for their money and don’t care to fritter it away carelessly. As futures traders, and educators of futures traders, this is the problem we face.

Of course, there are risks associated with trading e mini futures contracts, and deliberate money management techniques must be implemented along with very exacting trading technique in order to be successful. In short, it takes discipline and experience to be a successful futures trader. But it can be done.

There are a large number of successful traders in the United States, but they seem to be a quiet bunch and go about their business without fanfare or accolades. These folks are interested in making a great living and, by and large, do so without braggadocio or drawing excessive attention to themselves. Needless to say, there are a few braggarts out there. I always seem to meet them at cocktail parties and endure hours of explanation on their trading technique and the millions they have made in the market. I seem to attract them. I don’t know why, but cats seem to feel the same way about me. I prefer the cats.

The point of this article is to emphasize that well controlled trading is possible and profitable. Individuals who equip themselves with the proper knowledge, training, and mentoring stand a good chance of success. They just don’t know it because they’ve listened to the crowd of mad bulls who charge into the market. I wish it weren’t so, because trading can be such an enjoyable profession and creates a wonderful sense of self satisfaction. I feel that we, as trading educators, have failed to get the word out on responsible and profitable trading. For this reason, trading is perceived as a risky and foolish endeavor; better suited for mad bulls.

My goal is to responsibly educate the public, whether they trade not, that rational individuals make a living trading in the futures market. Whether people choose to trade not is up to them. But I would like for the public to have a more rational view of the trading profession. We are not the greedy Wall Street types, nor are we excessive risk takers. We are a group of people who have learned to control risk and embrace it to our advantage. In short, we need to dispel the notion that futures traders are mad bulls.

- About the Author: I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit. Would it be convenient to recieve valuable trading tips every night in your email? You can sign up for our free video series by Clicking here These videos contain advanced trading strategies and will enhance your trading knowledge immeasurably. Best of all, they are free! So get your free videos and start trading like the pros. Article Source