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By: James J. Dehoiver
It is no coincidence that the most successful floor traders are in general those with the most experience. This is because I believe that trading is essential a skill based activity which requires both practice and experience. There are many similarities between very competitive skill based sports, like golf or tennis, and trading. Here are 7 of the key skills that you must develop as a trader. 1. Futures markets are just like any other market wether it be stocks, options or bonds. They will obey the laws of techincal analysis as well as any other market, providing there is enough volume to make the market liquid. So when trading futures look for support and resistence, trendline and chart patterns. Learning techincal analysis is not as hard as most people think, you just need to spend enough time looking at charts because it is really a visual skill. 2. Always have a trading plan before you enter the trade, and more important than your entry point is your exit point. Your exit strategy could include multiple points including several price targets where profits are taken and a stop loss point. 3. Ask any experianced trader who makes money every month and they will tell you the number one secret of trading is to keep your losses small. Amateurs take a long time to learn this. By doing this your small losses will cancel your small wins and you will be left with your big wins which is how you will make money over time. 4. Over trading is a big mistake that a lot of amateurs make. Professionals tend to be more patient and wait for the better opportunities to come along, this is called cherry picking and takes both patience and discipline. These are essential skills that you must develop. 5. It is important that you track all your trades and review them to see where you are making the mistakes. This is hard work, but this is what separates the professionals from the amateurs. Unless you do this you will keep on making the same mistakes. The best way to do this is to keep both a daily and weekly log. 6. Only trade when you are both physically and mentally prepared. This is often overlooked but is very important. Do you think a tennis star can win a game when they are tired and mentally not focused?, it's unlikely. Being prepared means getting a good nights sleep, having your trading station and charts well prepared before the market opens, taking the time each and every day to review your trading plan and rules. Finally you must have the mental frame of mind and confidence that you are going to be successful today in your trading. 7. If you are new to trading futures take the time to paper trade until you are very confident that you are going to make money. You will know when you are ready because you will start to hate paper trading knowing that you could be making real cash profits on a consistent basis.
Article Source: http://www.articlenorth.com
James J. Dehoiver is an experianced stock, options, forex and futures trader and teachs online futures trading systems. Download a free advanced futures options trading ebook instantly from his site.
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