Emini futures, or simply eminis, are smaller-sized contracts of “full-grown” futures contracts that have been around for decades. Unlike the latter that have been traded on physical exchanges, eminis have always been traded electronically, allowing retail traders with access to the Internet to compete against institutional traders from the comfort of their homes or home based offices.
Futures offer much greater leverage than stocks or bonds, and practically only trading currencies on the Forex can provide even better leverage. While this leverage can be also very risky in the hands of unskilled traders, this somehow has not prevented wannabe traders from flocking to emini futures or Forex.
Trading eminis is not easy, although it can be mastered given enough time and dedication. The basic trading rules apply here just as in trading stocks or bonds, but due to this enormous leverage following these rules is even more important than in stocks or else it’s very easy to end up blowing one’s trading account in no time.
One of such rules insists that you “let your profits run”. Another urges you to “cut your losses short.” Both make a lot of sense and when combined, they give rise to much more intelligent trading.
Let us discuss the latter here as it seems to be of even more importance than the former. This is so because ignoring this rule is a sure path to ending up with a totally depleted account relatively quickly when trading emini futures.
Yet, this rule is often violated despite the grave consequences that doing so entails. Why is it so, one can wonder. Let us address this issue here as that is not always done in an exhaustive, comprehensive manner.
There is no doubt that trader’s ego is involved in this process. Most humans, traders being no exception, do not like to admit that they have made a mistake, so they would rather wait for things to somehow get worked out in their favor while they adjust their stop-loss and keep going deeper into the red zone. This is often no more than wishful thinking that masquerades as eternal hope. Yes, it is true that to be a good trader one has to be an optimist, but one also has to be a realist and being self-disciplined. Violating basic rules of trading is hardly a sign of solid self-discipline.
But there is also another reason why overriding this rule often takes place. At the core here seems to be the lack of confidence in one’s trading methods. This is what also can make the trader to hold to his losing position because he does not believe that he will be able to get a better trading opportunity. Had he believed a much better opportunity is likely to present itself while he is stuck with his loser, he would have cut it much faster.
The moral from the last observation is this: if you are considering trading emini futures or any other market, for that matter, you want to make sure you have a good solid strategy that you trust as this can only help you to cut your losses short.
By: Waldemar Puszkarz
Posts Tagged ‘Stop Loss’
Trading Emini Futures – The Failure to Cut Losses Short Revisited
March 26th, 2010What is a Forex Signal Trading Service?
February 25th, 2010
Forex signal trading involves the suggested buy and sell points with the specific price targets and the stop-loss levels which are delivered to Forex traders by signal providers. The signals cans be delivered by cell phone, instant messenger, email or directly to your desktop. Some services allow you to auto-execute their signals directly into your broker account; this is called auto-trading.
A beginner in Forex signal trading can gain education and experience by practicing with a dummy account. Many of the Forex websites that offer trading platforms also offer newsletters with advice and tips from experienced traders or market analysts. These newsletters can be extremely helpful for the beginning trader because of the valuable knowledge provided by the professionals. The main purpose of the Forex trader is to make money and thus the more information the beginning trader can acquire then the better informed they would be.
Forex signal trading involves the ability to identify trends by using the many varied and subtle indicators in the market. These particular indicators help to indicate when it is a good time to buy or sell. Bear in mind that Forex analysts and brokers charge a fee for their service.
Forex signal trading brokers may only monitor the more popular currencies such as EUR/USD, USD/JPY, GBP/USD and USD/CHF. However, for a higher fee you may be able to find Forex signal services for less popular currencies and pairs. Basic subscriptions to Forex signal services will send you alerts about the best times to buy and or sell. If you happen to have a higher level of subscription then you will be alerted about the buy and sell times by pager or cell phone. There are also levels of subscription that will provide the subscriber with live Forex charts. The minimum subscription fee is usually a hundred dollars a month.
Short-term Forex signal traders will capitalize on slight changes in rates that they expect every day. The short-term trader focuses on the study of the daily Forex charts, indicators and the time of day. The long-term trader will require large amounts of capital to cover the daily fluctuations. Thus, the long-term trader focuses on long-term factors in the market. Therefore, the short-term trading system will be quite different from the long-term trading system.
Forex signal trading should not be used alone in the market without any other indicators. If you are looking at indicators over a short period, you will not have a true picture of the market. You must use this service in combination with other market indicators. Medium-term traders comprise the majority of the traders. They have the least risk and usually need less capital than other types of traders; however, trading opportunities are limited.
If your time is limited, you cannot watch your computer screen, and you still want to maximize your profits then it is a good idea to sign yourself up for a Forex signal trading service. Do not expect a signal service to be your ticket to immediate Forex riches. Look at it as just another device in your Forex trading repertoire.
By: Tom Houser
