Is Trading Futures in Stock Markets risky even for an experienced Trader?
Normally when we buy a future we set a target to book profits. But, when the market falls we are loath to put a stop loss and we loose a big chunk of money. Last year I made a profit of about fifty thousand dollars playing in future. This year all that proft got wiped off in just three months. Should I stop dabbling in futures?
- 4XTraderLv 51 decade agoFavorite Answer
Just because you lost money in futures doesn't make it bad. If you lost $50k in the stock market, would you think it's bad? The difference between futures and equities is the speed in which you can make/lose money. What you should use to determine whether you trade futures or not is your "risk tolerance" levels. The majority of people DO NOT have the necessary risk tolerance levels to trade futures.
Is it risky for experienced traders? Yes, it's risky for all traders. Just like equities are risky for experienced traders also. Experience doesn't make anything less risky, it only trains you on how to handle the risk. For example, an experienced snake handler isn't any less at risk with a poisonous snake, but his experience allows him to handle the situation as such to reduce the EFFECTS of the risk. He can still get bitten. I remember the story of one pro trader that was short soybeans. Shortly after he got into the trade, beans opened lock limit up 12 days in a row. Not limit up during the trading day, but on the open, so he couldn't get out of his trade for 12 days. He ended up losing something like $250k
Should you stop dabbling in futures? If you can't handle the stress and you are anxious when you have an open trade, then Yes, you need to quit. If you don't have the risk tolerance level, then you need to be out. It's not a bad thing. Never trade against when is natural for you or you will lose.Source(s): I trade derivatives & fx.
- 1 decade ago
No one trader in the world has 100% of wins. Sometimes you earn sometimes you lose. Main thing is what is win/loss ratio. It is money management. I don't know what trading systems/techniques you are using but I hope its are good.
NOTE: EVERYBODY COULD FALL DOWN BUT MAIN THING IS RISE UP AND GO AHEAD.
When I begin my trading I have losses too. But I decided to keep going. And I'm successful now
Maybe those books help you to improve your trading maner or even create your own new trading system.
Market Wizards by Jack D. Schwager;
Technical Analysis by Jack D. Schwager;
Comprehensive Course on The Wave Principle by A.J. Frost and Robert Prechter;
Candlestick Charting Explained- Timeless Techniques for Trading Stocks and Futures by Gregory L. Morris;
Trading Chaos – Applying Expert Techniques to Maximize Your Profit by Bill M. Williams;
New Trading Dimensions by Bill M. Williams
Trading Chaos II by Bill Williams – Maximize Profits with Proven Technical Technicues by Justin Gregory-Williams and Bill M. Williams
I read many books but those are the best and most useful. (It is my opinion)
Don't replenish the crowd of 90% loosers! You are Traders!
Good Luck!Source(s): Forex trader
- Anonymous1 decade ago
The worst part is that last year you had to pay taxes on the 50k you made. This year, you will only be about to deduct 3k in losses. And worse yet carry forward your losses for only 2 more years.
I traded futures one time and immediately lost 4k. That was enough for me. Hopefully I learned my leason. And hopefully you will also.
But look at it this way, earlier this year a hedge fund lost 2 billion in the futures market, so you are in good company.
- days_o_workLv 41 decade ago
Given that inside information, from industry people who have privy to such information before anyone else, wall street experts who spend 18 hour days doing nothing but researching an industry and doing channel checks, etc, it seems like it would be hard for an individual with limited resources to beat these odds.
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- Anonymous1 decade ago
I'd quit. Yes, it is risky, and you are up against a lot of people who have a lot more experience doing it than you do.