How Not to Lose Money in Futures?

08 July 2009 - Xenia Rainey (Which Way To Pay)


How Not to Lose Money in Futures?

There are some things that you might want to bear in mind before entering the exciting, often rewarding world of Futures trading.  While successful trading can lead to really healthy returns, don’t forget that any trader can lose a substantial amount of capital.  While there are countless books, internet sites and stories on ‘how not to lose money in futures trading’, the real matter here is the individual story. 

There is no one way that you can get wins and there certainly is no guarantee that you will trade successfully.  The really important thing is to stay on top by educating yourself and being proactive.  Part of the fun is the risk, which is why many people enjoy it - the challenge!

One trader who lost a large amount of money in the space of two weeks summed up a list of things to keep in mind:

- Only invest as much capital as you can afford to lose
- Keep your head clear – don’t get caught up in ‘greed’
- Do the research – investing without background knowledge can lead to bad results
- It is your money – so do not rely too much on the opinions or judgement calls of others
- It is your investment – so do ask questions and do demand more answers.
- If you are unsure, consider investments in areas where you have some existing knowledge
- Get to know the charts and figures – look out for trends and indications
- If things head downwards – get out fast
- Keep an eye on how much you are trading – do not get addicted!

Remember – no matter how experienced a trader, he or she still is at risk of losing all invested capital plus additional funds to cover the loss.  Futures exchanges are regulated by the FSA in the UK and by opening a contract, you must be aware of your liabilities in the event of a loss.  You may be bound to make up deficit to the broker.

Trading is certainly worth getting into, but the best prepared and best educated trader is more likely to see success than those who rush in head first!


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