Ok, I may have lost a lot of you right there... and I admit, that appears a bit suspect, but while you can lose on individual trades, you'll ultimately win in the long run if you follow two golden guidelines:



Now before I tell you about them I have to caution you that you probably won't like them... in fact you've probably even heard them before... and if you have, I hope you take that as a wakeup call to their importance. The reason I want to preface this is because I KNOW that people hate to hear it, but it is this same wisdom that professionals take and apply that make them the professionals they are. Now the 2 guidelines I want to share are:

1 - Don't trade under-capitalized

2 - Use (and never cancel) stoploss orders

While you don't need tons of money to be successful in trading, you should have enough to ride out the inevitable loss. To give you an idea of how much you should have, always consider having (at minimum) 10x your average loss.

So if you plan on risking about $500 on any given trade, you should have a minimum of $5,000 in total trading capital. This allows you some margin of error in the case of a losing streak. If you expect to risk more like one thousand dollars per trade, you should plan on having at least $10,000 available in trading capital.

Another way you can come up with your recommended trading capital amount is to take your expected (or actual) loss on three consecutive trades and multiply it by 3. So if you were risking $1,000 per trade, then 3 losing trades would put you down by $3,000. Take that and multiply by 3 to get a suggested starting capital of $9,000 to $10,000.

Let me summarize the issue of trading capital with this critically important truth about futures trading - Losing trades are part of the game. Futures trading is speculation. No one (at least no one I've ever met anyway,) speculates with 100% accuracy. But the wonderful thing about futures trading is that you don't need perfect trading - you can make a fortune even if you're losing more often than you're winning... as long as you always manage your risk.

That brings us to our 2nd point - Always use stoploss orders. Now I don't have any actual stats to back me up here, but from my own trading results, as well as from those I've witnessed from clients and peers, I'd wager that 90% of accounts were wiped out because someone "fell in love with" a trade, and instead of taking a calculated loss, people pulled their stoploss, and stayed in a trade hoping it would eventually go their way... unfortunately this usually ended bankrupting their trading account.

It's happened all too often, That's why I have a simple rule... Never cancel a stoploss order. Never. Got it? It's as simple as that. I've seen it over and over... Whenever the market is close to stopping anyone out, they can come up with hundreds of "reasons" to cancel or move their stop. That would be fine except these are never good reasons - they just appear to be at the time. Expect and take your losses... the best time is when they're cheap. This isn't about being right or wrong, it's about profitable trading.