Fu tutes For You  |  MAR 2007

Futures For You by Dan O’Neil

Stocks & Commodities V. 25:3 (43): Futures For You by Dan O’Neil INSIDE THE FUTURES WORLD Want to learn how the futures markets really work? Dan O’Neil, a principal at online futures and forex broker XPRESSTRADE (www.xpresstrade.com), responds to your questions about today’s futures markets. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. DON’T FAIL TO PLAN I’m thinking about getting into the futures markets because it seems so much more fast-paced and exciting than stocks. But a friend of mine who invests in commodities told me that emotion can be a trader’s worst enemy in these markets. How can I avoid getting caught up in the emotions of trading? Your friend is right. Investing in futures is a thrilling thing to do — the prospect of riding a bull market to a handsome profit can be exciting. And given the liquidity and constant movement of these markets, the action and emotion is a draw. However, experiencing that emotion and trading on it should be two separate things. It comes down to trading with your head or trading with your heart, and trading with the latter may mean you won’t be trading long. Most long-term traders who succeed in the futures markets have removed emotion from the decision-making process by sticking to a trading plan. Many traders who are already negotiating the markets without a defined plan in place find it difficult to set aside the time and energy to create one midstream; this is a common but unfortunate situation. After all, if you were living in a house built on a shoddy foundation, would you be thankful for every day it didn’t collapse and hope that your luck continued, or would you go about finding a way to get things on solid ground?

by Dan O’Neil