But these are too easy to ignore, even for the most disciplined traders. Too many traders try to use “mental stops,” picking a price in their heads for when they will close out a position and minimize their losses. Protect your positionsĬommitting to an exit strategy in advance can help protect you from significant contrary moves. That way, you’re attempting to limit your risk to $2 per ounce, while maintaining a profit potential of $5 per ounce.
With a bracket order, you could set a stop loss exit at $18.00 per ounce and a profit exit at $25.00 per ounce. For example, say you bought one contract of December silver at $20.00 per ounce. You don’t want emotions like fear and greed dictating your moves by luring you into holding onto a losing position too long or exiting a profitable position too soon.Ī carefully wrought trading plan that includes risk-management tools such as stop-loss orders, which we will discuss below, or bracket orders, can help protect you from such errors. The goal here is to minimize the possibility you’ll need to make important decisions when you’re already in the market with money at risk. This means having not only a profit objective, but also an exit plan in case the trade goes against you. The first tip simply can’t be emphasized enough: Plan your trades carefully before you establish a position. That’s why it’s so important to have a strategy in place before you start trading. In the world of futures trading, success can mean significant profits-but mistakes can be extremely costly. Principles can help you reach your financial goals. $0 online equity trade commissions + Satisfaction Guarantee. ADRs, Foreign Ordinaries & Canadian Stocks.
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