Futures Trading SystemsA well-planned futures trading system is your first line of defense against fear, greed and pride; the three worst enemies of any successful future trading professional.
Decipline in Trading
Futures trading systems are a set of "rules" which define when you move in and out of a position. These rules are based upon sound financial principles and nothing else. A professional trading system doesn't take into consideration your current mood, the day of the week or how bad your hangover is from the night before.
Money Management
Your system can be paper-and-pencil based or it can be an integral part of your future trading software system. The only important thing is that it handles determining entry and exit conditions, provides risk control, and offers prudent money management strategies that are based upon the amount of capital that you can afford to have at risk. Of course, systems must not be so complex that they cannot be easily executed at a moments notice.
Risk Management
Futures trading involves risk and even the best trading systems won't fully eliminate that risk. What systems are designed to do is to give you a solid decision platform to better manage that risk and to give you a chance of closing out at the end of each day in the money.
People who are involved in trading futures without a system are sailing the stormy seas of a volatile market without a rudder. When you move in and out of positions without any strategy then you are a prime candidate for a fear, greed and pride attack.
Developing Your Own Trading System
If you are an experienced futures trader then you can develop your own futures trading strategy. The best way to get started is to study the last six month's worth of trades and chart your profit and loss. Pay close attention to each trade and determine what you did right and what you did wrong. As the picture begins to emerge your trading system will almost write itself.
If you have more losses than wins, or if you don't have a lot of experience trading futures, then you are better off adopting someone else's successful trading system. There are any number of financial advisors who sell pre-made systems. Of course, not everyone's risk tolerance is the same so you are advised to review several before choosing the system which is best for you.
