Can A Novice Really Learn To Trade?
Learning to trade e-mini futures contracts profitably can be a tall order without proper training and experience
. This fact is borne out by the especially high failure rates published in leading trading journals. It is estimated that more than 50% of first-time traders fail in their initial attempt at trading e-mini futures contracts.But the outcome does not have to be negative for novice traders. My observation is that most traders began training with little or no training and even less experience. This is a grave mistake for the beginning trader, because the markets do not operate on common sense or everyday logic. It takes special training and introduction into the logic of the market to be successful, along with some practical experience in futures trading.
The markets are enticing though, and the promise of huge profits and a luxurious lifestyle are what attract novice traders in droves to try their hand at trading. At first glance, the rhythm of the market would seem easy enough to master. A casual observation of the market would yield the conclusion that the market goes up for a little while, then goes down for a little while; the novice trader observes that this undulating pattern doesn't really look too hard to master. So he or she dives headfirst into trading; usually with disastrous results.
But there is more to these undulating patterns than meets the eye. Even though the market appears to move in regular serpentine patterns, understanding the nature of these patterns and capitalizing upon them is far more difficult than meets the eye. For this reason, it takes specialized training and experience to decode when and where to initiate trades and just exactly when to exit a trade.
Many novice traders fail to realize that futures trading is a zero-sum game. For every winner there is a corresponding loser. This differs from stock market trading in that the stock market allows unmatched trades via market makers. There are no market makers to facilitate unmatched trades in the futures market. For this reason, choosing the proper e mini contract to trade is of utmost importance. The contract you trade must possess the prerequisite liquidity for a trader to move in and out of trades effectively. A thinly traded contract, one with very low volume, may make it difficult for the trader to exit a trade at a price of his or her choosing.
Further, most futures traders have a battery of oscillators, rate of change indicators, and price action technique they employ to properly choose a potentially profitable trade. Of course, the secret to effective trading is to enter a market move at the beginning of the move and not pile on to the move once it gets organized. By then, the market move may have expended much of its movement and the trader may be getting in just-in-time for the price action to change directions. This is a very common mistake many new traders make. It is also a phenomenon that experience traders often take advantage of, as they will take a trade in the opposite direction as the novice traders pile into the trade in the latter stages of the move.
There is a remedy for this situation. Proper training and extensive mentoring will educate the novice trader and a methodology required to trade effectively. As I have said earlier in this article, common sense and trading futures contracts do not necessarily go hand-in-hand. On the contrary, the market often displays illogical price action and moves in ways that may not make sense to the uninitiated. This phenomena underscores the need for specialized training to be successful in trading the markets. While I suppose it is possible to learn the markets on your own, it would be an expensive and frustrating lesson. It is possible to shave years off your learning experience by learning proper trading technique and honing a workable trading methodology.
The point is a simple one; learn to trade futures contracts from an reputable source and practice what you have learned until feel you can demonstrate a mastery of the trading technique you have learned. Personally, I recommend a trader be able to be able to trade profitably for several weeks before he or she decides to tackle the live market.
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