By David Adams
It’s not unusual to see pieces written that enumerate important points in the field of e-mini trading. Many intimate that there may be 3 or 4 key skills that will put a new trader well on his way to trading success. Generally speaking, the articles are well written and the points are valid. On the other hand, I would like to point out that they are a wide variety of skills that must be thoroughly learned in order to trade profitably.
I suppose the most difficult aspect of learning to trade is the steep learning curve the profession entails. It’s simply not enough to learn to recognize a good set up, or find an occasional good trade. No, there is a well-defined skill set that must be learned. For a trader can develop the necessary confidence to attack the e-mini markets with consistent success. That is a key word here, too. Consistency. Great traders are consistent day in and day out, while they may have to adjust their trading style incrementally to specific market conditions, their overall style remains consistent and their profitability is also consistent.
Some of the skills that are often overlooked include areas such as:
• Money management and proper trade scaling
• Trade management
• Learning to set proper stop loss and profit targets
• Learning to deal with your broker’s mindset
• Setting specific trading rules and never deviating from those rules
• Learning to trade a specific contract and understanding the personality of that contract
• Choosing a specific trading methodology that will work over the long run
• Understanding the zero-sum nature of the futures markets and its idiosyncrasies
• Understanding chart reading
• Understanding price action
• Learning which contracts have limited potential for profits and why
• Understanding the emotional and psychological parameters a trader must work with within, and this may be the most pivotal and important skill to learn. Yet it is the least discussed and most overlooked aspect of e-mini trading. More traders go broke because their emotions betray them than any technical skill.
This is just a partial list of a much longer list of specific skills that every e-mini trader must gain an understanding. To trade consistently, a trader must learn to execute these skills and others to consistently profit. Certain deficiencies in training or emotions will eventually cause a trader to exit the business prematurely; so a determined student continues his learning experience through reading books and articles throughout the course of his or her career. The day you stop learning is the day you start moving backwards in your trading ability.
You’ll notice that on the last bulleted point I added a few extra lines, and that was intentional. With some exceptions, the psychology of trading is often overlooked in favor of learning technical skills that will assure good setups. In my experience, it is usually the emotional makeup of an individual trader that assures his or her success, as the technical skills are a matter of rote memorization and practice. Controlling your emotions, however, is a far more difficult exercise and many traders fail miserably under stressful conditions or chaotic market situations. Whether you are winning or losing in a daily trading session, you must learn to maintain a consistent viewpoint and methodology in your trading.
It would take an entire book to fully explain all of the ramifications of each of the bullet points I outlined above. My goal is to encourage e-mini traders to learn more than an ordinary trading course offers because there is more to learn. On average, I read a new book on trading on a weekly basis. It is also common for me to reread older books to refresh my training in specific areas. Trading is a business that requires a great deal of multitasking and a variety of emotional and technical skills and in order to succeed you must develop a level of confidence in a far wider context than is often thought. On the other hand, it can be done. Many traders make a great living on a daily basis because they have mastered a long list of skills an e-mini trader must learn. I encourage all new traders to continue in their trading education by expanding their knowledge base through reading and browsing magazine articles.
In summary, I have pointed out the wide variety of skills and e-mini trader must learn. Obviously, not all of these skills can be mastered overnight, but they can be learned through education, time, and experience. If you desire to be a successful e-mini trader, make it mission to expand your knowledge base on the wide variety of topics it takes to be successful.
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