1. Business & Finance
About.com
Commodities

Discuss in my forum

The Four Biggest Mistakes in Futures Trading - Jay Kaeppel

About.com Rating 3.5 Star Rating
Be the first to write a review

By , About.com Guide

See More About:
The Four Biggest Mistakes in Futures Trading - Jay Kaeppel

It is refreshing to read a book on futures trading that is not hyping some type of trading system that will make you seemingly easy profits in the futures markets. This book takes a different angle by discussing the common errors that losing traders commit, because they will certainly lead to your trading demise if they are not overcome.

When I first read the title of this book, I wondered how the author was going to fill in the pages. However, the author goes into great detail to sufficiently explain the mistakes and how you can avoid and rectify them to improve your futures trading.

The Four Biggest Mistakes in Futures Trading

Jay Kaeppel summarizes the four main mistakes as the lack of a trading plan; too much leverage; failure to control risk and lack of discipline. These are well-known errors that losing traders commit over and over. They are often discussed in articles, but not to the depth that author covers them.

I have made some of these mistakes in my trading and I would guess that most other futures traders have also at some point in their trading careers. The problem is that losing traders will commit them over and over until they throw in the towel and quit trading all together. It is difficult to realize the mistakes until you know why traders commit them.

Why Do Futures Traders Commit Common Mistakes?

The author gives you the reasoning behind the mistakes. Much of it has to do with human nature. Doing the right thing is normally the hardest thing to do. Maybe that is why so many futures traders lose money. Once you can find the reasoning for your misbehaviors, you can work on avoiding these costly mistakes.

Avoiding the Mistakes

This is the most important part of the book as far as I am concerned. Jay Kaeppel gives you a detailed explanation on how to avoid the four biggest mistakes in futures trading. Better yet, he explains how to do things the right way. For example, using too much leverage is one of the main problems for futures traders. So, the author gives you several examples on how to calculate the proper size of account to use to maximize returns and minimize your exposure to leverage.

This book is certainly suited for new futures traders. However, it may be more beneficial to futures traders who keep losing money and do not understand why. Addressing these four mistakes and overcoming them will certainly increase your chances to succeed in futures trading.

The author provides no hype or unrealistic expectations. As a former commodity broker, I have to say that I have seen these same mistakes committed regularly by futures traders. Unfortunately, most of them refuse to recognize their mistakes or do anything about them.

In this book, Jay Kaeppel teaches you how to be a more successful trader by teaching you how not to be a bad trader. It is not a difficult book to read as far as futures trading books go. It is direct and to the point. Don’t expect some type of magical system with this book, but do expect some sound trading principles that are covered very well. This book is well worth reading for new and experienced traders. It wouldn’t hurt to re-read it every year to make sure you are on the right track.

©2012 About.com. All rights reserved.

A part of The New York Times Company.