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Am I Suitable for Stock Index Futures Trading?
2010-11-24

 

Prospective investors need to ask themselves before entering the market whether they are suitable for the futures trading.

 

Firstly, as a risk-prone trading, the futures trading requires every investor to invest in a sum of money in advance and large amount of time and energy. Are you able to do that? What if you don’t even have the time to keep an eye on the market movement or read relevant materials and analyze the quotation? Every investor should be aware that the time requirement for futures trading is different from that for stock trading. It is fine for an investor to leave the stocks alone, but it may lead to heavy losses if an investor holds position and is absent in case of great fluctuation.

 

Secondly, an investor, with the money, time and energy, though, does not necessarily make a profit for a long term. It is common to gain profit once, twice or for many times in futures trading, and it is normal to suffer losses several times, since there may be the factor of luck. But it is not a mere matter of luck for an investor to make a long-term profit. From the experiences of many successful investors, their capability of making profits in the long range is closely related to their relatively rich comprehensive knowledge, i.e., the ability to independently use and analyze the current information as well as the experiences and lessons in the long-term trading. The experiences and lessons are the result of paying a heavy price. Almost all the best futures traders have painful experiences, and some even have repeated rises and falls.

 

Finally, a good psychological caliber is very important, which is not owned by everyone. The mentality of fear, greed, or seeking razor-thin profits, the try-your-luck mentality and the herd mentality will lead to failure. Many investors, who are aware of the danger of such states of mind, still repeat the old mistakes in case of similar situations, just as the old saying goes that “rivers and mountains can be changed, but it is hard to alter a person's character”.