This is a daunting statistic for the novice trader, interested in trading futures for the first time. In this article we examine why so many people are unprofitable when speculating in the futures market, and highlight the common underlying features that separate the winning traders from those who lose. The key components of a successful trading plan are an edge, discipline, risk control, and money management . An edge can be defined as a trading strategy that has a positive mathematical expectation.
Futures are a zero sum game.
A buy or sell is equivalent to betting on red or black, and trading costs are the '00' on the roulette wheel. Over time it is a certainty that playing roulette will lose money, as will trading futures without an edge. After you have developed a profitable trading strategy, you need the discipline to follow it - much easier said than done. The best speculators are completely unemotional about their trading, not caring if an individual trade is a winner or a loser. They know that over the long run their plan will be successful so there is no need to waste emotional energy on the daily ups and downs of their trading account.