How is trading futures with money / risk management just like playing pool?

What is the one thing all pool players have in common? After they break the balls, they circle the table 3 times looking for the easiest balls to pick off, the ones that are placed just in front of pockets, before they go for the balls that have encumbrances. When it comes to trading futures, we should do well to learn from the pool players.

Here’s the problem with so many traders, and why it is so often said that making money trading is not possible…investors make too many trades. They have a goal, they set it, and then say, “well I set that goal, let’s go for higher stakes.” They buy and sell, again and again, and finally, the law of averages works to their disadvantage and they lose what they made.

Professional traders know better. They are looking for a specific goal. They make that goal, close down their trading platforms, and live to trade another day. They know only to too well how easy it is to give it back to the Market. The problem is not making money in the Market, it is keeping the money you made.

Here’s a quick solution that may help. Have one brokerage account, but have two sub-accounts. Put half of the money in one sub-account and half in the other. One sub-account is strictly very conservative trading, for your mortgage payment and other necessities. The other sub-account is for more wild and crazy trading. Once you have made your monthly mortgage in your conservative account, take 10% and move it to your wild and crazy account.

Only take a trade for your conservative account that you know is very likely to be profitable, has all the confirmations, etc. Be very selective buying and selling for this account. In your other sub-account, try other strategies, maybe that do not have all the confirmations. This is kind of building in your own self generated stoploss.

Here’s the funny part about trading futures. If you do 3 ticks per day (3 price movements), on 5 contracts, you’ll be able to make your mortgage payment every year. 3 ticks, which is most likely just 1 trade. More is not better. So if you keep your very conservative to just 3 ticks, and select the trade with the most confirmations, chances are you’ll do just fine. Who knows, you might even do well with your wild and crazy account too.

As traders, you need to take a lesson from the pool players. Pick off the easy trades first, then worry about about the trades that have encumbrances.

Barbara Cohen CIO, Shadowtraders, and professional day trader, specializes in teaching students how they can be trading futures with their own trading system and trading strategies. Ms. Cohen has helped hundreds of traders achieve their goals trading. Find out if trading futures is for you by attending one of Ms. Cohen’s Free Webinars. Check out my Futures Trading Articles. For more information, send an email to or call 866-617-2037 today.

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