E-mini Index Futures - Key Trading Concepts - Part II

In January, Marc Nicolas from Tradingemini.com, shared Part I of his e-mini index futures trading concepts. Among his many tips he talked about looking for high volume markets with a thin spread, only risking 1% of your capital per trade or less, limiting the hours you trade and keeping a runner. In Part II Marc discusses emotional trading and how to avoid being a gambler.

Visit Tradingemini.com to learn more about Marc's strategies and to find out about his upcoming free webinar this Wednesday, April 14th.

Mental Risk Management

“When you learn what not to do in order not to lose, only then can you begin to learn what to do in order to win.” Edwin Lefevre, Reminiscences of a Stock Operator

1. Managing Position Size
Size envy can make traders take larger positions than they should. Most people can’t walk straight into a gym and bench press 300lbs. Traders must build up financial capacity, technical skills, and emotional development, judging progress against their own levels not others.

2. Dreaming of a Big Win

This is the earmark of a beginner. The key to success is consistency - steadily achieving profits with a simple, sound process and using runners to catch the larger moves or position trade with a separate broker account. A successful athlete focuses on the steps to achieve results not the results.

3. Vengeance Trading
Vengeance trading is when a trader takes a hit and wants to get even with the market risking financial and emotional capital. The angry trader wants revenge, to prove they were right, so they stubbornly enter in the same direction as the losing trade, focusing on where the trade did not go, rather than where another trade could go in a market which is always impersonal and never wrong.

4. Boredom
The mind will go to great lengths to avoid boredom. A Gamblers Anonymous maxim holds that gambling, or over-trading, is a sign of boredom, so recognize when you are becoming bored and dismiss it as a false emotional trigger.

5. The Averaging-Down Sin
Averaging down is adding to a loser, with the hope that it will turn around, without regard for the reality of what your charts are telling you. Never average-down; you are stubbornly refusing to admit you are wrong.

6. Are you Trading Intelligently or Gambling?
Successful traders trigger when the odds are favorable. Gamblers trigger on hope. A gambler can’t explain why they won other than they had a “gut feeling”. They trade for excitement, with no plan or discipline, unwilling to accept reality, believing they can have good things without effort.

The Gamblers Anonymous 12-steps can help control loses. For example, “Make a searching and fearless moral and financial inventory of ourselves.” Know why you want to be a trader, what you expect to get out of it and whether you really have the right support and financial basis to trade.

“Admit to ourselves and to another human being the exact nature of our wrongs.” Keep an honest trading journal and have an accountability group, be it other traders, friends or family.
“Continue to take a personal inventory, and when we are wrong, promptly admit it.” When in a bad trade, admit it and get out. You must take personal responsibility for your actions and not blame others or “the Market”.

Trading can be enjoyable and social; gambling is lonely and heartbreaking. The Recovery Book sums it up in one sentence,“To gamble risking progressive deterioration OR not to gamble and develop a better way of life”.

Marc Nicolas


To learn more about Tradingemini.com’s techniques you can join them for a free webinar for Trader's Blog readers April 14th at 16:30 EST. This exclusive webinar promises to be something special.

9 thoughts on “E-mini Index Futures - Key Trading Concepts - Part II

  1. Excellent article Marc! This is the perfect summary of the rules on how to be a great trader and make consistent money. These rules should be printed out and put next to each traders' monitor. 🙂

  2. How correct! Every time I have lost big, it was because of Vengeance trading or over-trading.

    I have more than tripled my money dozens of times only to be wiped out by loosing my cool. How do I get help to control my self-destructive streak?

  3. really enjoyed mental risk management, I knew it, but it's good to be remimnded again.

  4. Yep, great post, I know I've committed every sin there but as you say with a "fearless personal inventory" you can maintain control - thanks Marc for putting them all in such an easy to grasp and succinct checklist which I shall be printing off and putting next to my monitor.

  5. thank you.very helpful. important keys in trading.i am a new trader seeking consistency & succeess ,and i will definitely write down these rules to be followed and be taken seriously.

    thank you mr marc nicolas

  6. Excellent article. As traders we all go through these emotions and steps mentally. Thank you very much for the reminder

    Maria Martin

  7. Thank you Marc. Excellent and valuable trading values to live by. Not always easy to but certainly makes good solid sense.

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