Tweet this

Dealing Desk Hotline

(603)-2181 8848

Five Ways to Avoid Losing Money in Futures Trading


Many people compare futures trading to gambling

Many people compare futures trading to gambling. It’s because you have a 50:50 chance of winning big or losing big and it all depends on how you play your cards.

Because futures contracts are highly leveraged, futures trading not only give you an opportunity to reap huge profits, but also the risk of losing a lot of money, especially if you are just started trading futures.

People say you lose some, you win some. But it’s no fun if you’re stuck in a losing streak and not winning at all. Read on to find out how you can avoid losing your hard-earned money in futures trading.

1. Learn before you trade

When we want to learn something new, oftentimes we observe how others do it before we step in. If we want to learn to bake a cake, we watch how the chefs do it on television shows or enroll in a baking class.

Likewise in trading, it’s crucial for a budding trader to learn about trading and study the market before you start executing trades. Educate yourself on how to trade futures properly. You must know what your trading strategy is and how you will execute trades. It’s better if you can learn from a successful trader or find a trading mentor who can provide you guidance.

Limit your losses and preserve your profits

2. Cut your losses short and let your gains run

As the saying goes, it’s important to limit your losses and preserve your profits. Once you’re in a losing position, don’t hold on to it too long hoping it will turn around because it will turn into a big loss and eat into your profits.

However, if you are in a winning position, don’t be so quick to exit the trade and take the profits. Hold on to it to maximize your profit taking. Having a few profitable trades helps you compensate for the small losses you made along the way.

3. Discipline yourself & don’t trade with emotion

You need to discipline yourself and stick to your trading plan as it ensures that you make a clear decision without involving any emotions. Sticking to a trading plan helps you trade consistently and eliminates second guessing that could lend you in a losing position. Trading with emotions keeps you from thinking clearly and makes you forget everything you’ve learned.

Have an exit strategy

4. Have an exit strategy

Establishing an exit strategy before executing your trade is a great way to protect your profits and minimize your losses. By having a stop loss order, you are setting a cap on the amount you are willing to lose in a trade that has gone against you. A stop loss order automatically executes when the price specified is hit, and it takes the emotion out of a buy or sell decision. Stop loss orders don’t guarantee against losses but they drastically reduce risk by limiting potential losses.

5. Befriend the trend

Most newbie traders try to predict the market. However, it’s not an easy task as the futures markets cannot be controlled or accurately predicted. Rather than trying to predict the market, experienced traders recommend trading in the direction of the trend as it’s easier to make money when a market is in a trend.


As with any trading, you stand to risk losing money in futures trading. But discipline, a solid strategy and knowledge will set you apart from other traders, save you from big losses and help you become a successful trader.


Wan Zuraiha Wan Zakaria is a staff writer at Oriental Pacific Futures (OPF) where she writes on investment and trading. OPF is a futures and options broker based in Kuala Lumpur, Malaysia and provides electronic trading, brokerage and clearing services to retail and institutional traders since 2007. OPF is licensed under the Securities Commissions of Malaysia and offers cash-settled derivatives instruments traded on Bursa Malaysia, as well as select major derivatives exchanges around the world.

Oriental Pacific Futures articles published on the Corporate Website ( may be reprinted, reposted or distributed free for educational purposes only on the condition that Oriental Pacific Futures and the Corporate Website link information are included. However, other organizations are invited to link to articles that are available in the public area of the Oriental Pacific Futures’ Learning Resources website. No additional permission is needed for such a link.