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Do you find yourself doing too much trading with E-Mini? You may be over-trading

This article is really about high and low probability e-mini trades. Failure to distinguish between these two types of trades is often the cause of overtrading. Overtrading tends to chew up profits because it incurs an inordinately high level of commissions. I will say this; Your broker will love it as they pay you by receiving a portion of the commission charges in your futures trading account. One of the keys to being consistently profitable is differentiating between trades that have a high probability of success and letting the trade run versus taking lower probability trades that have a higher probability of resulting in a losing trade.

It takes experience, education, and perseverance to correctly identify high-probability trades. I think it’s important to understand that you don’t always have to be in a trade. It is not unusual for traders to exit a trade and immediately start looking for another trade. Many times, there is no other good to be initiated and the correct course of action is to sit on their hands. In my opinion, this is one of the most difficult skills to learn: discretion when making electronic transactions. For some people, waiting for the correct settings to arrive is problematic, so they end up going in and out of settings too often.

On the other hand, low probability trades always appear and it can be an exercise in mental discipline to avoid the temptation to initiate a trade that has little chance of success. Some typical situations to avoid are:

Countertrend trades

Trades in a degrading channel

Trying to trade with the idea that the market is going to change

Trading in a choppy market

Trading in an extremely low volume market

Taking trades from the highs or lows of the day, this is often called a bounce trade.

There are many types of problematic setups and it would take too long to list them, but these setups can cause a lot of trouble for most traders and should be avoided. One of the problems I often see is starting a trade that has less chance of winning than most and actually wins. This encourages the individual to continue taking risky setups rather than patiently waiting for a better setup to form. Once a bad habit is positively reinforced by winning, many people will try more setups that don’t stand a good chance of winning. The cycle can easily deplete a good portion of the futures trading account.

We’ve been talking about taking builds that have a good chance of winning and taking fewer builds. If you are willing to make trades that do not have a great chance of winning, you will find that you have accumulated too many trades during your trading session. Focus on the good ones and leave the bad ones. Easier said than done.

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