The media is quick to focus on the emotional volatility of the populace, and in doing so, often fans the flames of public opinion, increasing emotional panic simply by reporting it. An excellent example is the subprime mortgage disaster in the home loan industry. When first reported with big, black headlines and dire warnings, the reality was that only a small percentage of the total number of mortgages had been made to subprime lenders, and only a tiny percentage of those were actually moving into foreclosure. Initially, most realtors and loan industry officials were not particularly worried and saw what was happening as an uncomfortable but necessary real estate market correction after several years of wildly inflated housing prices.

Widespread media coverage frightened many homeowners, realtors and lenders, leading to all out panic in a fairly short time. The media started issuing dire predictions that the disaster would affect the economy and the market responded. As a broad group, the “people” have always demonstrated a herd mentality. It’s what drives trends. One person acts uniquely, others think he must be on to something important and are quick to follow suit. A trickle turns into a stampede and pretty soon the herd is on the move!

That’s what happened in our subprime example. By constantly increasing its focus on the subprime problem, by continually predicting negative economic repercussions, media attention actually increased public panic, which affected the markets, which impacted the economy, which increased public panic … and so on in a vicious cycle. By dint of its overzealous attention, the media helped the disaster it had forecast become reality.

Futures traders need to look beyond the media hype and dispassionately observe the movement of the market. Don’t allow yourself to get caught up in the emotions of the herd. Trust yourself, trust your system and stick with it.

Making practice trades allows you to:

• Test and fine tune your trading system.
• Learn to successfully pull the trigger.
• Perfect your charting system.
• Develop productive trading habits.
• Practice self discipline.
• See if you have what it takes to be a futures trader.

That last item is very important. You can have the best system in the world but if you don’t believe in yourself, if you don’t believe in your system, if you don’t have the passion to trade, no system in the world will make you a successful futures trader. Like I tell my students, successful futures trading is 90% attitude. Not everyone has the skill, passion, ability or discipline to succeed. Better to find out before you lose your money.

In my Futures Trading Secrets course I recommend that students practice trading on the e-Mini with Sims Broker until they achieve a certain level of confidence and consistency in their trades. Log and study your profits and losses. Look for patterns that indicate when you successfully pulled the trigger and when you failed. Work to increase successful strategies and decrease unsuccessful ones.

Develop successful daily trading habits and routines. Practice the discipline to stick to them even when you don’t feel like it or they don’t seem to be working. Discipline and routine are essential habits of the successful futures trader. Every trader loses sometimes. You have to have the discipline to follow your routine and have faith in your system even when you’re losing if you are to ultimately succeed.

Practicing futures trading on paper is important before you attempt the real thing. Before you start trading with real money, you must develop the discipline to control your emotions and stick to your system. Plunking down cold, hard cash opens the door to greed and fear which can submarine even the best system if not held in check. Practice will give you the skill, confidence and courage to succeed as a futures trader.

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Futures traders learn to trust themselves and their system. If you start letting emotion rule your decisions, fear, anger and greed will undermine your carefully planned and practiced strategies. It is by persistently following your system, by dispassionately relying on what your charts tell you, by religiously following your indicators that you will succeed as a futures trader.

When you trade with your emotions, it colors your judgement. You’re no longer trading on your indicators, you’re trading on your gut. And letting your gut rule is like letting it ride in Vegas. Eventually, fear or greed will compel you to make that final disastrous gamble that wipes you out.

The market is an inanimate object. It has no feelings, no agenda, no emotions. If you make a bad trade, you cannot personalize the market. The market is not out to get you. Start thinking this way and you toss logic and wisdom out the window. If you feel yourself getting caught up in emotion, if you feel logic slipping through your fingers, get out. Just stop trading until you can regain control. Every minute you keep trading on your emotions, you come one step closer to disaster. No matter how emotional you become, the market will just sit there. You cannot change the market, you can only react to it.

• There are some days when the demands and pressures of daily life — a fight with the spouse, that fender bender last night, a problem with one of the kids, a leaky roof, a meeting with your banker, etc. — will take up so much of your mental and emotional energy that you simply can’t concentrate. Don’t fight it. If you can’t concentrate fully, don’t trade.

• You may just feel uneasy for no explainable reason. The day may just feel “off” to you. If things don’t feel right mentally, no matter what your logic tells you, sit the day out on the sidelines. Lost opportunity is better than lost money. Don’t take a chance. If it doesn’t feel right, don’t trade.

• Successful traders practice good money management. If you’re trading with money you can’t afford to lose — mortgage money, retirement funds, life savings, money borrowed from a friend or relative, etc. — you’ll be trading scared. The pressure of what will happen if you lose the money will negatively affect your ability to trade successfully. You need a clear head — and a clear conscience — to trade at your best. Don’t trade scared. If you can’t afford to lose the money, don’t trade.

It takes more than knowledge to be a successful futures trader. You must have the self-confidence and courage to trade. Trading takes total concentration. If you can’t keep your head in the game, pack it in until tomorrow.