skip to main content
Coach's Playbook Posted by Team Topstep November 13, 2019

5 Reasons Most People Don't Make Money Trading Futures


In this week’s Coach’s Playbook, Hoag and Mick, discuss an important, but somewhat unfortunate topic: 5 reasons most people don’t find success trading futures. You should definitely know these pitfalls so that you can avoid them in your own account.

Remember to tune in every Wednesday at 11:30 AM CT for new live episodes where you can ask your own trading questions, or occasionally watch us fumble with the video equipment.


Too Much Leverage

Like most of the topics on this list, the problems that arise from being over-leveraged are rooted in either fear, or recklessness.

The reckless part is easy to understand. Many inexperienced traders refuse to follow responsible risk management rules given the size of their account. They trade too many contracts and lose too much money on single trades or single days. They’ll lose half their account on a bad day, and never come close to making that much on their best days.

Fear is a whole other animal. When traders “size-up” before they feel comfortable, they lose their ability to think rationally about the trade. In the video, Hoag describes literally shaking the first time he filled an order for a 5-lot. You need to increase size at your own pace.

Trading Futures for the Wrong Reasons

Many people get into futures trading for questionable reasons. They see the possibility for huge profits, but completely ignore the research, discipline and time that goes into becoming a successful trader.

If you’re looking to strike it rich quick, you might as well just buy a lottery ticket, because that’s not going to happen in the futures market. You may enjoy some beginner’s luck, but the law of averages will bring you back to Earth quickly unless you put in the time and acquire the skills.

Irrationality of Large Losses

As mentioned in the video, money starts to lose its meaning once you’re down a certain amount on the day. Remember, $1,000 is $1,000. It doesn’t matter if you go from +$1,500 to +$500, or -$9,000 to -$10,000—it’s all the same amount of money.

Far too many traders are simply unable to control their downside once they’ve crossed some mental threshold. They just say “screw it” and go on tilt, or revenge trade. Which brings us to the next item on our list…

Each Loss Gets Easier

Yep. The first loss is sometimes the hardest. Then you start to build-up a sort of immunity. Suddenly a losing day is, “just what happens.” Ho-hum. After all, it happens to the best of us!

This is a dangerous thought pattern. If you’re racking up losers, that is the market telling you something. You need to decrease size, reassess your strategies, and stop being so cavalier about losing money. Treat your account like it’s your own small business. Learn to break even.

Amateur Traders in a Professional World

At the end of the day, the vast majority of retail futures traders are amateurs competing in a professional world. It’s very difficult to make money in these markets as a hobbyist.

The futures game is one of the most sophisticated markets in the world. There are very smart people out there who often have advantages when it comes to speed, and institutional knowledge. This is why you always have to be trading what IS happening as opposed to what you WANT to happen, or what you think SHOULD happen. Becoming chained to a position is a recipe for disaster.

This is not to say the situation is hopeless. There are plenty of retail traders that do make money trading futures. However, it’s not the easy path that some of the people screaming at you in YouTube ads would like you to believe. Remember, nothing worth doing is ever easy.