5 Behavioral Traits of Successful Futures Traders

Originally published at: 5 Behavioral Traits of Successful Futures Traders | Optimus Futures

This article on 5 Behavioral Traits of Successful Futures Traders is the opinion of Optimus Futures.

How do you define success when it comes to trading futures? What makes a successful futures trader? As obvious as the answer may seem, some traders tend to muddy the issue by bringing up other factors that are also crucial to trading–e.g. knowledge, experience, development capacity, psychological traits, etc. As important as these factors may be, they are secondary, at least in terms of answering the question.

When it comes to measuring success in trading, there is only one win condition: that over time, your gains are significantly larger than your losses .

>> You may have more losing trades than winning trades, yet your upside payoff is larger than your downside results;

>> You may have a narrow understanding of trading tactics, yet your simple approach gets the job done;

>> Your trading approaches may often have been permanently disrupted by large-scale shifts in overall market dynamics, yet your adaptability keeps you net positive despite the changes that may have made your previous approaches irrelevant.

Short Trading Psychology, Long Praxis

If successful performance can be linked to certain “behavioral traits,” there’s a strong chance that these behaviors may have less to do with psychological matters than epistemological ones.

In other words, they may have very little to do with the experience of emotions (such as fear and greed) and to some extent, biases that bear down on sentiment, and more to do with the way in which we form practical knowledge.

Besides, no matter how good your characteristics as measured by the principles of trading psychology, the fact remains that if you can’t think your way through a challenge, then your discipline or positive sentiment might even serve to make things worse (imagine being disciplined enough to stick with a system that was flawed to begin with or no longer relevant in the current market environment).

Hence the following five traits we present are not your typical trading psychology tips. We’re not going to talk about the importance of discipline, patience, mental toughness, planning, or anything else that might be too obvious.

Instead, we’ll discuss the traits that may lead to sound ideas. We’ll explore the hard stuff; the bitter pill; the sobering mirror that many traders don’t want to look into as they may actually discover themselves.

1. An Aptitude for Critical Thinking and Skepticism

If you want to see things with hyper-clarity, or at least understand how you see things that appear to be hyper-clear, then you might need to start with a clean slate; that is, abolish every assumption that you have about a given matter. Start from scratch. Build your knowledge from the ground up. Reinvent how you see a given topic in terms that only you have verified and can accept.

After all, that’s what Descartes meant when he wrote, “I think, therefore I am.” He was undergoing a project of doubting everything in order to rebuild his base of knowledge and perception. After doubting just about everything, he realized that he cannot doubt his own existence simply because it would have been impossible for him to “think” if he didn’t first “exist.” That was his ground level, to put it rather simplistically.

When it comes to trading, a highly speculative activity, a trader who thinks critically may realize that s/he is holding many assumptions about the markets, whether true or false, practical or useless, relevant or irrelevant (e.g. fundamentals are evident in the price patterns; correlations are an accurate measure of price deviations; price always revert to the mean; gold always rises when the dollar falls; etc.).

If you can’t thoroughly question your assumptions about anything market-related, you won’t be able to adapt to situations outside the norm.

You may be operating from a static model that can easily collapse amidst a dynamic market environment. After all, markets are dynamic. And a dynamic environment requires not only adaptability, but also a willingness to learn new things and to discard or set aside things that are not pragmatically relevant to the new environment.

Takeaway: Since trading is a highly speculative activity in an ever-changing dynamic environment, successful traders approach every perspective and approach with a healthy dose of critical thought and skepticism in order to remain adaptable to the changing environment and to re-discover what really works and what doesn’t.

2. A Healthy Respect for Randomness and Risk

Have you ever created price charts using a random number generator on Excel? If you try it enough times, you may find yourself unpleasantly surprised. If random meant 50/50, then you might be shocked to find out that a random number generator can produce a clean uptrend, downtrend, head and shoulders, symmetrical triangles, cup and handle patterns, etc.

Other times, it may produce a chart that looks like a sideways market or a trading range. But the fact that it can produce clear technical patterns should concern you a bit. What if you are trading a cup and handle in a live market, and it works out? You may be thinking that you were right, when it’s quite possible that in that particular case, the results were random (though there’s no way of verifying its state of indeterminacy).

Some long-term investors who make fewer transactions than most traders may have become successful due to serendipitous circumstances. Such was the case leading up to the crash of 2000, or 2008, or today’s market. When you buy a diversified portfolio of stocks during a bull market and hold for a long time, your chances of accumulating a big return may be greater. This doesn’t make the investor a genius, but it made him or her successful because s/he followed sound principles (avoid weak stocks, avoid buying and selling too often, avoid over-concentration, and buy during a bull market).

But when most investors try to duplicate that performance on a short-term trading basis (even worse if they’re day trading futures), they often end up killing their trading account. Why? They encounter more randomness and noise, not only in the markets they trade but in the methodologies they use .

Don’t attribute your trading success solely to skill, otherwise you may be denying the chance factor. And if you do that, then you might not see it coming when chance eventually works against you.

The big risk here is that you fail to exercise vigilance over risk if you think that your trading success is 100% due to your own speculative prowess. You may think, “why exercise caution when my trading approach works so well?”. It always does, until it doesn’t.

Takeaway: Randomness doesn’t always look random. And when you find success in a given trade, it might be the case that success just happened to find you…out of pure chance. Respect randomness and respect risk. Remember: if there is a 5% who consistently make money in the markets, the traders among the 5% today may not be among those in the 5% tomorrow (but there may still be a 5%).

3. Knowing What Not to Do May Be More Important Than Know What to Do

Today’s society seems so obsessed with the affirmatives rather than negatives, with answers rather than questions, with solutions rather than problems, with defining what is rather than what is not.

Yet it remains that much of the time-tested ancient knowledge that remains with us today takes the opposite approach–an approach Via Negativa , or defining something according to what it is not rather than what it is. For instance, the 10 Commandments…”thou shalt not …”. Or the ancient version of the Golden Rule, “ do not do unto others…”.

What does this have to do with trading? Quite a few things, actually:

  • It’s not how much you know that matters but how well you know the few things that work for you;
  • By extension, learning is always encouraged, but unlearning what’s not necessary, practical, or effective may be just as helpful if not more so;
  • Seeing too much data can hamper your decisions, whereas having a narrower approach with strong money management may increase your odds of success; and
  • Between a trader who possesses encyclopedic knowledge of trading strategies and a simple trader who knows only a few approaches but has an adaptable demeanor, the less knowledgeable trader might do much better.

If quality of knowledge is more important than quantity of knowledge, then knowing what not to hold on to (and by extension, what not to do) may be more important than accumulating a clutter of knowledge. Online futures trading comes with the perks of information accessibility, but that can often lead to information glut.

Takeaway: It’s all about addition by subtraction–adding to the quality of your tools by subtracting what’s irrelevant from your toolbox.

4. Seeing the Big Picture

Here’s a scenario: a trader sees a perfect pattern. He sees what’s happening, at least from a technical level. He pulls the trigger. And then the market jumps three times its normal true range for that day. Let’s assume he takes a major loss. Somehow, he forgot that the FOMC announcement was coming out that day.

Here’s another scenario: an investor (not a trader) decides that a particular stock is undervalued, its fundamentals strong. Most analysts are bullish on the stock, its company’s earnings were overall positive, its guidance was net positive, yet the stock was tanking, and she bought into a “falling knife” scenario. And she sold her entire position a few points away from a major technical support line, the “correction” itself hardly a 30% retracement from its previous trough. The stock eventually went up, but she no longer held the position.

In the first scenario, the trader got sideswiped because he didn’t take into account the scheduled fundamentally-driven report. In the second scenario, the trader had no knowledge of the technical context surrounding her asset purchase. Both examples describe scenarios in which the trader and investor don’t see the big picture, either fundamental or technical.

If you trade technically, it might be foolish to avoid the bigger fundamental context. If you trade fundamentally, it might help to understand the price action context of that which you trade.

In other words, try to see the bigger picture.

Takeaway: We all get sideswiped by unexpected developments. But to get sideswiped by an event that can easily be seen, anticipated, or commonly observed and suspected is a bit inexcusable.

Want to be a more successful futures trader? Try to see the bigger picture in every market context you trade.

5. Find Your Holy Grail Without Believing in the Holy Grail Myth

There is no system-of-all systems. Nothing of the sort exists. Therefore, there is no “holy grail.” At least, in the form that many traders seek. Yet, some successful traders will have found something that, if they were to describe it, might convince other traders that what they had found is the holy grail of trading methodologies.

So, are misguided traders are looking for something that doesn’t exist, or are they looking for something that may exist, but not in the form which they seek? Warren Buffett seems to have found something. Ray Dalio seems to have found something as well. Jim Rogers and George Soros seem to have found something that works for them. And that’s just to name a few of the bigger and more famous traders/investors.

What have they found? We often tend to miss the fact that what makes a trader is not just the set of internal characteristics and external means that he or she employs in the course of trading. It’s the way both resonate within a trader’s natural inclination. It’s not the trading system, but rather, how (or if) that system and all it requires resonates with you as a trader.

Not everyone will have a knack for day trading; some might be better off swing trading instead. Not everyone will make a good technical counter-trend trader; but they may have the inclination to be a fundamentally-based contrarian investor. Not everyone will make a good momentum trader; yet some might discover they have a knack for spread trading or statistical arbitrage.

The holy grail doesn’t exist in general form. But on a personal level. If you find something that works with you–your natural tendencies, inclinations, risk tolerance, and more–and if it truly does work for you, then that just might be your own personal holy grail. What works for you might not work for you forever, which means you will have to constantly adapt in order to find it again.

But the main point…

Takeaway: What works for you might not work for someone else, what works for someone else, might not work for you. Focus on what works for you in terms of your total means and capacity.

Don’t follow others. Eventually, you will have to forge your own path. And once you find something that works for you on a very practical and realistic level, maybe, just maybe, you’ll find success in trading.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.


One of your best yet Matt (and there are many of them.) Cheers.


Thank you for your kind words.

Much Appreciated!

Matt Z
Optimus Futures

1 Like

Brilliant article.

Having a healthy respect for market randomness will help keep traders humble and manage risk.

edit: additional question @Mod-MattZ

Do you think the randomness will play in the decision to either use a limit order to enter vs waiting for ‘confirmation’ of a candle. Is the confirmation really giving an edge if the outcome could be based on chance? or do the odds improve waiting for confirmation?

Any thoughts?


@jubael_haque What you want to do is develop skills and that most of the “normal” crowd does not have, and one of them is patience. Yes, you should wait for the confirmation of the trade, and that is because what most traders will not do. Patience is your edge over many others that are impulsive and let their (misguided) intuition dictate their trading. If the set up requires completion of a candle, wait for that to occur. That applies to every trade you do: Setup, Trigger, Execution.

Limit orders are not the opposite of setups if you know where the set up will occur, or you can set the limit order after the setup completed if the market is not too volatile, otherwise enter at the market.

There is an element of randomness in the market place. But our intention in mentioning was to emphasize that it is an element, not a rule-based system a trader could integrate into his/her trading system. Random element means that whether you have a winning trade or a losing trade, randomness, could have played a part in it. It could have been a news release, a trade placed by a prominent trader or any event had a role in the movement of the market. In the long run, your discipline and patience will play a big part, in our opinion, in your success. This may, of course, take a very long time.

Even when you will consider yourself a pro, you will continue to learn and grow and evolve.

We hope this helps.

Matt Z
Optimus Futures

1 Like

The above text immediately made me think of the application of the First Principles [ wikipedia: A first principle is a basic, foundational, self-evident proposition or assumption that cannot be deduced from any other proposition or assumption…] which is so useful when analyzing a validity of any idea one tries to research and “take to market”, be it a trading approach or a product or new company (Elon Musk, seems to be the current wide adopter of these).

Interestingly enough, I recently thought of a way to attempt to temporarily discard and “set aside” all of the assumptions regarding the markets from what I know through experience of trading for 2 decades, in order to become a freshman who is open to receive and download a set of new inputs and therefor learn a new way to trade or experience trading. In my case it has to do in switching from momentum trading to scalping and more of market making (providing liquidity).

“abolish every assumption” would mean to “forget” every loss and pain associating with certain periods or trading soaked with losses due to either cold period of a trading approach, lack of adherence to the self-imposed risk management rules (luckily not this one for me) or any other set of circumstances that may have caused a loss streak. Of course a series of losses should and better teach and reveal a certain tendency of a system during a certain market type and aside from the need to maintain a certain risk capital level, being able to strategically ignore and “forget” about the recent losses, may prove useful while adopting a newer, presumably better trading approach.

This is particularly true (IMHO) when it comes to testing a strategy on your own and not take words and metrics posted by others, as most of the time each trader shall change, and adapt any method to their own style, personality and hence what may work for one may be a total disaster for another trader.

I know of traders who get chewed up when trying to scalp ES while others miss big trades even though they had a series of amazing entries. The latter started thinking they got a methodology to enter the trades for an intraday momentum plays, but once they see a little green or faced with a small regular pullback, they jump the gun and run for cover to close the trade green. Of course the trade may end up working out had they stayed with it. Stories like these are countless and the markets keep repeating the cycles. It’s up to us to being able to adjust early enough and being able to call what kind of market are we currently in.

Happy Trading

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