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Read Many Publications, Watch the Television Business News, and Follow the Consensus of Opinion

This is a surefire way to get confused and lose money at the same time. I call this approach "Edsel trading," named after the infamous Edsel that was designed by a committee attempting to incorporate all of the changes and features recommended by experts and consumers alike. While the Edsel may have been well ahead of its time, it failed miserably as a product. When you attempt to trade on the basis of the consensus of opinion, you'll end up with an Edsel trading system, a system that seems like it should work but doesn't. In fact, my research with contrary opinion indicators strongly suggests that you are better off trading against majority opinion than with it. Futures trading is a loner's game. You must find a combination of indicators and tools that works for you - shut out as much outside influence as possible.

Add to Losing Positions to Average Your Cost

Here's a great method for losing your speculative capital. In fact, it works so well that many traders have virtually guaranteed themselves losses by following this time-tested strategy. The methodology is simple: Whenever a position goes against you, hold on to it and add to it repeatedly to lower your average cost. When the market eventually moves your way, you will come out ahead. The reasoning is very logical in a game where no margin is required and time is not important. But in futures, and particularly in futures options, time passed is money lost. Contracts expire, margin calls continue, and the trend most often continues in its existing direction. While you may be right in the long run, you will most likely be broke in the short run.

Take Your Profits Quickly and Ride Your Losses

This is another popular strategy among losers. To see why this approach is so popular, let's examine its psychology. Most traders are anxious. They are so worried about the ego-deflating experience of being wrong and losing money that when they have a profit, they are afraid it will not last. They are inclined to jump out of their profits quickly to get the gratification of knowing that they have banked the money and that the market cannot take it back. However, when there is a loss, things are quite different. Traders simply cannot admit to a loss. There is the perennial hope that things will eventually get better, that the market will turn around. And each small turnaround rewards the trader for hanging on. Unfortunately, it is often a classic case of one step forward and two steps back as the position continues to erode.

Start with Limited Capital and Attempt to Parlay It into a Fortune

This is the trader's Utopian dream. The Horatio Alger story is still the image that inspires traders to take their shot at making it big in futures trading. Most traders begin with limited capital, seeking to hit the one big trade that will propel them to success. However, the odds of doing so are slim. The simple fact is this: The less you start with, the lower your odds of success. It's a matter of logic. If you're hoping to get on board that one big move, it may take 10 consecutive losers before the winner comes. By then your capital could easily be depleted, and you'll miss the move you were hoping for.

My advice: Be realistic. Begin with a good capital base. Be prepared for numerous small losses. Expect to be wrong 5, even 10, trades in a row before you hit a big trade. When you do hit a big one, don't get out too quick. Remember that the less you begin with, the less likely your chances of success.