E-mini trading and the Iraq exit strategy

Suppose you are an e-mini day trader, as some people are or inspire to be these days. What's the most important question you should ask before entering a trade? The answer: how to exit it. This may apply to more than just trading, but in trading, especially day trading e-mini futures, not knowing the answer to it may cost you a lot, a whole account, in fact. Plus a marriage, if you are really unlucky.

Learn from the best, losers, that is, such as George W. Bush, who declared "mission accomplished" and yet some 8 years later this is still to be done or accomplished. Yes, some 8 years later, someone has yet to make a wise decision on how to exit this war. You see, President Bush did not have an exit strategy from what was obviously quite a misguided war, and if you don't have an exit strategy from your next trade, especially a misguided one, you too may become the butt of jokes. And you may become known as the guy without an exit strategy.

I am joking, but the matter is really serious. If you don't know how to exit the trade, it's simply better not to enter it. There are two basic ways to exit the trade: when your target is hit and filled, and when your stop-loss is hit and filled. Sometimes orders don't get filled, so if your target gets hit but the exit order is not filled, you are plainly unlucky. The opposite holds true if the stop-loss is not filled, but that happens too rarely to count on it.

These are the two simplest ways the exit takes place and it is the latter, exiting with a loss, that is much harder, for reasons rather obvious: emotions and ego. Yet, because it's harder, it needs to be mastered really well. You cannot afford yourself to adjust your stop-loss indefinitely. Yet, this seems to be the current US exit strategy from Iraq, and obviously the only effect of it is the increasing cost to the taxpayers. Don't count on the taxpayers in your case, though. You are not one of those "too big to fail."

There are other ways to exit besides those two, and many times you do need to rely on those. It's important to keep them simple and consistent so that you avoid confusion. You need to have some rules for it and stick to them. If you ever decide to override them, make sure it is exceptional and you know where to place your next stop-loss, but then again, it's probably better to make it wide enough and take the first loss because as they say in trading circles "the first loss is the best."

To those totally new to trading e-mini markets, let me add that e-mini futures are electronically traded, smaller units of "full-grown" futures contracts whose popularity is especially high among retail traders with limited funds. You don't need much money to open and fund a futures account these days. Some futures brokers, especially those specializing in retail emini traders, offer margins as low as $500 per contract for intraday trading, which means that with about $3,000-5000 in your account you could be ready to give e-mini trading a fair try.