Trading Reflections - April 07, 2017

My own belief on developing an arsenal of strategies for varying market conditions has turned out to be very useful.  By arming yourself with knowledge, you're better prepared to cope with different sets of circumstances and challenges.  It's no different than learning to manage experiences from childhood to later stages in life.

I tend to favour trading options on futures because I'm able to design:

  • Limited risk strategies
  • Trades with low margin
  • Trades with a theoretical edge (volatility)
  • Adjustments if needed
  • Spreads with positive time decay
  • Focus on fewer assets / markets
  • Trade higher time frames


List of Courses & Materials


Utilizing trade adjustments with options can offer a second chance at turning a failing trade around if your initial view isn't panning out. Keep in mind that too many adjustments can wither profits.

Option spreads with positive time decay allow you time to wait for market moves without your position eroding from negative time decay as with outright positions in vanilla calls and puts.

Trying to make a living by guessing intraday direction on futures alone can be pretty stressful although there some traders who do quite well.

As a trader, you need to make decisions based on where you are comfortable. Rather than a one shoe fits all approach, every trader has their own risk tolerance and opinion. My opinion is you're better off finding an approach to trading that is suitable for you ... rather looking for an off-the-shelf guru to copy.  

The alternative is simply giving control of your account to an advisor.

Keep in mind, trading decisions are centered around a view or opinion -- of both market conditions and your risk. Copying another's framework of opinions (a systematic black box) doesn't ensure the same success.  I'd rather put my hard earned dollar on my own frame of views.  At the end of the day, I'm held accountable for my own decisions.

General Considerations:

Trading isn't simple. Understanding how you want your sandbox designed before playing isn't a bad idea.  Following are a few suggestions on exploring tools based on your answers below.

  • What trading time frame is the best fit for your lifestyle?
  • Mechanical, discretionary, hybrid methodology preferred?
  • Are you more inclined towards directional or neutral strategies?

Consider a Software to Build Your System

You might consider a software like TradeNavigator for technical analysis and system development. It's an inexpensive way to access charts and programming where you can create and test systems with many technical studies.

You can practice simulated discretionary trading using instant or streaming replay.  Or, backtest and build your system on different market environments over years of historical and intraday data.  Systems can be designed with automated trade execution on underlying or intra / inter-commodity futures spreads.  Many technical studies have been built in and assistance on programming is available.

TradeNavigator offers great support and is a powerful software to develop technical based systems for discretionary or mechanical trading at a reasonable cost.  It's also a great way to devise and manage outright futures trading or inter - / intra - commodity spreads.

You can sign up for a trial here and we'll help schedule one on one training. If you come up with a system, you can simply describe it in an MS Word doc and get programming assistance.

Consider Futures or Option Spreads

Another alternative if you're interested in options trading is OptionVue software.  I'd highly recommend this as a professional grade option analytics software with our online course.  If you schedule ACE Strategy sessions with us, you'll learn how to use the program.  We'll help walk you through enough to get started on your own. You'll also learn how to backtest financial futures and options strategies.

Rather than take on too many different things at once and overwhelm yourself, 

  • Day trading futures can require higher margins and depending on volatility could require constant monitoring to optimize profits or manage risk. Consider a systematic approach.

  • Futures & Option spreads have the potential to offer limited risk and lessen the impact of intraday volatility with lesser margin requirements.