Overview of trading Strategies currently in use

 OK Boss (changing the name to protect the innocent 😄), I thought I would go over my current thoughts on trading markets and strategies.

  • Markets
    • I moved over to almost exclusively futures in the past few months.
    • Like:
      • Open more than just 0930-1600hrs. Not that I need to trade extended hours, but my stop is in force and can get triggered if an unexpected event occurs.
      • When I have a stop, I expect that it will be the price I exit the trade if I am wrong. Once, in a fast moving market, my exit price was 1 tick different from my stop price. I have found this different from options, as I need to watch the price to get out of an options trade. 
      • When you enter a position, your broker sets a portion of your funds aside as margin, but doesn't take any out of your account. At the end of the day, if you still have a position, the price is marked-to-the-market and an amount is added/deducted from your account, but the remainder stays with margin.
      • Some futures have great spreads, as volume is huge
        • A small trader cannot typically move the market. Only the big guys.
    • Dislike:
      • This is where the big traders play. I am up against some of the smartest traders.
      • Some of the markets are very wild
  • After trying some of the different markets and looking at my results over the last while, I have decided to concentrate on a few. Here is what I have learned:
    • Gold: GC is too big for me to trade. MGC is much more manageable, but it is wild! I had a few wins, but more losers. So, I have decided to stay out for now. Maybe in the future, but not for now.
    • Bonds and Notes: Love'em. Lots of volume, ticks are sufficient size to make trades worthwhile. Due to the volume, bid/ask are typically side-by-side. However, ticks are big on the ZB. I typically set my stop at about $150. For ZN, this is 10 ticks, which allows the market to breathe, but on ZB, it is only 5 ticks, so I get stopped out more often. I had a few good trades in ZB, but overall not enough to keep going. For my account size, I can't give the trades enough room to breathe if I am wrong on initial direction. 
So, after trying different things, I will concentrate on the following for the next while until I feel proficient. This will keep it simple and keep me focused:
  • Setups and Markets:
    • Retracement trade: ZN only
      • Why? Retracement gets me in at a good price, and ZN gives me a stoploss that has some room to work.
      • As I get a little better and if I am in a ZN position for a long time and I want it to run, I will hedge with TN or another expiration month in ZN (if it has sufficient volume)
    • Opening Range Breakout: ZB
      • Why? ORB is a quick in/out trade that seems to have a good probability of success. Use ZB as it will move quickly, and moves are worthwhile. 
This should keep me going for a while. I will continue to work on the setups, follow the rules and keep focused on not chickening out of trades to grab a small risk to reward. To stay in the game, I need to ensure my setups will give me a sufficient risk/reward to keep me profitable over the long term.

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