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NinjaTrader 7.0 (seven) Download, Demo and Review is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

As you know, we at Optimus want to share with you strategies to help you become a better trader.  There are “strategies” to avoid, and some that need to be implemented. Today I would like to share the one strategy to avoid:

It’s the last trade of the day, the one that could potentially take away your profits or even turn into a small loss into a substantial loss.

Typically, this last trade comes in the form of “intuition” and guessing:

Scenario 1: Profitable trading day: TraderJoe had reasonable gains on the day, and decides to throw in just one more trade. The sheer psychology of making more money is very attractive and makes sense, and so TraderJoe decides to take another trade, and maybe even increase the number of contracts to make the “killer trade” before the day ends. Typically, when the trade turns into a loss, Trader Joe starts relying on “hope” because the thought of losing the entire day’s gain is unbearable.

The losing trade takes all the gain away and some more…at times turning a profitable day to an upside down day.

Scenario2:

Losing trading day: This is where TraderJoe did not have such a great day, and decides to get his money back. Typically losing trades consist of consistently shorting bottoms or trying to buy tops. TradeJoe decides that the bottom or top must have been reached despite numerous stop outs. Again, regardless of all the literature supporting the notion that tops or bottoms cannot be accurately identified, TraderJoe, again going by intuition, increases his exposure to make back the losses. The logic of increasing the number of contracts which requires a smaller move to get back to breakeven rarely ever works out in his favor.

Sometimes good trading starts with all the things you should know not to do.

Leave your comments below if you have any; please share info that could help all of us grow as traders.

Best,

The Team @ Optimus

The Last Trade of the Day is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

Today’s futures traders face a variety of trading platforms that could accommodate the most sophisticated and astute day trader all the way to a beginner day trader. Never the less, it is quite a challenge to choose a platform that is appropriate for you. Why? Sometimes programmer and interface designers try make educated guesses as to what traders look for, so there are platforms that are just purely “hard” as far as their functionality, yet at the same times, there are those who hit the mark and created an interface that is easy to use and the navigation on it is quite intuitive.

There are things that should be important to all traders, such as: Stability of platforms, execution time, and stable data feed, and above all good support from the tech support desk.  But, it is also important that you choose a platform that meets your needs as a trader: day, swing or long term trader.

Also, choose an interface that you feel comfortable with and above all meets your trader’s needs and experience. Don’t just go with one that is considered popular…go with the one that meets your needs. Having more bells and whistles does not mean “better trader” or “profitable trading”….go slow…you can always switch from one to another.

The following are platforms that we use at Optimus Trading Group, and we have listed them so you can choose the ones that are appropriate for you.  There are plenty more platforms out there, but we feel that within these you would be able to find what you are looking for.

The following link shows a complete charts review of Futures Trading Platforms

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

Futures Trading Platforms Comparison is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

At some point every traders asks himself whether he should keep on trading by himself, attempting to improve his own methodology or perhaps consider whether he should  outsource a service to enhance his/her return.

Although the trader can use a number of services from email trade recommendations, real time indicators and/or a combination of a few, we would like to specifically compare the difference between automated futures trading strategies versus self directed trading.

First, if you are a winner in trading, and you are able to win consistently over long periods of time, there is no reason for you to seek another trading method. Maybe you can change platforms, maybe “fight” for cheaper commissions, but it’s not worth experimenting with other methodologies. Naturally, if you have additional risk capital, you can try and diversify, but end it on that.

• Automated trading strategies typically do not change the number of lots when traded. This is a very good thing when it comes to trading, as most self directed traders change the number of lots according to their success and failure.  Hence, increasing their risk substantially when they do well, yet trade less during drawdowns, when it’s a natural course of things.  This affects performance substantially.
• The cost of commissions could be substantial less because of two factors: as mentioned above, the number of lots increases and decreases constantly which adds a substantial cost of transaction.  Although the commissions on self directed could substantially less that automated trading services, from our observation automated trading still reduced the cost of transactions. Naturally, you should be checking the frequency of any system you are presented with.
• Slippage. Although this is the “cost” that most traders accept with trading, it’s substantially more prevalent in self directed trading.  Because of the reason mentioned above, frequent trading and large lots, the cost of slippage is enormous.  Just to keep you in perspective, the slippage could be substantially more than any commissions.

These are some of the facts considering when it comes to comparing the two services.  There are no ways to guarantee success, but there are substantial ways to decrease risk and transaction cost. Consider Automated trading strategies if you lack the time, disciple or both when it comes to yourself-directed accounts.

Compare Cost: Self Directed Trading Futures Trading or Automated Trading Strategies? is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

Besides finding a good and winning methodology, there cost of commissions, platforms and quotes could be quite a burden on account as far as cost.So here are the best ways to save on execution, platform and other trading costs:

1) If you are using an analytic charting and trading tool and pay subscription for it, you might not need a platform that requires charting.  Why get futures and commodities charting twice and get charged for it?

There are many platforms that are free that don’t require fees at all.

Try Vision Express that had a great interface and easy execution order entry. Also, try Rithmic R-Trader if you are an Emini SP trader and require fast execution. This is a great platform also for those require spread trading.

Keep in mind that the exchange charges trading technology companies for the use of quotes if it’s implemented on charts.

2)      Ask “how much is a phone execution?”  There are a number of things that can happen when you trade online, you might not be by the computer, your internet might be down or the platform might be down.  Some brokers take advantage of situation like this when you have to call in. This is how they make up for the “discount” rates they offer. Ask what the call in fee is.

3) Commissions – Ask a broker specifically which platform has the cheapest commissions. Ask for a selection and decide which one is the best on considering your trading preferences.

4) Feed – Ask what is the feed and the speed of the platform. If the platform is slow, your cost would be the slippage that you pay on each transaction or unfilled orders.  Obviously, you also want to be sure you have good connectivity on your end.

How to Save on your Futures Trading? is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

Trading the Emini S&P Strategies requires a methodology to trade successfully, but there are other elements and factors that traders should not overlook. These are not elements that would help you choose a direction, but if you adhere to these rules, it would help you focus on your methodology only.

1)      Decide which time of the day you want to trade. Some traders trade during the first one hour or two of the early session. Some feel that gives them the best chance as oppose to day trading the whole entire day.  In the early morning sessions you will find there is more liquidity due to institutional flow, as oppose to the more retail flow that could dominate in the afternoon hours.

2)      Price Feed-here is what you are looking for when it comes from the exchange: unfiltered data from the exchange.

Here are 2 great platforms for it:  NinjaTrader and R-Trader Rithmic

3)      Back up broker – platforms will go down. It’s not “if”, but “when”. It’s technology, and it’s never perfect. You will need to know a broker, and or a trade desk person who can help you immediately help you. The “down” time can be because your net connection went down, or the data is down, it’s irrelevant. But, being ready and establishing a rapport with someone who can immediately tell you where you stand, is priceless.

4)      Stability – Go with a platform that is commonly used by day traders, and is commonly discussed amongst traders. You can find it on forums, discussions boards, etc. This is not a guarantee, but the more know platforms would be more accommodating for most traders from a feature and a stability stand point.

5)      Be conscious of commissions- Single dollars might not seem a lot, but it adds up pretty quickly and can have a tremendous effect on your trading results. Save! Save! Save!

Commissions should be competitive, but your level of service, frequency of trading should all be all taken into consideration. Don’t expect to negotiate unless commissions do have a tremendous effect on your trading.

6)      Study and Decide- What methodology best fits my personality? Day trader is very analytical and requires strong precision, while swing trading looks at a bigger picture as far as analysis. Also, day trading requires being “glued” to the screen a bit. Be objective about your time availability.

E-mini Day Trading Strategies – What Do Traders Overlook? is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

Before you go and click on all the ads that advertise for Emini SP Brokers, here are a few guide lines that would help you to choose one:

1)      Software Selection- Choose a broker that has multiple selections of futures trading software.  In the event one is too complex or too simplified, you can easily switch between one or the others.

We recommend using NinjaTrader Broker as a starting point because you can custom makes it to your needs and requirements. You can trade from both the DOM (Depth of Market) and/or the charts.

2)     Discount Commissions Broker – Does not matter how you slice it or dice it, it is very important that commissions will not eat into your account. A reasonable commission fee for Emini SP is in the $4.00 to $4.50 Range depending on volume and frequency of trading.

3)     Tech Support – All online platforms at some point could experience a technical malfunction. It is important that you could immediately get a hold of your broker to close or report your positions in real time.

4)     Reasonable day trading margins – it is important that you get access to reasonable day trading margins to utilize your capital correctly.  BUT, don’t utilize every single dollar in your account to over leverage.  We can have a whole discussions as to why it’s important not go with brokers that offer margins that are too low, we wrote an article about that here:  Day Trading Margins we recommend to use 1000 per contract to 2500 depending on your experience of trading.

5)     Use your intuition about the people you are about to do business with…call and speak with a broker first. He will be the guy that you will a keep a rapport with over the years….so make sure you have a common language.

How to choose an Emini SP broker? is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

I have gathered a list of futures and commodity symbols for Twitter.  I will try to add to this list over time as Twitter would add to their list. I obviously would need your help, so on the bottom feel free under the “intense debate” section to leave me with any new symbols as they become available. from my short experimentation, you could put the symbols in capital or lower case.Adding a $ sign in front of the symbols works as well.

Also, I highly suggest to use these terms in STOCK TWITS www.stocktwits.com, rather than in twitter itself. They have a good community of traders, who collaborate via twitter or twit via stock twits directly. Some of those guys are professional traders who share great ideas.

You can trade all these futures with us at Optimus Trading Group www.optimusfutures.com

Equity Index

ES_F Emini S&P Futures Index

NQ_F NASDAQ 100 Futures Index

DJ_F Dow Jones Futures Index

YM_F Mini Dow Jones Futures Index

EMD_F –  E-mini S&P MidCap 400 Futures

TF_F –   mini Russell 2000 Futures

Metals

GC_F Gold Futures

SI_F Silver Futures

HG_F –   Copper Futures

PL_F –   Platinum Futures

AL_F –   Aluminium Futures

Energy

CL_F Crude Futures

NG_F Natural Gas Futures

Debt Instruments

ZB_F –  30 Year U.S. Treasury Bonds Futures

ZN_F –  10 Year U.S. Treasury Notes Futures

Currencies

6C_F –   CAD/USD Futures

6S_F –   CHF/USD Futures

6B_F –   GBP/USD Futures

6N_F –   NZD/USD Futures

6M_F –   MXN/USD Futures

6E_F –   EUR/USD Futures

6J_F –   JPY/USD Futures

Futures and Commodity Symbols for Twitter and StockTwits is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

By: Matthew Zimberg President, CTA

It does not matter if you are a self-directed trader, use an automated system of your own or other vendors; there is one key factor behind it all:

Methodology + Execution=Results

The purpose of this short description is to discuss trade execution which many investors/traders lack information about. Initially, the entire focus is on the Methodology and obviously the profits and/or losses behind any system depend on its methodology, and its logic in analyzing past behavior over a given time-frame.

However, proper execution of a given methodology can be a factor in contributing to improve or worsen a system’s performance. Many brokers and system developers talk about slippage, but there are many other factors that can drive down the performance of a system.

We, at Optimus feel that if a brokerage firm advertises the use of automated trading systems, they should at the very least meet the following criteria:

Personnel:

Anything that is mechanical, software driven and/or relies on any type of technology will experience down-time.  It’s a question of “when” and not “if”. The personnel has to be knowledgeable and ready to either stop the system, and/or switch to manual execution to offset or trigger any positions.  Familiarity of the staff with the different software and trading programs will allow a fast response time and smooth transition while the automation software is once again functional.

Fast and uninterrupted Internet Connection

When a signal is generated and a trade needs to be executed, communication must be transmitted at lightning speed to the exchange. Since most orders are “At the Market”, it needs to get filled ASAP. The difference between where the system should be executed theoretically and where it is executed in real life is called Slippage. The goal is to minimize slippage.

Back Up Internet Connection

Although a home based internet connection is connected via one line, it should be noted that a business should have a minimum of two connections. In the event that one drops, the other will pick up the connection.  We at Optimus have created a “Bonded T1 Lines” where we have two T1 connections in case one drops the other will pick up. In the event that both drop, Optimus has also a cable line to pick. The connectivity throughout the day will alternate between those services that have the highest speeds.

Electricity Backup

It is advised that every computer will have individual back up battery in the event there is an electricity shortage. This would allow alerting the necessary parties that power needs to be restored. Ideally, there should be an offsite trading facility to transfer the entire operation to while the backup provides this temporary solution.

Signal Generation vs. Order Generation

This is something that traders need to grasp. There are platforms that are being used for order generation, but they don’t actually fire off the trade to the exchange.

Why is this important for you? Because communication, speed and interaction between the two sides may have negative consequences on your trading.  The execution machine and the order generation have to communicate at fast speeds for accurate execution while they are both connected at all times.

Why? Trading systems are being written in code, sometimes the code has to be on one machine while an order execution is attached to it. Let’s use an example.

TradeStation (TS) is a highly recognized platform for traders and systems developers because it allows the use of Easy Language which is a very common programming language for traders. However, TS could be used as a brokerage or you can simply use it as a platform to generate signals. You can hook up your TS to an execution machine of your choice. We for example, use NinjaTrader or TradeMaven, which are the execution side to the exchange. Essentially the two machines are “talking” to each other on the same server, while the execution machine fires off trades to the exchange as the methodology dictates.

Data Feed and the Execution Machine

There has to be a data feed coming from the exchange in live stable and streaming manner.  Whatever instrument you choose to trade it must feed both the signal generation machine and also the execution machine. Some data streaming are better than others. We at Optimus use institutional grade quotes such as CQG and Rithmic.

In Summary

We have tried to provide you with the most basic elements that a broker executing systems trading should have at his disposal. At the end of the day, a brokerage in this field also has to be highly forward looking entity seeking the best solutions for its trading clients.

Please call us at your convenience if you have any questions. 800 771 6748 Open a Futures Account for System Trading Here

Best,

Matthew Zimberg

What can your broker do to create a top notch facility for automated trading execution and WHY you should care? is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders

The competition on the Emini SP futures contract has become so fierce, that futures brokerages have decided to “utilize” a strategy where they are simply “killing” future (no pun intended) futures traders by proving margins that are against common sense. Now brokerages provide $500 day trading margins for the Emini S&P which is one of the sought after instruments by day traders.

Essentially, a trader with $5K, could trade up to 10 contracts.
Let’s do the math: if a trader loses more than 5 full points ($50 per point), its:
5 pointsX10 Contracts x $50 a point = $2,500 (50% of $5,000)
How long does a customer last with this mentality of trading? A week?a month?
Does a trader have a chance to withstand drawdowns in his/her account?

New traders, always look at day trading from the reward side. Trade more contracts; go for less points, etc.
But, brokers should warn new comers, what day trading is all about, and how difficult it is, and how carefully they should proceed. It’s called fiduciary duty!

Traders, STOP being attracted to these brokers. You have great trading platfroms in the market place, good commissions rates, and above all you have the chance to develop your skills as a trader without being “pushed”.
Everything starts from common sense. Do what is right for your capital, not your greed factor.
I think there should be regulatory rules when it comes to day trading margins. Just a thought, but that’s not my jurisdiction.

Trading with $500 Day Trading Margins for Emini S&P Futures is Idiotic! is a post from: Futures Trading Blog for Independent Self-Directed Traders and System Traders