In Episode 2 of the Optimus Future’s podcast, Matt Zimberg, explores ten things he wished he knew before he began trading in the commodity futures and options market. He goes over how his approach to trading has evolved over the years in order to help new traders avoid some of the obstacles he faced. Matt also discusses how he has personally grown as both a trader and independent broker.

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

Episode Transcript

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[00:00:00]

Welcome to episode two of the Optimus Futures Podcast. In this episode Optimus Futures president and CEO Matt Zimberg will discuss ten things he wish he knew before he started trading. Please remember that this matter should be viewed as a solicitation to trade trading futures and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Optimus Futures LLC is not affiliated with, nor does it endorse any trading system, methodologies, newsletter or similar service. We urge you to conduct your own due diligence.

[00:00:42]

Have you been looking for practical advice to take your trading career to the next level? Can’t decide on which platform to trade on? Fearful of the current state of the market? Look no further. Welcome to the Optimus Futures Podcast a place to learn from an industry insider with over 20 years of experience in commodity futures and options. Gain insight to the newest technology, platforms risk management, concepts, trading philosophy and advice about the current state of the market. For futures trading platforms, deep discount trading commissions, overnight margins and instructional videos. Feel free to visit our website at Optimusfutures.com. Now here’s your host, independent broker veteran and CEO of Optimus Futures, Matt Zimberg.

[00:01:34]

Hey guys this is Matt from Optimus futures and on this podcast I want to talk about some things that I wish I knew when I started trading. So I wish somebody actually came to me and told me those 10 things I could probably list more things, but I think the things that I have here are equally important for your development as a trader and something to be conscious of. So in any case I’m going to start and one thing before I start actually, one thing that I want to share with you. I wish somebody was not politically correct with me when it came to trading because at the end of the day, this is money and when it comes to money I don’t want to tell you things that you want to hear. Maybe I want to tell you things you don’t want to hear. Maybe they will be a little bit provocative. Maybe they’ll upset you, but at the same time it will give you a realistic expectation of trading. So the the first thing that I’m going to start out with and again I think I think all of them are equally important, but the first thing that came to mind was that size matters which means the size of your trades will dictate, partially dictate the success that you have. But I would say it’s a big part of it and let me explain why the futures market is very, very leveraged and there’s no need to overly leverage it with too many contracts. Obviously the first thing you’re thinking about when you say I’m going to trade more contracts you think about the potential of gain.

[00:03:05]

But I think the most important thing is to think about the risk. I’m going to make a lot of podcasts here talking about risk, but when it comes to size you really have to determine the right size of trading because I’m going to tell you because of one reason and the reason is is that even if you have the best methodology in the world which of course nobody has, but let’s assume that you have the best methodology in the world you will not be able to implement it if you trade with with a very large size that your account cannot handle. So basically part of developing a good methodology is obviously having the right number of contracts associated with it. There’s also psychological aspects to it. There is a certain size that you’re comfortable with and there’s a certain size of contracts that makes you nervous and you never want to trade nervous. You always want to trade with the right size when you stay calm and you don’t look necessarily at the P/L now, but rather at the market fluctuations and make your decision not based on gains or loss but rather on what the market does.

[00:04:16]

The second thing that I wish somebody came and told me is about two things, which also is the second thing that it consists of two things. One is lackluster periods and negative returns. People who are new to the market think that they can come to the market and consistently have positive returns every month or every week. It’s a myth. It’s very very difficult to achieve. You might have positive as a day trader you might have positive months every months, but I assure you that you can have every day and even sometimes it’s hard. You know over months if you look at people who are money managers like CDs fund managers and you look at track records of 10 years, 20 years some of them that actually lasted that long. You would see that there actually is a pattern that starts to occur. You would see that every month is different. There could be three or four months that don’t even make money. They could be consecutive months that they do make money. So the important thing in all this is to come very realistic to the market and say, OK what am I going to get in terms of return? And in terms of risk? So one thing is you might get into a period which is not necessarily negative. It might be just boring lackluster period. You just trade back and forth back and forth back and forth and there’s nothing that happens and it’s almost certainly because your method is bad because the market maybe did not present opportunities appropriate for your method during that time and it happens to every trader. There are negative returns there are drawdowns and it’s just part of trading. There’s nothing that you can do.

[00:05:58]

That brings me to the next point which is realistic returns. When you trade and you forecast your returns for example, which don’t always suggest to do that. But let’s assume that you take X amount of dollars and you saying I’m going to earn a day this amount of dollars or a week or a month. Calculate your yearly result with that return and ask yourself, is this realistic? Right. So you would see that a lot of people would say, when I say a lot of people I would say sometimes I read forums and read blogs and I see people promote their methods and they’re saying I think I can do it, it’s achievable. Despite the fact that you know it’s astronomical numbers and they’re not realistic. In any case you have to think about realistic results when it comes to trading. The more realistic you are the better you will trade and you will not stop and restart stop and restart trying with new methods.

[00:06:47]

That brings me to my next point that you have at some point you have to stick to your method of people changing methods. Every day every week they go through to three weeks it’s unsuccessful to try not a method and not a method. Guys it’s not going to work that way. It’s just not. You have to choose a method and stick to it. Now whether you have to know when the method is just unsuccessful and you have to know whether you’re just experiencing a bad period. But at some point you don’t want to change methods. You don’t want to go from market profile to Fibonacci. Fibonacci to Elliot Wave, then decide that you’re a long term trader then decide that you’re a day trader, then change platforms. You don’t want to do that. That rarely leads to anything productive. Look, good trading is boring trading. It’s not exciting. That’s the reality and that’s the truth. So what you have to do is stick to the same method. At some point if you believe in that method.

[00:07:54]

So now we have we are going to come to the next point which is Who are you going to learn from. I suggest to learn from pros people actually trade. You will have a different perspective from them about risk and reward and how they make their decisions. Now I’m going to tell you this, to learn about risk and reward. You don’t necessarily have to learn from people who trade. You can have other people who talk about risk and reward and you can apply it in your own trading. For example one of the things that I’ve learned about risk is how venture capitalists work. What they actually do when they have 10 companies that they want to invest in. They actually eliminate, you know what they’re not going to do. So they’re not trying to decide what the best company to invest in is. They’re trying to decide what not to do. And that really gave me a lot of food for thought about choosing a method or trading method. First you have to decide what you don’t want to do. It’s a process of elimination until you get to the point of what you want to do. So learning from pros and learning from people who actually trade actually have skin in the game is very important.

[00:09:03]

Now I know there’s a ton since the launch of YouTube and Twitter and the Internet, there’s a lot of educators out there a lot of them unfortunately don’t trade a lot of them don’t have practical experience. And the unfortunate part is that they teach you things that you cannot implemented teach you things that you want to hear and others want to hear, but there’s nothing that you can do with it brings me to the next point. Trading should not consume you. Meaning that when you think about trading you shouldn’t think about, you shouldn’t get too excited. You should think about how to implement a business plan as far as trading trading as is in itself. It’s a business of decision making. So you know, I know some people get really overly excited about trading not understanding that at the end of the day it’s again all about decision making. It’s not about getting excited. It’s about potentially and I should say carefully here, potentially making a gain, but at the expense of a lot of learning and studying the markets and sitting in front of the markets and taking decisions only when the time is appropriate.

[00:10:13]

So again you know you don’t want to go from a time where you’re overenthusiastic about the market, to the point where you understand how difficult it is. You want to approach it in a very cool manner. OK. Going back to learning a little bit I would say that I wish people told me to learn more from books. You know when I read books as opposed to reading articles and I’m not saying there’s no good articles either there’s very good information and obviously I hope this podcast will help you as well. But I really find that people have really good experience in the markets. They write very lengthy books and they can really help you and again the key is to read the books that are practical from people who have actually done a good job, for example you know one of the books that I read lately was by Ray Dalio. It’s called Principles. He runs Bridgwater the hedge fund and I think that you know I see how he makes, actually he explains how he makes his decisions. Now I’m not saying that every sentence that he says I could adopt to trading, but a lot of the ideas that he has that definitely would help traders understand how successful people think about trading and what they do. Let’s talk for a minute about methods. Methods are basically a way for you to decide when to trade. Now for some reason, there is this belief that systems have or methods I should say, have to be difficult. But the reality is that they are they have to be simple, they have to be defined. So if somebody came to you and asked you how do you trade or what makes you pull the trigger. You have to summarize it in one sentence. If you can summarize it in one sentence you probably have something very confusing over there. So I would suggest to narrow down your method to one sentence that says something along the lines of this when, X happens then I place a buy right, when Y happens then a place sell. When Z happens I get out of the market either at a profit or a loss. This should be it. That’s it. Now over the years I’ve seen people that have lots of screens. I’ve seen people with you know multiple screens and multiple platforms and powerful methods and a Skype chat open and some trading room open. I don’t know if it helps you simplify the process. I just don’t know. I don’t think it does. I think it makes it more complex. And I think it makes a very beautiful visual setup, but I don’t think it’s going to make a better trader. The last thing that I want to tell you about that I wish somebody told me at the time was to choose the right broker.

[00:12:59]

Well guys I’m not objective here, but I run Optimus Futures the way I would want to be treated as a customer which means this, first of all provide the right technology for execution. Making sure that I don’t just go with the most popular thing out there. I’ll give an online obviously names specific brokers but you know there’s brokers out there who have enormous amount of money for advertising and you were exposed to them all the time. It doesn’t mean that they have the best technology out there. It doesn’t mean that they provide you with any advantage over others so the key is when you choose a broker to make sure and there are good brokerages out there would like to believe that Optimus Futures is one of them, but one of the things that’s key for us is really providing technology and execution depending on the customer’s method location of where they execute from. And the way they make their decisions. This is one of the things that I always talk to people about what’s your method. How do you make your decisions? Why do you need to make a decision? That’s it. And based on that I recommend things you know to make it to make that decision making as far as trading simple.

[00:14:09]

That’s it for now guys. This is but guest number two. Those are the top 10 things that I wish somebody told me when I started in the business couldn’t be more honest with you. If you again if you have any questions send it to me General@optimustsfutures.com. I look forward to hearing from you and communicating with you. And if there’s any way I could help your trading please let me know what you love to earn your business. Thank you and until next time.

[00:14:34]

Thank you for listening to the Optimus Futures podcast. Subscribe to our podcast on iTunes SoundCloud and Google Play. You can also find us on YouTube Facebook Twitter and Google Plus all under the username Optimus Futures if you have any questions feel free to send us an email to support@Optimusfutures.com or give us a call directly at 561-367-86864. Toll free at 1-800-771-6748. Once again thank you for listening to the Optimus Futures Podcast.

[00:15:21]

Please remember that this matter should be viewed as a solicitation to trade trading futures and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Optimus Futures LLC is not affiliated with nor does it endorse any trading system methodologies newsletter or similar service. We urge you to conduct your own due diligence.

 

 

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