Online Futures Trading Archives • Page 59 of 69 • Futures Day Trading Strategies

Posts in Category: online futures trading

Risk and SPAN Margin in Futures and Options Trading

 

You hear it over and over again as a trader, and it takes many different forms: “Money management is more important than great entry signals”, “The market can stay irrational longer than you can stay solvent”, “It’s more important to manage risk than to generate profits”, and so forth. So how do you put this advice into practice? I won’t propose a general theory of risk management here, but instead, I’ll discuss one helpful tool you can use as a trader of Futures and Options on Futures: the SPAN risk algorithm.

What Is SPAN?

The name stands for “Standardized Portfolio Analysis of Risk”, and it was developed by the CME in 1988. It is a scenario-based algorithm which attempts to compute the maximum loss your account might reasonably incur within one trading day. This amount is what the exchange requires you to hold in margin, or “performance bond” as it’s also called.

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How Lack of Trading Discipline is Killing Your Performance

 

Trading Discipline, do you have it?

How would your trading account look like if you hadn’t taken all those trades you knew you shouldn’t be in in the first place? Traders are often much closer to finding their market edge and trading profitably than they think. The missing piece is not a lack of knowledge about what to do, but the inability to follow a disciplined approach and do what they know they should be doing.

The good news is that developing discipline is usually much easier than developing a better market edge. This article will show you exactly what is needed to take your trading to the next level.

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Knowing what to do and doing it

In trading, like in most other professions, it comes down to knowing what to do and then doing it. This statement consists of two parts: “knowing

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Is algo trading affecting discretionary trading profitability?

 

Will the Algo-firms and the billion Dollar High-Frequency Trading (HFT) models soon take over the financial markets and make human traders obsolete? If you are a trader, you have probably asked yourself this question before. HFT and computer based trading is the new, omnipresent “threat” which traders believe is turning trading into an uneven competition. But, is it true? How is HFT really impacting the financial markets and is there still room for human traders, trading discretionary trading strategies?

 

Computers are a natural evolution

First, it is important to understand that computers and HFT is a natural evolution of how market participants interact. Back in the days, there were no real-time charts and people had to trade based on the outdated information they got from the newspaper. The people who had access to real-time market information had a huge advantage over the normal traders. Then, with the invention of the telephone, people

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How Self Directed Traders can potentially benefit from Automated Trading Concepts

 

Automated trading elements you should incorporate into your trading strategy today.

The general belief is that discretionary / self-directed trading, where the trader makes all trading decisions, can outperform algorithmic/automated trading, where the decision making is based on coding a trading concept into a program. Regardless of whether there exists a “super trader” who can overcome today’s ultra-fast computations of quantitative trading systems, charting and price analysis and is able to execute just as rapidly and accurately, here are three elements from automated trading that you  should incorporate into your own trading strategy:

  1. Automated trading incorporates position sizing by computing capital and margin to equity ratios quickly and automatically. Discretionary traders may let human emotion determine how many contracts to trade. For example, if the trader is losing money, he or she may trade larger sizes in an attempt to make the money back. This may lead to further losses. On

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Does intuition and gut feeling play a role in trading?

 

Does intuition and gut feeling really exist in trading?

Whenever you hear traders talk, they use the words intuition or gut feeling to express their thoughts and to justify their decisions which are often not based on sound trading principles or trading rules, but on something different, something they ‘felt’ about what is going to happen next; or so they claim. However, it is very important to distinguish between real intuition and what traders mistake as intuition.

Trading Intuition

Intuition and impatience

The most commonly made mistake is that traders use intuition to justify trades where they prematurely entered the market and broke their trading rules. They will then say that they had a feeling that price was about to take off and that they didn’t want to miss the trade. Be honest to yourself, how often

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