Tuesday, May 6, 2014

Advice from an Elder.

Last week or the week before (I forgot the exact date), I was "advised" by an elder in my family that futures trading is a very dangerous activity. According to his friend's daughter, who has just recently graduated from a university in US, only "professional bankers" who write program to trade futures are profitable in this business. And retails who wish to make money trading futures "must" "monitor market every minute" and "trade carefully". He hopes I can do "other jobs" to make a living rather than depends on "futures speculation".

No doubt investment banks are the large sharks in the market with many of the banks recorded profitable trading for every single trading day. Retail traders like us are "handicap" if compare to them in terms of capital, experience, program sophistication, execution speed, diversification, etc. However, it doesn't mean retail traders can't "cari makan" in the trading world. For me, before I put my hard-earned money into my futures trading business (I always treat trading as a business, rather than gambling), I must make sure my business plan / strategy possesses the "EDGE" over the market. I need the statistical "EDGE" to execute my trading plan confidently without sabotaging myself halfway through the journey. Why? Because even with the "EDGE", one is still not immune from trading losses. Unfortunately, Holy-Grail doesn't exist in futures trading. When my trading operation is running, I am constantly "monitoring" its progress and evaluate the results quantitatively. When the "EDGE" is fading or failing, I know my business plan or strategy fails and I will need to exit the business. Contrary to the advice, I am not monitoring the market every minute. I don't see the need to monitor the market closely except that you trade based on tick or 1 minute chart, which I don't recommend unless you are "professional traders" working for investment banks, hedge funds or prop trading companies.Those work for me or with me know I seldom monitor market because every trade decision that I made is from my trading systems, monitor or not monitor doesn't make any difference.

I try to understand the advice "trade carefully" as to manage your risk prudently. This one I fully agree. Know your risk for the whole business and for each individual trade to minimize the surprise to the downside. I am not sure my elder's friend's daughter trade futures or not. Hopefully she doesn't, otherwise "kesian" her to have to monitor the market "every minute", probably round the clock. :-)

I didn't heed my elder's suggestion to look for work elsewhere. I am still speculating in futures market to make a living. I thank him for the good intention but obviously his understanding of futures trading is very much lacking. Hopefully I have the opportunity to explain to him what I actually do for a living.

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