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.

FtR 9.7 Apr 2014 Signals Update

FtR 9.7 System enjoyed a rather smooth month in April. 30Y US Treasury Futures (ZB) contributed nearly half of the profits.

And my last April position which was short on Gold Futures (GC), ended with the precious metal staged a dramatic trend reversal yesterday. Shown above 15 min intraday chart of GCM4.

If you want to trade like what I did in FtR 9.7 Trading System, consider subscribe to my Trading Signals Sharing.

FtR 9.7 Mar 2014 Signals Update

I included two trades that closed today (April 2nd) in March record. The last one was ZB, which happened to be the largest loss for the month. I am satisfied with another profitable month for FtR 9.7. :-)

Four Pillars of Trading Success from a Veteran Futures Trader

I had a long chat with an experienced futures trader that day. He shared with me his four pillars of trading success.

1. Ability to analyze and come out with own ideas.
You should have your own thinking, not to copy others trading ideas. I always stress the important of designing your own trading strategy, not blindly follow some experts' trading method or black box system. You need to understand your strategy inside out, know its characteristics, weakness etc. This is to ensure you are able to follow the strategy confidently when your trading are dealing with market adversity. At the same time, you will know when your system has stop performing statistically like it should in backtesting when market conditions change dramatically.

2. Money
Money here refers to adequate capital. To many, futures trading offer leverage, meaning you can start with very small capital and make huge profits. Many futures trader wannabe I met with started with as small as RM 10K and wished to make ten-fold profits in the shortest time possible. It is possible but the probability is very low. And to make such a huge profit, one need to take enormous risk and this increases the risk of ruin. Capital and risk management in futures trading is as important as cash flow management in a business. If a company faces negative cash flow problem, it might go bankrupt. If you can't manage your risk well in futures trading, your account are doomed to bust.

3. Patient
A good trade does not always start to make money immediately. Sometimes, price goes lower after you bought, causing you with unrealized loss on that particular trade. Panic and impatient trader will exit their position at loss, fearing the loss will widen. If a trade goes in your trade direction, impatient trader will take the profit because they want to lock in the profit and fear the market will take it away if they do not do so. Their behavior prevent profit to grow into huge one. Trend traders on the opposite, let the profit runs as big as possible. In the process, they may let a few unrealized profits turn into small losses. However they reckon this is inevitable and accept this as an expense of running their trend trading business.

4. Luck
Erm... Luck! Are you kidding? Take a look at the chart below.

Scenario 1-You quit your job and started your trend trading business in year 2005. You ended up with very tiny profits or small losses. You were forced to quit trading in early 2006 because profits were not enough to support your life.
Scenario 2-You quit your job and started your trend trading business in year 2006. You were rewarded with huge profits in your first year of trading. Then in 2007, you again made extraordinary profits. In 2008, you probably encountered volatile swings in your account equity earlier in the year, but you have plenty of "house" profits from 2006 and 2007 as buffer. At the end of 2008, you are glad that you didn't deviate from your trading system and were able to take advantage of market collapse to generate spectacular profits.

So, when is the best time to start trading full time? Unfortunately, no one knows when is the best year or so. I am lucky to have started my trading career full time in late 2008. So far, business is running rather smoothly. So, who say luck is not important in trading?

Globex Trading Hours During Daylight Saving

Daylight saving time 2014 will begin at 2AM on Sunday (09 Mar) in US. Most US states will spring forward an hour. Trading in CME Globex will bring forward an hour too.

Those who subscribe to FtR 9.7 Trading Signals Sharing, please don't forget to adjust your alarm clock 1 hour earlier.

FtR 9.7 Jan and Feb 2014 Signals Update

Not to say excellence but managed to grab some profits. Hope you guys also profit from my sharing.

How to Jump on the Running Train (Trend)?

Apparently, FCPO is trending. I guess not everyone is enjoying the bull run because they missed the train. They chose to believe the breakout above 2700 is false. They were afraid to buy "high". They would rather miss the trend rather than risking their "sacred" capital. Whatever reasons it may be, if you are not on board of the bullish train, you may tempted to buy to participate in this "cpo bull of a lifetime". I received several requests and emails these few days, asked me how to get in the long side of the market. In this post, let me share some of my ideas for those who wants to buy but afraid the price is overly extended.

First thing you might need to ask yourself what is your objective of going to long this market? Of course a lot of people will probably say "money". I knew but you need to find out what kind of profits are you looking for in this long trade. If you are looking for 50-100 points quick profits, In my opinion, forget about it. You shouldn't be trading at all. For me, I will definitely want to participate in this rally to maximise the profits, meaning I will let the profits run as long as possible. In other words, I will only exit this long trade when market reverses and turns bearish (I will have my own method to determine when that happens).

Zoom in to 60 min chart to find trading opportunity. Retracement provides good and low risk entry into a developing trend. When price broke 2700, it didn't immediately shoot up uncontrollably. It retraced towards 2700, then moved up. This is a good place to initiate new long. One may wait till market completed the retracement by buying above the previous recorded high. In this example, buy above 2734. At the same time, set the initial stoploss below 2700. This involves risking about 40 points (RM1000) per lot.

The last time FCPO trading above 2700 was more than 12 months ago. This bull looks like still have a long way to go before it ends, therefore I suggest letting the profits run as far as it can. In this case, risking RM1000 per lot to achieve an unlimited profit target seems viable and logical. In case the long position got stopped out prematurely, I would definitely take any chance to re-establish long position again. Anyhow, if you look at 60min chart again, market broke the last resistance (2756) again last Friday.