January 2020: An email regarding the “Light” contract package from a new client states, “Today, the materials were received, and I must express that the content is impressively substantial. There is also a considerable volume of files.”
December 2017: In correspondence from a client who commenced paper trading the system in October 2017, at a time when the client was relatively inexperienced and paper trading performance metrics typically exhibit significant improvement over time: “I’ve been assessing both winning and losing trades. Particularly with the losing trades, the outcome is somewhat amusing and encouraging… While reviewing the losing trades, there are very few regrets. In a couple of instances, my stop was marginally too tight, and I will address that moving forward. The majority of losses were ‘signal flips,’ resulting in a minimal impact on the bottom line. My average loss was only -$562, whereas the average gain was +$1,237. I aim to elevate the win/loss ratio from the mid-50s to the low 60s; currently, it stands at 54%. Despite this, with 26 closed-out trades, the net gain is +$11,887.” (Note: based on three months with a simulated $50K account) “Additionally, I have five paper trades still open, and all five are in a profitable position.”
Concerning client preferences, a mechanical entry system based on price (comprising three confirming functions) with a rules-based position management procedure established at the time of trade entry is recommended. There are numerous inter and intra-market spread combinations available for modeling, providing ample opportunities. Moreover, the overnight margin costs for spread positions are among the most cost-effective futures leverage options, utilizing SPAN margin credits. Clients are advised to swing trade spreads and use exchange-supported spreads for safety and slippage considerations whenever possible.
Trade holding timeframes are contingent upon the specific spread’s OTR average trading range and volatility. For instance, a Eurodollar butterfly spread may be held for four months (with a daily movement of about 2 ticks), while an RBOB vs CL spread or a Gold vs Silver spread (both high-volatility spreads) might be held for a couple of days. Emphasis is placed on leveraging less volatile spreads, with each client having their own risk tolerance profile. The strategy involves modeling markets using longer timeframes and swing trading, discouraging high-speed day trading. Holding several spread positions concurrently in various markets is encouraged if the trades present themselves.
The modeling process encompasses hundreds, if not thousands, of different spread combinations in nearly every electronic market available. Clients are advised to be selective and leverage the large pool of trading opportunities to their advantage. The importance of not forcing trades, especially in day trading or scalping a singular market, is emphasized.
Upon entering a trade, the profit target and stop-loss level are set, generally resulting in a Risk/Reward ratio of 1:1. However, it is noted that as the trade unfolds, a significant percentage of losses are managed by the indicator package, taking clients out of losing positions before the originally set stop-loss level is reached if the original trade conditions are no longer valid.
Clients are encouraged to track their performance metrics, including drawdowns, during the paper trading and peer review process, which includes weekly group webinars. Individual webinars with the mentor are also recommended for reviewing paper trading performance and improving trade selections.
The construction of spread combinations and the selection of products and expiries are deemed crucial, rated as more important than the indicator package in terms of good trade selection. Approximately 50% of client webinars are dedicated to reviewing different aspects of spread combination construction.
Upon contracting, clients acquire intellectual property (IP) for personal use only, with terms and conditions clearly outlined in the contract. In addition to providing programmed .efs files for eSignal, coding for the indicator package is supplied for adaptation to various charting packages. Clients are reminded that the indicator package is purchased for personal use with no additional costs.
Over several years, a direct correlation has been observed between the effort and time a client invests during the spread construction and paper trading phase and their relative success using the strategy in live markets. The mentor emphasizes that success in trading requires hard work and dispels the notion of a guaranteed formula for success. The absence of a holy grail and the need for diligent effort is emphasized, with a reminder that trading inherently involves uncertainty, and successful traders work tirelessly. The mentor cautions against focusing solely on trade entry and neglecting position management.
Over the past few years, numerous individual and group webinar recordings have been accumulated, covering live and paper trade setups, performance metrics review, spread combination construction, and various topics like correlation analysis and execution. Special instructional webinars presented solo cover specific topics, concepts, and materials.
By January 2018, new clients typically take 2 to 4 weeks to initially review the materials provided. Subsequently, clients utilize the proprietary indicator package and spread combination build-out spreadsheets (usually with eSignal) to construct their own chart modeling platform. After several weeks, clients may have several hundred spread combinations across worldwide electronic futures markets. The next phase involves paper or SIM trading under the mentor’s review, tracking performance metrics, especially drawdowns and W/L ratios.
In reference to the Advantage Futures Year-End Trading Statement discussed further down on the website page, a third-party response from Patrick Agate, the risk manager and active partner with Prime International Trading, provides clarity. The response acknowledges the profitability of the account based on the statement from Advantage Futures, emphasizing the cash sweep-out for profits in 06. The response also mentions the familiarity with clearing statements from various firms and asserts the clear indication that the account made good money. Further questions are welcomed for clarification.
More courses from this author: Futures
Course Features
- Lectures 1
- Quizzes 0
- Duration 10 weeks
- Skill level All levels
- Language English
- Students 0
- Assessments Yes