Trade Aptitude

Results of Friday’s Best S&P Futures Turning Points: The short @ 4457.50 did trigger (and stop) in the post market but was cancelled due to market volatility from NVDA earnings release. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4411.25 stop 4407.50. Short 4492.50 stop 4498.00. 

The World Sentiment Index: (+100/-100) rises from +36 to +57 with all major world markets Bullish. 

Catalysts: Jobless Claims & Durable Goods @ 8:30. NVDA motivates a risk-on mood. 

Quick Tip: Strategy Diversification

Given enough capital diversification becomes mandatory. You’re unlikely to have one asset in your 401K. You have a basket of uncorrelated assets to smooth your equity curve. 

But what about strategy? You’ve probably never heard of a hedge fund that ran “one” strategy. Diversifying by strategy makes sense when you consider the market changes character and no strategy works well in all market conditions.

Here’s the pros for strategy diversification: 

1. More trading opportunities. When one strategy is waiting for entry, another may be active. This means more efficient use of your capital and time. 

2. Smoother equity curve. No guarantees, but you’re likely to have less severe drawdowns in your account if the strategies you trade are not correlated. This means you’ll feel better about your performance and trade with more confidence. 

3. “Sunset” protection. If you haven’t already noticed, trading strategies don’t always work forever. The markets are a technology business now. And we know technology advances at lightning speed. You need to constantly learn and apply newness to your strategies. Measure it and establish new rules. 

And here are the cons: 

1. Capital required. You may not have enough capital to run multiple strategies but given the small contract size and leverage in the options, FX and futures markets a capital constraint is unlikely. 

2. You need to learn something new. It’s tough to call this a “con” but some people get in that complacent zone and don’t want to grow their trading IQ. Reach out and learn something new… it’s fun!

3. Signal conflict. This is probably the only true “con” to running multiple strategies. You’ll get a buy signal from one and a sell signal from another. The fix is easy though. Think confluence. If both are in harmony, that’s good. If there is conflict, then maybe that’s a trade to pass on.

Our team day-trades multiple strategies with edge in a live online environment. Join our team, learn the strategies, and trade live with us daily for 30 days. Money back if you’re not blown away!

Trade Fearlessly,

Mike Siewruk