maguiredan

Interesting article, bakrob99. I use options to protect equity positions frequently. But, I didn't quite understand your example with the Call option protecting a long Forex position. Could you please provide more detail?

I use OEC because 1) they have a very good API to Collectie2 for autotrading; 2) they are connected to a larger number of futures exchanges than many other brokers, e.g. IB; 3) they don't charge for market data. However, 1) I don't think OEC is a very good software platform at all. It is rigid and has an old fashioned design. It is not nearly as flexible and user-friendly as IB's software. 2) The other day they had a complete technology outage and you could not use their system for 2 hours or so during the trading day. 3) Their commissions are high, especially for autotrading.

The trading results are posted on Collective2. That's what I mean by 'pretty good'. Yes, I'm associated with the product in a manner of speaking. I subscribe to it on Collective2 as I mentioned.

Thank you. Those strategies look worth trying. In return, I can mention that I've been trading a strategy called Futures Trader Daily on Collective2. I can confirm that the stats mentioned for that algorithm on the C2 site are accurate. It is pretty good.

If you don't mind saying, what strategy(s) have you used at LiveTradingZone and how have they performed for you? Thanks.

Thanks for the reference to those two interesting systems, Gianno. I checked the first one and they want $50K for a three year license and there is no trial period or even a demo. Tough to make that purchase decision!

My primary objective is to take profits out of the market. I will use any tool available to do that and I've found that rental strategies are a good - but not the only - tool to have.

I've been following 5 strategies: ES Oscillation, Futures Trader Daily, Quantum Fader, S&P ETF Timer and Stock Swing Trader. You can see my comments about each of them in the My Analyst pages of Collective2

If their trade history for 2011 is accurate, some of those strategies look pretty good. But I have a feeling those are really 'signals' rather than actual trades It would be better if they posted some 'real' trading history the way Collective2 does. That lets you factor in slippage and commissions.

If you are trading stocks, you should look at both the overall market trend and the trend of the individual security. The Edge is better if you trade stocks from the long side when the market is trending up and conversely. It's also useful to look at the rate of change in the trend as observed by the steepness of the chart, regression lines or RSI indicator. When the market and the stock you are stalking are in strong up trends, it is often better to use a breakout approach for entering a position rather than waiting for a pullback. Breakouts can be defined many ways, e.g. when the price penetrates the upper Bollinger Band, or makes a new high for the past 'n' days. But, trading breakouts is risky and you should always know how much you're willing to let the price pull back before you exit the trade. Set real stops unless you are watching the action constantly.

I've been using TradeMonster for a couple of years and have had really good experience with them. None of the problems cited above have happened with me. I'm actually surprised how often I get price improvement on equity trades. Their option spread trading tools are the best. I also have accounts at TOS and IB and I prefer TM to both of them for equity and option trading.

For the past 4 months I have been monitoring several trading strategies available for rent on the Collective2 site. Recently I have subscribed to a four of them. Mostly I have taken the signals and traded them manually. One especially promising futures strategy I have put on 'auto-trade'. My trading results thus far are slightly positive. Is it a viable approach to trade strategies available online? What sites other than C2 have people used and had good trading results?

Thanks for starting a very thought-provoking discussion, Daedalus. When you think about it, much of the professional trading world operates with an approach of trying to pick up lots of small gains using high probability entries and guarding against the big loss. High frequency traders, market makers, algo traders - few of them are calculating Reward:Risk ratios. That's for swing and position traders - people with longer holding periods. Although we're all trying to make a buck at the end of the day, the approaches are really quite different for various trading styles. When you use a swing trading approach, for example, you are looking for setups that have a high potential payoff relative to the loss. The loss is generally the point at which you should admit that your forecast about the future price of the security is wrong. Those gains and losses are normally measured in full points, not pips. As your holding period becomes shorter and shorter the profit target and stop loss prices move closer together. Generally, the setups also become more simple and repeatable. One of the characteristics of many very short term trading styles is that they need to be executed precisely and mechanically. They are ideal for automation. If you're bored with trading, this may not be the right direction for you to go.