Making a Living while Cruising

[TheNomadTrip]

Originally Posted by Delfin

I agree with all you say, Cormorant. As an FYI, the way I handle managing a daily review of spreads that have hit the stop loss is to have my son take a look at each spread in the evening, then if a stop loss has been hit, he just puts a sell order in on the spread about 5 minutes after the market opens. In other words, I get some help when gone for longer than a couple of days.

Does your son want a part-time job?

I'm at a complete loss there - I don't know anyone that a) has enough knowledge or b) I trust enough.

So, if we assume you didn't have that help - how would you manage everything while you're out cruising? And would that add so much risk or reduce the returns enough that you wouldn't play this way?

[TheNomadTrip]

Originally Posted by Cormorant

If you had good internet access twice a month, i.e. every 2 weeks, you could do this just fine. Delfin mentioned that he sets up all his trades each Sunday to execute automatically throughout the week. When you place the trade, you enter a "condition," and that condition is the date and time after which you are willing to buy/sell the spread.

The only tricky part would be getting out of spreads that have hit their "stop loss" level -- the level at which MRCI recommends bailing out if things aren't going well. This can't be set automatically on spreads (though it can on straight trades).

Delfin once asked MRCI if they had modeled the portfolio both using stops-losses and not, and apparently over time, there's no real difference. Some spreads come back from an anamalous plunge. Others don't.

Edit: One last thought -- MRCI releases their recommended trades one month in advance. So, say, on March 1 (or sometimes the 2nd or 3rd depending on weekends), you would have all of the March recommendations and all the April ones. So theoretically you could enter them all for automatic execution and take off for 2 months, return on May 1 and do it again, return on July 1, etc. You would need to be well margined in case a few went bad. But it's doable.

Awesome! I read that twice. Honestly, it's at least worth trying.

Being fairly conservative, and having the eternal question "if they can make so much money with this, why are they showing anyone?" - I'd prefer to start by sticking my toes in. I can lose a toe.

Any particular tips to easing into this?

[Delfin]

Originally Posted by TheNomadTrip

Does your son want a part-time job?

I'm at a complete loss there - I don't know anyone that a) has enough knowledge or b) I trust enough.

So, if we assume you didn't have that help - how would you manage everything while you're out cruising? And would that add so much risk or reduce the returns enough that you wouldn't play this way?

I was introduced to Moore by a broker in California, who places trades for great many people. I believe he has been doing it for 11 years, and from memory, the cost is around $25 a trade rather than a little under $5, so that might be worth looking into.

For myself, I'm not that concerned about going 'naked' without stop losses for a couple weeks at a time, so if no one was available to do the monitoring, I'd just suck it up and ignore it. The alternative is to close out all your positions and then re-enter them, but I don't much like that idea because the way to reduce total risk is to engage in as many of the trades as you can. I don't do currencies at the moment because those markets are diverging from historic norms, but other than that I follow all of the Moore recommendations.

[Delfin]

Originally Posted by TheNomadTrip

Awesome! I read that twice. Honestly, it's at least worth trying.

Being fairly conservative, and having the eternal question "if they can make so much money with this, why are they showing anyone?" - I'd prefer to start by sticking my toes in. I can lose a toe.

Any particular tips to easing into this?

Set up a play money account with Interactive Brokers, and get a trial subscription to Moore - after the trial, I think it's $50/month. Learn how to place the trades without risking anything. If you 'ease' into it, things might work out fine. I know some people have done that successfully. The only thing that makes me nervous is that while I now look at how a particular spread is aligning with historic averages and I don't play with currencies, I don't think I can much improve with analysis what Moore comes up. I'm not sure anyone can, but I know I can't.

Regarding why do they tell anyone - why not? The guy who started the company lives in the boonies in Oregon, putters around and trades. I have no idea how many subscribers he has, but I just hope he keeps publishing.

If you send me a pm with your email address, I'll send you a trading guide I did up for my kids that might be helpful.

[Certeza]

If you need to setup trades to execute when you might not have access, just use a third party trade management software. Interactive brokers will still be the FCM, but the trade software will allow you to set inter-commodity stop orders to auto execute if needed.

[ImaginaryNumber]

Originally Posted by Cormorant

If you had good internet access twice a month, i.e. every 2 weeks, you could do this just fine. Delfin mentioned that he sets up all his trades each Sunday to execute automatically throughout the week. When you place the trade, you enter a "condition," and that condition is the date and time after which you are willing to buy/sell the spread.

The only tricky part would be getting out of spreads that have hit their "stop loss" level -- the level at which MRCI recommends bailing out if things aren't going well. This can't be set automatically on spreads (though it can on straight trades).

Delfin once asked MRCI if they had modeled the portfolio both using stops-losses and not, and apparently over time, there's no real difference. Some spreads come back from an anamalous plunge. Others don't.

Edit: One last thought -- MRCI releases their recommended trades one month in advance. So, say, on March 1 (or sometimes the 2nd or 3rd depending on weekends), you would have all of the March recommendations and all the April ones. So theoretically you could enter them all for automatic execution and take off for 2 months, return on May 1 and do it again, return on July 1, etc. You would need to be well margined in case a few went bad. But it's doable.

With Interactive Brokers you can set automatic spread entry orders, stop-loss orders, profit orders, and exit-at-date-and-time orders. IB offers (at least) two order venues (not sure what the correct description is), and you must place the order through IB brokers, not directly to the futures exchange(s). I developed some gray hair, and lost money, figuring that out.

[Delfin]

Originally Posted by ImaginaryNumber

With Interactive Brokers you can set automatic spread entry orders, stop-loss orders, profit orders, and exit-at-date-and-time orders. IB offers (at least) two order venues (not sure what the correct description is), and you must place the order through IB brokers, not directly with the futures exchange(s). I developed some gray hair, and lost money, figuring that out.

Please, please, tell me how you figured out the stop loss on spreads. I know how to do everything else, but not the stop loss issue. Maybe a PM to explain? And thanks, because even IB didn't know how to do it!

[Cormorant]

Copy me on that PM!

[frank_f]

Originally Posted by Delfin

Please, please, tell me how you figured out the stop loss on spreads. I know how to do everything else, but not the stop loss issue. Maybe a PM to explain? And thanks, because even IB didn't know how to do it!

Include me on that PM if you would please.

[TheNomadTrip]

Very much appreciate the help here.

I apologize for the lack of response on my end, I have a boat under contract in a foreign country. That's another gray-hair-producing endeavor, and another story for another thread.

Cheers, and thanks again!

-Nate

[jostalli]

Originally Posted by frank_f

Include me on that PM if you would please.

I think more than several folks on this thread would appreciate this instruction! I'm setting up my play account now.

[ImaginaryNumber]

Originally Posted by Delfin

Please, please, tell me how you figured out the stop loss on spreads. I know how to do everything else, but not the stop loss issue. Maybe a PM to explain? And thanks, because even IB didn't know how to do it!

I'm not an expert in spread trading, and I hope I'm not giving you bad information. Like you, I asked IB about stops, and received a lot of hesitant answers. Because few traders do spread trades, at least with IB, their help desk people seem not to be well educated in spreads. Some at least try to be helpful; others can be a bit grouchy. You may have to talk to more than one person before you get your question answered. Some of my questions still have not been answered

As I understand it the initial spread trade needs to be set up as a SMART order, as opposed to a DIRECT(?) order. My understanding is that this allows IB to manage the order, rather than being limited only to the native order types provided by the futures exchanges.

Below are a series of screen shots of a SoyMeal(ZM)-SoyOil(ZL) spread made through my PAPER account. I didn't want to use my trading account to make a real trade just to demonstrate a point.

#1 shows a market sell order ready to be transmitted.

#2 shows that the order has been executed, at -172.6364. You can see that I now have a (-1) position; (-1) because it is a short sale.

#3 shows that I've set up a SMART buy stop (STP) set at -17350.00. The green line on the chart displays that value as well.

#4 now shows that I have no position, as the stop value was hit.

#5 shows orders that I've placed today. The latter two (SLD and BOT) are the ones I'm describing. Sold at –172.58. Bought at –173.38. (In this screen the decimal is moved to the left two places, compared to the charts. I don’t know why.)

#6 is the BASIC tab in the order set-up page. In this case I’m showing a BUY, with an ORDER TYPE of limit (LMT), at a LIMIT PRICE of –17428. Clicking on ORDER TYPE will offer up numerous other types of orders.

Also note the OCA GROUP (One Cancels All) in the lower right corner. You can use that to set up multiple exit orders, where if any one of the orders executes, the rest of the orders will be canceled. For instance you may have a STOP LOSS order, a MARKET IF TOUCHED order to capture a strong move, and an EXIT ON DATE AND TIME order. If any one of those three orders are executed, the other two are canceled.

#7 shows the CONDITIONAL tab. You can add a number of different types of conditions to an order, such as EXIT ON DATE AND TIME, which I’ve shown. This order says to execute if the TIME & DATE is GREATER THAN OR EQUAL to 2014 March 18, and the TIME is 11:01 EST.

I know all this explanation is more than what Delfin asked for, but some of the questioners seemed to want more information. But I hope that Delfin’s question was also answered.

[ImaginaryNumber]

images for #5, #6, and #7

[frank_f]

IN, thanks for the breakdown. I owe you a couple of beers (or wine or whatever)

[Delfin]

Originally Posted by ImaginaryNumber

I'm not an expert in spread trading, and I hope I'm not giving you bad information. Like you, I asked IB about stops, and received a lot of hesitant answers. Because few traders do spread trades, at least with IB, their help desk people seem not to be well educated in spreads. Some at least try to be helpful; others can be a bit grouchy. You may have to talk to more than one person before you get your question answered. Some of my questions still have not been answered

As I understand it the initial spread trade needs to be set up as a SMART order, as opposed to a DIRECT(?) order. My understanding is that this allows IB to manage the order, rather than being limited only to the native order types provided by the futures exchanges.

Below are a series of screen shots of a SoyMeal(ZM)-SoyOil(ZL) spread made through my PAPER account. I didn't want to use my trading account to make a real trade just to demonstrate a point.

#1 shows a market sell order ready to be transmitted.

#2 shows that the order has been executed, at -172.6364. You can see that I now have a (-1) position; (-1) because it is a short sale.

#3 shows that I've set up a SMART buy stop (STP) set at -17350.00. The green line on the chart displays that value as well.

#4 now shows that I have no position, as the stop value was hit.

#5 shows orders that I've placed today. The latter two (SLD and BOT) are the ones I'm describing. Sold at –172.58. Bought at –173.38. (In this screen the decimal is moved to the left two places, compared to the charts. I don’t know why.)

#6 is the BASIC tab in the order set-up page. In this case I’m showing a BUY, with an ORDER TYPE of limit (LMT), at a LIMIT PRICE of –17428. Clicking on ORDER TYPE will offer up numerous other types of orders.

Also note the OCA GROUP (One Cancels All) in the lower right corner. You can use that to set up multiple exit orders, where if any one of the orders executes, the rest of the orders will be canceled. For instance you may have a STOP LOSS order, a MARKET IF TOUCHED order to capture a strong move, and an EXIT ON DATE AND TIME order. If any one of those three orders are executed, the other two are canceled.

#7 shows the CONDITIONAL tab. You can add a number of different types of conditions to an order, such as EXIT ON DATE AND TIME, which I’ve shown. This order says to execute if the TIME & DATE is GREATER THAN OR EQUAL to 2014 March 18, and the TIME is 11:01 EST.

I know all this explanation is more than what Delfin asked for, but some of the questioners seemed to want more information. But I hope that Delfin’s question was also answered.

Thanks IN. That is much appreciated. I place almost all my spreads as combination orders through the SMART channel, and to be honest, I now can't remember why this didn't work before. I wonder if the ability to place stops on a spread is a new feature I hadn't noticed - which is entirely possible. On Monday, I'll see if I can get one to trigger on the live platform, and report.

I said I place most of my trades using combinations, but not all. The reason is that I have found that sometimes they don't execute because spreads are traded through a separate channel, and sometimes the differential is greater than the amount IB allows. This is to protect you against wild fills, where someone puts a bid in 50% below market but is the only open order against your market order so gets filled.

Very much appreciate the information.....