CTGFutures Trading Philosophy:The issues that govern our trading practices are simple and straight forward. Futures trading is fraught with risk and controlling that risk is the focal point of the business. The following illustrates how our trading program achieves these goals for us.
Plan the trade then trade the plan - based on our
free weekly technical analysis we determine our strategy for the coming week and produce our trade plan . With a printed copy of the plan in hand we execute. New orders are placed and existing stops are managed when necessary. No trades are EVER made that are not a part of the plan and EVERY new position is initiated.
Diversity - positions in a variety of markets gives us better exposure, opportunity and balance. This translates to positive open equity in our trading account more than 90% of time. Positive open equity provides support, both financial and psychological, for putting on new positions.
Limit and Stop orders to initiate positions - we like to move into most new positions at support and resistance points. This tends to minimize draw down and when used with tight stops kills losing trades quickly.
Profit targets - setting profit targets at key support and resistance points are vital. They must however be set at a dollar value of at least twice the average loss.
Stops loss orders that minimize loss - every positions' stop loss is examined daily and adjusted (only in a direction of lower risk) when required. Tight stops help us to maintain average losses at the $350.00 per contract level.
Sound Money Management Program - we employ the
Fix Ratio Money Management Program. This provides us with a measured way to increase our exposure to the futures market as our account balance grows and vice versa without increasing our risk on a per contract traded basis. In my next blog I will say more about Fixed Ratio and how important this aspect of trading is to growing an account.
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