Moore Research Center, Inc.

  • Increase font size
  • Default font size
  • Decrease font size

Trade Selection

E-mail Print

1. From year to year are the trades you post mostly always the same?

Example: If you compare let’s say this month’s (Oct15) seasonal outrights & spreads to last year’s (Oct14) trades would they basically mirror each other?

I know fundamentals and maybe other factors could play apart for the year that is being traded on whether or not a trade in a particular future would be taken but for the most part would you say they are the same?

 

First, whenever we choose strategies for any publication at any time, we start with the freshest data possible.  We also ignore anything we have published anywhere else.  In other words, there is no "master list," per se.

The 15 seasonal and 15 spread strategies published each month for MRCI Online are drawn from the 40 or so major futures we follow.  The computer runs an initial scan to find all those that qualify (for win/loss, average profit, duration, etc.) with an entry that month - sometimes as many as 800 strategies from which to choose . From that "raw list" we choose the 15 best --- the creme de la creme, if you will --- but being mindful not only that our subscribers run the gamut from commercial and professional to absolute novice trader but also that we need to diversify among markets and complexes. 

But that obviously leaves lots and lots of perfectly valid strategies that don't make the cut.  For example, a 93% corn spread that averages $200 over two months is absolutely a great prospect --- but how does it compare to a gasoline/heating oil spread that averages $1500 over two weeks? 

Thus, we have also created our MRCI Special Historical Reports that break down the markets down into several complexes (meats, grains, soy, metals, forex etc.) so that we can present more in-depth research and a greater number of strategies for those with special interests.

Please note that because it is a subjective process and we rerun our seasonal programs each month to choose our monthly trading strategies for MRCI Online it is is also "possible" that the website may feature a specific trade that is not included in one of our Special Historical Reports.

In general, when choosing among several strategies, the most weight is given to win/loss percentage, then to total average profit, then to average profit/day (suggests the intensity of the move), and then to other considerations (does exit coincide with First Notice Day, etc.)



2. Now and again a spread trade will be listed toward the end of a month and again at the beginning of the following month.

Essentially this is the same trade. Rather than having this duplication would it be better to have another trade that met the 80% + criteria?



You raise a valid point, but it can be a close call sometimes.

Philosophically, is it better to present similar strategies, each with a high degree of seasonal reliability, that offer alternative entry/exit and/or suggest the potential for adding to a position?  (We have found that seasonal strategies with a cluster of optimized entries, for example, have tended to be especially reliable.  That logically implies strong seasonal influences rather than "data mining.")  Or is it better to present an alternative trading idea, albeit one that might be of lesser reliability?

What if the outcome of or the information conveyed by strategies that are nearly duplicates is of greater consequence to how other markets, or even economies in general, may perform?

Occasionally when a seasonal pattern for a market or spread exhibits an especially strong, dynamic seasonal trend, we may show multiple entries into the same trend.

We have at least the following reasons for doing so:

(1) Add to a winner.  If the first entry works for the trader and the trend still looks good, later entry dates may suggest higher-probability days to add.


(2) If at first you don't succeed, try, try again.  If for whatever reason a trader does not take the first entry --- for example, (a) he may think the timing of the first entry looks risky, (b) the market is not yet set up, or (c) the trader is otherwise engaged --- but the overall concept appeals, perhaps a later date will provide a more opportune entry.


(3) New subscribers.  You will notice that, even though the entries were clustered within perhaps 6 weeks of each other, they were each presented in different months --- the first in October, the second in November, the third in December.  If someone new came along in early November, he/she would have missed the first entry date but seen the second.

We do try not to duplicate, but sometimes there are valid reasons for doing so.  Sometimes better alternatives are lacking.  We do not pretend to have all the best answers.  And we will try to be especially aware in future.

 

3. Why does the spread strategy suggest to buy the May Corn/Wheat spread once in January and once in March with different points of liquidation in April?

Some seasonal trends last several months, but MRCI tries to limit the duration of any given strategy to no more than three months, preferably no more than two.  Thus, the first strategy ends after three months, but the trend has tended to continue.  Thus, another strategy tries to take advantage of the continuation of said seasonal trend.

Sometimes, however, you may see two or three entries/positions within a seasonal trend.  They can give traders more than one alternative to entry of they can offer opportunities to "add to a winners".

 

Last Updated on Thursday, 17 December 2015 04:40  
Banner

Subscribe Today

Subscribe Today

Subscribe to our FREE Newsletters

Email:

Newsflash

Let MRCI introduce you to our brand new Futures Highlight!

The focus on a single market each month can provide you more in-depth knowledge of how it trades. What if you knew such things as ...
(1) average daily ranges by day of week
(2)  how often it tends to close higher/lower by day of week
(3)  how often it tends to gap up/down
(4)  historical summary of daily % of price change

FREE for a limited time!!!