Better Tactics

Markets

May 11

Wikipedia defines tactics as,

a conceptual action aiming at the achievement of a goal. This action can be implemented as one or more specific tasks.

And on strategy vs tactics:

Strategy is a set of choices used to achieve an overall objective whereas tactics are the specific actions used when applying those strategic choices

The S&P 500 has made some really huge swings lately. However, futures traders with small accounts have probably struggled.

While I have made tactical errors, I have observed the following tactics could be very successful in the current markets:

  1. Buying or selling put spreads with ES options. You can limit your risk to just a couple hundred dollars per trade and often a nearly 2:1 payout.
  2. Reducing size and trading the CME Micro contracts. The micro S&P 500 MES has good volume and trades very well. The ability to trade multiple contracts and get higher R is a game changer for discretionary traders. For system traders, the ability to deploy portfolios on small accounts is huge.
  3. For the E-minis scalping with limit orders has been better then chasing. Keeping risk tightly controlled.
  4. Layering in binary options (NADEX) within risk tolerance on days that can reverse is a tactic worth consideration.

The following tactics have not worked or are likely to be incurring more risk then necessary, as well:

  1. Trading the E-mini ES with tight stops and market orders.
  2. Taking high risk trading the ES with large stop on tiny account. Larger swings mean this strategy is very high risk.

About the Author

Curtis is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact him at curtis@beyondbacktesting.com.

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