The Benefits Of Managed Futures
Performance: Since managed futures programs have the potential to profit in both up and down markets, they tend to outperform traditional investments like stocks and mutual funds during market downturns as can be seen in the accompanying graph. Please note that futures trading involves risk of loss and is not suitable for everyone.
Diversification: Because managed futures programs can profit in bear markets and given the lack of price correlation between commodities and equities, they provide the benefit of diversification for those holding a long only portfolio of stocks or mutual funds. This paper by the CME Group revisits a famous Harvard professor’s study on managed futures.
Security Of Funds: When you invest in a managed futures program with a Commodity Trading Advisor (CTA), your funds are secure since the CTA does not have physical access to your funds, but simply the authorization to trade your funds on your behalf.
Better Tax Rate On Trading Income: You will pay a lower tax rate if you are a US based trader actively trading futures compared to stocks or options. This is because profits from futures are treated as 60% long term capital gains and 40% short term capital gains, regardless of the holding period.
The Benefits Of Trading With Acumen
While there are many benefits to trading with our algorithms, the main benefits come from the time put into developing the code and the automated nature of the systems. The impartial, precise to the second execution of the code is highly efficient and performs faster than any human trader could. In addition, this automation negates many of the negative human emotions that tend to hinder discretionary trading such as bias, fear, fatigue, impatience, and overconfidence. Manual trading can simply not compare to a quality automated trading system in terms of efficiency or effectiveness.
Furthermore, trading manually can be very stressful, and we all know that high levels of stress can be very bad for your health. If you really give it some thought, it simply doesn’t make sense to potentially exert such a great deal of stress and emotional energy by trading manually when in all likelihood you will underperform our automated trading systems.
So relax, and let us do the trading for you. Automate your trading, simplify your life.
The Many Benefits Of Our Algorithms
Furthermore, trading manually can be very stressful, and we all know that high levels of stress can be very bad for your health. If you really give it some thought, it simply doesn’t make sense to potentially exert such a great deal of stress and emotional energy by trading manually when in all likelihood you will underperform our automated trading systems. So relax and let us do the trading on your behalf while you are free to do the other things that you desire in life.
Furthermore, the fact that our algorithms enter long or short trades on a purely technical basis allows you to avoid the pitfalls of market bias. For example, if a high profile political event occurred over the weekend that was perceived as negative news, the market in a financial instrument can open considerably lower and manual traders may try to enter into a short trade at the open or shortly after due to the negative sentiment in the media. However, many times in these types of scenarios a market will “gap up”, or move upward after a substantially lower open since traders view it as a buying opportunity. You can avoid the inherent danger in these types of scenarios by utilizing our algorithms and trading long or short solely based on the movement of the price of an instrument, while effectively ignoring the outside noise.
Additionally, our multi instrument algorithmic programs provide diversification in terms of trend following opportunities since the volatility in a given instrument varies from day to day, and all instruments within the programs are not necessarily all going to be volatile in the same trading day. It is primarily this aspect of diversification of trend following opportunities that makes our algorithmic managed futures programs so effective in terms of profitability and drawdowns.
Stock options also provide a lot of leverage when compared to futures, however, there are other concerns in trading stock options such as theta, or time decay. An underlying stock price for an option can start the week at $10 and also end the week at $10, yet the price of the option associated with it will fall. This is due to the assumption of underlying stock price movement, or theta, that is baked into the price of a stock option. This is not a concern when trading futures. Additionally, if you want to day trade stock options (or stocks for that matter) you need to have a minimum account balance of $25,000 per the rules established by FINRA. The difference in day trading futures could not be more stark; futures traders are effectively encouraged to day trade since day margins are lower (which allows for more leverage), and there are also no futures account minimums established by any regulatory body.