So, What Have We Learned?
As I mentioned at the outset, our overall performance has been good despite these head winds. However, we also learned a few things about how trading style can impact subscribers to our service… particularly those who are new to trading options.
- Having access to multiple strategies is Important
Each individual trading strategy will perform best in certain market conditions. Given that market conditions cycle as markets move from consolidating to trending, and from tops to bottoms, there will be times when a particular trading strategy doesn’t identify opportunities or perform as strongly. Consequently, we’ll be working harder to ensure that members have both our strategies so that when one is less active, they can take advantage of the other.
- Long trade duration & adjustments are hard for small accounts
Even though in many, many trades we’ve been successful in adjusting losing positions back to break even or significant profitability, I must acknowledge that this process ties up capital in open positions. We’ve noted that this is difficult for subscribers with smaller accounts who may run out of capital to take new trades while waiting for losing positions to be adjusted. Despite the fact that the overall result is that the capital is recovered, waiting through long trades and missing out on others due to lack of capital is frustrating for smaller account holders. Therefore, we’re looking to improve this experience by adjusting our risk management approach. We’re running numbers and expect to have an update on this in due course.
- Adding a non-directional strategy will benefit our members
Over the past couple of years, with markets often range-bound with uncertainty as discussed above, we’ve concluded that adding a strategy that performs in sideways conditions will be good for our members. This should help increase activity and also offset periods when directional strategies don’t perform. As you know, I’ve been exploring a strategy with Calendar spreads for this purpose for some time now.
So in line with the above, we’ve embarked upon several changes to our service that we hope will make a big difference to the experience for all of our members. I will be excited to officially let you know about these announcements in the not too distant future..
Take care everybody,
Chief Trading Strategist