Last week’s activity has many traders asking questions: How should markets react to certain real-world events? Is there any correlation between the state of the collective consciousness and the performance of financial instruments? Where do we go from here?
A good plan of action for your trades and investments in times like these could simply be to stay calm. Though exercises such as politics may demand a more passionate approach, activity in your portfolio should maybe not evolve as rapidly as your Twitter news feed.
This isn’t to say that active traders should avoid short-term opportunities, but rather that the more consistent strategy may be to refrain from uprooting long-term investment and trade both sides of a passing moment. Take, for example, the recent activity in interest rates.
Rates in the Short Term (Small Treasury Yield S10Y)
The 10YR Treasury rate, via S10Y futures, has doubled in the last five months as it tears through 1.00%, or $10.00 in S10Y. Contrarians interested in selling into this rally may find that adding the context of the last few years could cloud their judgment.
Rates in the Long Term (Small Treasury Yield S10Y)
The average 10YR Treasury yield over the last three years is 2.00%, $20.00 in S10Y. This fact might lead those looking for mean reversion to find value in the upside. So, what do you do with a market that could have potential for profits from both the long and short side? Well, you can buy AND sell it.
It’s possible to be both bullish and bearish as long as trades are separated into varying timeframes and products permit flexibility. S10Y futures let you trade rates for a margin cost of just $180.* This can allow for a long-term position of a few units with interspersed short-term trades of a single unit.
If your mechanics are sound and your portfolio is organized, you can have ephemeral strategies side-by-side with more persistent opinions all without getting turned around.
*Value taken on 1/7/21, per contract, based on OCC initial margin rates
To learn more about how the Small Exchange is merging the efficiency of futures with the clarity of stocks, make sure to subscribe to their YouTube channel and follow them on Twitter so you never miss an update.
© 2020 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information in this advertisement is current as of the date noted, is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading futures involves the risk of loss, including the possibility of loss greater than your initial investment.
Contact Daniels Trading
To open an account or request more information, contact us at (800) 800-3840 or firstname.lastname@example.org and mention .
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the “risk disclosure” webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
SOURCE: Daniels Trading – Read entire story here.