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System futures trading and portfolio enhancement
Traders using systematic approach in their trading enjoy
benefits that other, intuitive traders, do not. Many books and
sites exist on that topic, but I want to highlight one aspect
not much spoken about: namely portfolio enhancement.
The portfolio approach to trading is based on the notion that if
you invest in different assets whose prices do not correlate,
you get a safer portfolio than would be the case if you invested
in similar, correlated assets.
At the same
time we know, that since it is futures markets we are
talking about, we can utilize fluctuations of prices in both
directions equally easily. Hence, there are trading systems for
one and the same asset, which are based on different approaches:
trend following, contra-trend, short-biased and long-biased etc.
If, trading say the S&P500, we combine systems uncorrelated with
one another, in other words, if we use a portfolio of systems,
the result is much safer trading than trading with one system,
or intuitive trading (since intuitive trading is almost always
biased reflecting the personality of a trader). Well, and what
if we use a portfolio of assets, and for each asset, a portfolio
of systems? The result is obvious: a much more robust portfolio
and a much safer trading approach; safety and robustness raised to
the second power, so to speak.
On the pages
of this site, we will try and illustrate how this concept works.
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| Crude oil |
Lean hogs |
Kansas wheat |
Heating oil |
S&P500 |
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Nasdaq-100 |
Chicago wheat |
Corn |
Cotton |
Platinum |
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Fed funds |
Live cattle |
Gold
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30-yr. T-bonds |
Dow Jones I.A. |
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Coffee "C" |
Euro FX |
Silver |
Copper HG |
Soybeans |
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Go right to the system you
track:
S&P500 systems
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Non-S&P500 systems
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