Jack asked in a comment what is the relationship between the futures and cash markets. For the past several weeks I have been pouring an enormous amount of energy into:
a) Familiarization with a real-time futures platform, configuring and experimenting with stock index futures moving averages and technical series.
b) Crafting a trading robot, basically a software engine that on the minute pulls in these averages and technical series and compares with real-time prices. It then generates signals based on the analysis. I issue the trades manually.
c) Developing a system of trading with trend, which has been difficult for me in the past because I have tended to trade picking tops and bottoms (which I do fairly well). The ability to slowly increase exposure with trend after having positioned near an extreme is a necessary skill set.
d) Using futures data to establish close stops instead of the wide stops I typically use trading ETFs.
e) Developing a systematic method to take advantage of trend changes that occur overnight while I sleep. I am still working on this and hope to employ the robot to take small positions on it's own.
The futures and cash markets provide two different view of the same reality. The long moving averages that I use in the cash market provide different results than the futures markets and so a different set is employed. I've discovered new methods using the futures platform that feed back into my cash analysis.
Of course, all of this effort has taken away from my analytical effectiveness somewhat, but the longer-term results will be worth it.
3 hours to go until the close. Still waiting on SP 1086.25 to confirm next leg down. Currently 4% SDS and 4% futures, but I want to expand that.
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