Not really if you take a look at the attached real-time chart.
I am a speculator of currency futures options with 30 years experience in trading just one Currency Pair Eur/Usd (earlier Dem/Usd) and two simple trading strategies:
1. Buy (long) Options outright and predict Breakout in advance is one of them.
2. Sell (short) Options but the risk is not defined in advance and need continual adjustments.
Pros:
- No margin calls,
- no money management,
- no lots/positions management.
- Risk is defined at the time of taking the trade.
- Risk to reward can vary from 1 to 4. Take Profit can be put as pending trade.
- Outcome duration from 5 days to 20 days
- Just focus on mastering techniques to predict Breakout by combining pattern recognition with fundamental and technical analysis
- CME instrument, Exchange-regulated , so no counter-party risk.
- Less risky and won't affect psychology if you accept to take defined risk
- Not complicated to understand and simple to analyze and executed.
- Gives breathing space for the prediction to be wrong several times without the trade being liquidated - unlike a stop loss resulting in irrecoverable loss.
Cons:
- Only four symbols are liquid: Eur, Jpy, Gbp and Aus
- Minimum investment: Starting from $1,250 per contract to cost of outright buy of options, which depends on strike price
- Don't expect more than 15 breakout opportunities out of which I target 8 chances for profit
- Most of the bought options - up to 80 per cent - expire worthless because most of them are bought and sold by speculators for a different objective. Mostly for hedging their assets. So I will use strategies which can produce results in a very short period of time.
Trading Strategy is quite simple. I predict breakout based on my study of fundamentals and historical/seasonal patterns. I don't use any indicators and depend on my old notes on the behavior of the pair in the past. Discretion or subjective decision making is involved. Timing is the key factor.
Trading Platform:
I use Interactive Brokers trading platform to trade CME currency futures options - data for which is provided for free by CME to a non-professional trader.
CME sells data through authorized distributors and allows brokers to provide trial paper-trading platform for a maximum period of two weeks.
Unlimited Paper-trading account with real-time data is supplied by Interactive Broker to test strategies. I can use either Live account or Paper Account if I need access to real-time data. Minimum deposit of $10,000 is required by IB to provide a paper-trading account.
No broker uses MT4 or MT5 platform to trade CME futures options.
Can the strategy be coded into EA- like automated trader?
Yes, it can be. I am a non-coder but can design trading logic and structure.
IB supplies very basic chart technical analysis tools but supplies API to develop applications in both high-level and low-level programming languages.
I am willing to supply details to any programmer who is serious on coding indicators and auto-traders which can work on the trading platform of Interactive Brokers (IB).
The basic process will be:
- Pull real-time data through the IB API pipeline, work on it in an application supplying trading model and indicators to compose/execute trades through the pipeline back to IB.
- Some kind of time-series analysis is needed to back-test the historical data and identify repeating patterns, active and hot trading hours.
Manual Execution:
I execute the trade manually . I buy options outright based on my 5-20 days view of whether breakout will happen or not and what will be its speed and size.
Fake breakouts are helpful as I put Take profit targets in advance.
Automated Strategy:
Interactive Broker has provided sample applications in different programming languages for pulling real-time data through their API.
I am willing to share this strategy with any programmer who can pull CME futures options data from IB through their API in any of programming languages they know and develop the application to trade on the model provided by me.
