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Make A Resolution That Counts

January 5, 2021 by Frank Kaberna| Tips & Strategies

For the last 40 centuries, going all the way back to the Babylonians, human beings have marked the start of a new year by resolving to something.* Were they promising to lose weight by buying themselves Peloton bikes and subscriptions to Imperfect Foods? Probably not. (Not only did these things not exist in 2000 BCE, but New Year’s resolutions were religious events whereby people made promises to gods and repaid debts.)

In 2021, why not abandon plans for physical improvement that will be discarded by February anyway? Save yourself the sadness of that stationary bike you paid too much money for transforming into a coat rack and those veggies you prevented from waste growing mold. Instead, invest in your mental, emotional, and financial wellbeing with a less attractive resolution: take losses in futures trades that could protect against larger losses.

Gain exposure to popular markets with standardized tick values and expiration dates on the Small Exchange. Learn More >>

The best futures traders rarely argue with inanimate objects or pray to market gods. Why? They close losing trades with the same mechanical clicks as they do winning trades. Though exiting a trade in the red may come with some short-term sting, it’s a necessary evil in the fast-paced world of futures.

Theory of Losing

Directional strategies have a theoretical success rate of 50%. The great advantage of this proposition, and futures in general, is that traders can create long-term profitability by simply tipping the scales a few percentage points in their favor. Many market makers and prop trading groups have kept the doors open for decades by operating with win rates just north of 50%.

Small Stocks 75 (SM75)

Small Stocks 75
Source: dxFeed Index Services (https://indexit.dxfeed.com)

Take, for example, shorting the stock market. While there were many opportunities to take $100 out of selling SM75 in the first ten months of 2020, a single short position taken on the first trading day of November would have been down more than $1,300 if it went unmanaged to the end of the year. Just managing a few short trades for $100 losses and waiting for better prices to sell could have saved money and headaches in the long run.

Incurring losses in futures trades that are multiples of your profits will not help your bottom line. While taking a loss is never fun, it could be the difference between net profits and losses at the close of 2021. Who knows? Maybe Peloton money will be chump change by 2022.

 

*Lennox, Doug (2007). Now You Know Big Book of Answers one of the amazing thing. Toronto: Dundurn. p. 250

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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.

© 2021 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.

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Filed Under: Tips & Strategies

About Frank Kaberna

Frank Kaberna is the head content strategist at the Small Exchange. He produces everything from brochures to videos that inform on the Small Exchange’s products. After earning a mathematics degree from the University of Michigan, Frank traded interest rates at the Chicago Board of Trade. He then worked on the tastytrade Network as a content producer and on-air talent before landing at the Small Exchange.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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