British Pound and Sugar Trades

We expect to sell the December British Pound on Wednesday night for Thursday’s trade. We’ll be risking 2.5% from the Wednesday night’s opening price. This equals 330 points or $2,062.50 per contract. Initial margin for the British Pound is currently $1,650. Finally, we plan to hold the trade through the first week of October.

*Past performance is no guarantee of future profits.

*Past performance is no guarantee of future profits.

Out of sample equity curve for strategy.

Out of sample equity curve for strategy.

Finally, the Monte Carlo analysis shows us that the risk to reward ratio is firmly on our side because the average trade is more than three times the standard deviation of the returns.

*Past performance is no guarantee of future profits.

*Past performance is no guarantee of future profits.

Moving to the March sugar, we expect to enter a new long position Thursday night for Friday’s trade or, Sunday for Monday’s trade. Either way, we’ll be risking 4% from the entry price. This equals 46 points or, $515.20 with March sugar trading at $.1050 per/lb. Obviously, the total risk on the sugar trade is less than the British Pound. This brings up the point of proper contract sizing for a portfolio. We never know what the market will give us on the profit side but, we can control the risks fairly well. A portfolio equalized for risk across both of these trades would clearly trade 3-4 sugar contracts for every British Pound. Finally, we’ll be holding the sugar trade through mid-October.

*Past performance is no guarantee of future profits.

*Past performance is no guarantee of future profits.

Out of sample equity curve vs sugar's closing price.

Out of sample equity curve vs sugar’s closing price.

Once again, the Monte Carlo analysis indicates the risk to reward profile fits our requirements. This shows that our risk to reward ratio is better than 2:1 excluding the in sample periods.

Once again, we defer to the Monte Carlo simulation for a more well rounded look at our expectations.

Once again, we defer to the Monte Carlo simulation for a more well-rounded look at our expectations.

We’ll update subscribers nightly and send out clear entry, exit and, stop prices as the trades are triggered.

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This material has been prepared by a sales or trading employee or agent of Commodity & Derivative Advisors and is, or is in the nature of, a solicitation. This material is not a research report prepared by Commodity & Derivative Advisors’ Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Commodity & Derivative Advisors believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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