Below are some commonly asked questions and answers about our trading room.
What is a trading strategy?
A trading strategy is a tool used by individual and professional traders that uses an objective entry and exit criteria based on the systems parameters that have been determined by historical testing on quantifiable data. Strategies are run on computers or servers that are linked to an exchange for trading.
Developers and professional traders will update the strategies revisions (updates) as they see fit. Most professional traders use Trade Station or Portfolio Maestro to trade their specific strategy and run all their data on for testing and as well actual live trading.
Why should I trade a specific strategy?
Trading futures, forex or even the equity markets using a specific trading strategy will provide the discipline to overcome fear and the greed that can paralyze a trader and prevent making timely decisions. Each order placed is governed by a pre-determined set of rules from the specific strategy that does not deviate based on anything other than market action. This is called sticking to your Trading Plan and not allowing the Emotion to deviate from your plan!
How would I know if the strategy is good?
One key element of a trading strategy is the ability to be back-tested for hypothetical performance using quantifiable data. Recognizing that hypothetical results have not been market-tested and that they are usually provided by the strategy developer who is in the business of selling trading systems, the trader can obtain some idea as to the trading systems characteristics.
However, the only true test of a strategy is to see how it performs in actual trading where market slippage and trading cost are a part of the record. As a result, there can be a significant difference between hypothetical and actual results and neither is any guarantee of future trading results.
How much capital would I need?
The minimum deposit to open a trading account varies by the broker and the strategy. In addition, the prospective trader should only consider opening a futures account when the trader has sufficient risk capital, due to the leverage in futures trading.
How does the subscription service work?
Each strategy has been back tested, also trading live for many years. Each strategy has been set up specifically for auto-trading at a broker who receives the strategy signals or the code. Once you have purchased one of PIT’s strategy programs, you will be receiving an email going over the next steps.
Within 24 hours you will be receiving a call from one of the auto-trading brokerage firms to assist you on setting up your trading account. When completing your broker paperwork you will be setting up an account for Letter of Direction, “LOD”.
When you are completing the LOD, you are giving authorization to your broker to ONLY take the trades from the PIT service that you have purchased. Once you are set up and approved at the broker, and you have deposited your trading funds, your account should go live.
Do I have to Auto Trade?
Yes, each strategy is set up with a specific broker who has the experience, knowledge and technology to receive the code or signals to execute the trades properly and effectively.
Do I have access to my account to monitor the strategy?
Yes, you and only you will have access to your trading account after you have set up your auto-trading brokerage account. You can log in and monitor the strategies anytime. In fact, we have clients adding more trading funds as the strategy sees favorable market conditions and they take money out as needed for personal purposes.
What happens after I have signed up for a specific strategy?
After you have decided which strategy fits your interest and you have made your purchase you will receive a confirmation email. Within 24 hours you will be contacted by an auto-traded brokerage firm to assist you in setting up a brokerage account. Since the specific strategy is set up for automation only, and you will need to set up an account at a broker. A list of brokers will be sent you in your confirmation email.
Once you have been confirmed as a new subscriber and your brokerage account is set up, you can authorize your broker to start taking the signals from the specific strategy that you have purchased.
Do I need to watch the market every day?
It is not necessary but always a good idea to be knowledgeable about market fluctuations. Each strategy has specific parameters to enter the market, exit the market and stay on the sidelines. The trading team behind each strategy constantly is monitoring their strategy and the markets to ensure the overall long term success.
Will I be alerted from my broker before the trades are executed?
The auto-traded broker will alert you prior to your trading account going live.
If I do not want to continue trading the strategy, what do I do?
You would contact your broker and let them know you would like to stop trading the account. You may have open positions in your trading account from the strategy, your broker and you can discuss what you would like to do with the open trades.
Are there any Risks?
Any one strategy may be subject to market specific, strategy specific, or complex specific risk. By trading multiple systems across different markets, one may reduce market specific and complex specific risk. By trading systems with different entry and exit strategies, the trader may reduce strategy specific risk.
However, the risk of trading can be substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated tests of strategies, is not necessarily indicative of future results.
Is strategy trading a valid approach to trading futures, Forex or Options?
In our opinion we do feel certain that it is, and most professional traders will trade using a specific strategy of some sort in trading most markets. Any strategy ranging from simple entry and exit criteria, money management rules, the use of stop losses to protect positions or take profit points, to the more complex use of technical indicators and mathematical formulas. Having a specific strategy provides a consistent and logical approach to trading any market category.
The strategy could be complex or simple; a trading strategy is usually most effective when implemented consistently in the market. One problem frequently encountered by individual traders is the difficulty in following a specific strategy, whether their own or a professional developer’s. Sticking to a specific strategy requires discipline, and discipline is often difficult to maintain in the heat of live market action, where emotions can rule the day, and a professional trader will not be tempted to second-guess his or her system.
What happens when the strategy that I have purchased seems to be not doing as well as I thought?
Every strategy out there, no matter who is trading it or who developed it, will go through a period of losses at some point. No one can pick the top and bottom 100% of the time. Some individuals may get nervous when seeing losses; this goes back our statement about having a plan and sticking to that plan. Nevertheless, merely because a strategy is struggling at the moment does not mean that it will not offer positive returns over the long run.
A number of systems have gone through periods of drawdowns, but they have also gone on to make money for the trader. While it is always preferable to see winning trades in one’s account, the fact remains that the futures and other markets, tend to fluctuate. Futures markets can also be more volatile than equity (stock) markets but trading futures using a systematic approach offers specific advantages using establishing rules of risk and money management. In other words, patience and an accurate assessment of one’s financial situation are key factors in systems trading.
Do trading strategies ever completely fail?
Strategies do on occasion chronically underperform. Specifically, Futures trading is inherently risky, and while strategies in general are developed in order to manage risk and improve a trader’s chances of obtaining a successful outcome, traders should nevertheless trade using only risk capital.
My strategy is losing money. What are my options?
Our priority is your trading comfort. We don’t advise that subscribers abandon a strategy merely because of a series of losing trades which every strategy will see at some point. If you feel uncomfortable with the direction of your current trading approach, you do have the option to stop trading, take a deep breath, and allow the strategy to get back on track. All Strategies do go through temporary periods of drawdown and usually come out of the drawdown. Some drawdowns can last several days or several weeks. It is just being patient during this timeframe.
I have purchased a strategy which is currently being traded at the auto-traded broker. What is the relationship between the auto-traded broker and the strategy developer?
The developer will send the specific signals and coding the auto-trading brokerage firm and they are simply executing that signal on the subscriber’s behalf. There is no discretionary trading on the broker’s side and they will only take that specific signal. One of our goals her at PIT is the unbiased reporting of strategy performance. PIT has no financial ties to strategy developers. Our financial independence allows us to be objective in offering different strategies. The leasing or purchasing of proprietary strategy is a matter between the subscriber and the developer. While we strive to work with reputable developers of robust and legitimate systems, we see our role as primarily one of service and the accurate reporting of information. To this end, we do not tamper with strategy signals, but faithfully strive to offer real and successful strategies to the consumer.
How are trading signals different than trading systems?
Trading signals – also called trading picks and trading alerts – are simply notifications of when to buy and sell an instrument which could be forex, futures, stocks, ETFs, or options. Good trading signals include an exact entry price, a stop loss price and a profit exit target. Common delivery methods for trading signal alerts include email, cell phone text messages. Trading signals may or may not include the underlying strategy or rationale for taking a trade.
A trading system is the underlying, detailed strategy for placing trades. A trading system may include both fundamental and technical analysis. Fundamental analysis for stocks includes examining a company’s financials and business operations like earnings, debt, product offerings, competition, and company news. For forex, futures and ETFs, fundamental analysis includes newsworthy items and world events that move the markets. On the flip side, technical analysis primarily involves the study of charts, price movement, and volume by using technical chart indicators. For market technicians, all fundamental data is built into the price itself, and can be seen on the instrument’s chart.
How are your trading signals verified and tested?
Our trading signals are tested real-time in the live market. You won’t see any back testing results here. For each trade signal strategy, you can see the total number of trades, win / loss ratio, maximum drawdown, and monthly percent return to name a few.
Who created your trading systems?
Our trading systems are developed by real traders.
How much money do I need to trade?
The amount of money you need to trade really varies depending on what you want to trade. For leveraged instruments like futures options, stock options and forex, you can trade with as little as $5,000. While trading stocks and futures you’ll need a larger account in the range of $10,000 or more. These amounts are for information purposes only and are not intended as investment advice. The amount you choose to trade is very personal, and you must take into account your own personality and risk tolerance.
How much money should I risk per trade?
The amount you risk on any one trade really is a personal decision. However, one common method is to risk only a small percentage of your overall trading account on any one trade – no matter how great the setup. On the conservative side, some money managers may risk only 1 – 3% on any one trade. On the very aggressive side, day traders may risk as much as 10% on any one trade. When deciding how much to risk, examine your trading system’s winners versus losers. If your trading system has 60% winners, then for every 10 trades you have 4 losers. Now think worst-case scenario. What if those 4 losers happen all in a row? Will your trading account survive? Whatever you decide, keep in mind that preserving your trading capital is paramount to long term trading success. It may sound obvious, but if you blow through your trading account, you are done trading. Period.
Do you offer a money-back guarantee or any refunds?
Not it this time. There are too many market factors beyond our control.
When do you take profits?
Profit levels vary by each trading system and trader.
Where do you place your stops for losing trades?
Stop losses also vary depending on each trading system. You’ll want to choose a system that fits your particular risk / loss tolerance.
Do I have to watch the markets all day in order to trade your signals?
No, these programs are auto traded for your convenience.
Are you a broker?
No, we are not. We are not associated at all with any brokerage firm.
How Can I Cancel My Subscription?
To cancel your auto trading account, you would contact your broker and let them know you would like to stop trading the account. You may have open positions in your trading account from the strategy, your broker and you can discuss what you would like to do with the open trades.
- Contact your broker and inform them you’d like to cancel your account.
- They’ll help advise you on what to do if you have any current open trades.
- Login to your subscription account to cancel the monthly subscription charges: https://passiveincometrades.com/my-account/
- Click Subscriptions on left side of page.
- Click View button.
- Click Cancel button.