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Look Before You Leap

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A Message from the Chairman and Founder

Before starting a business it is important to have a business plan and have adequate capital. Most new businesses start off with a dream, and the proprietor’s willingness to work hard. Despite hard work, they can fail because of unforeseen difficulties, poor preparation, or lack of capital. Remember this when starting your trading business: try to have adequate capital and plan for the unforeseen by developing and testing a trading plan.

Before trading, it is imperative that you develop a trading plan.

Your trading plan should be capitalized with money you can afford to lose. Generally trading funds are categorized as genuine risk capital if it is money that you can afford to lose. Again, this is not your child’s college education fund, the mortgage money, or grocery money. Proper planning and adequate capitalization are the cornerstones of any new venture.

The first step in building a house is drawing up plans for the completed house. The workmen who erect the house consult the blueprints when placing walls, sinks, appliances, and electrical outlets. The transition from bare ground to a finished home is laid out in the blueprints, or the plan for the completed structure. Trades should be planned with as much detail. Every situation should be planned for, so decisions are not made in the heat of the moment when money is on the line.

The goal of your trading plan is to allow you to make decisions before things happen, giving you a blueprint for trading before entering the market. A basic trading plan should include the following features as a minimum:

  • Trade entry
  • Initial risk or stop loss point
  • Criteria for stop loss movement
  • Criteria for profitable trade exit

Once you have developed your trading plan, put it to the test by "Paper Trading." Paper trading is fictitious trading, or simulated trading, best done using Gecko Software’s Track ‘n Trade 5.0 market simulator program, in which you simulate buying and selling futures contracts, without risking real money. The whole purpose of paper trading is to be as realistic as possible when doing it. It does no good to practice trading with a million dollars, if you are going to start with $10,000. Don’t practice your trading in the S&P if you are intending to actually trade Corn. Keep your practice as realistic as possible.

The one major downfall to paper trading is that it does not involve real money. It is very easy to live through a fictitious losing streak but quite different to live through it when it is your money on the line. Because paper trading does not involve real money, your emotions are kept at bay, but tend to creep up when real money is involved.

Gecko Software’s Track ‘n Trade 5.0 comes with over 25 years of historical data on over 50 different markets, allowing you to learn the markets and develop a trading plan. Six different plug-ins are available for Track ‘n Trade 5.0 to help you maximize your trading strategies. The plug-ins are listed below:

Accounting Plug-in: Enables Track ‘n Trade 5.0 users to simulate placing life-like orders, applying deposits and making withdrawals. Also, it keeps track of commissions paid to your simulated (or live) broker, tracks orders placed, profits & losses, and even simulates margin calls.

Options Plug-in: The order tools included with this plug-in automatically snap to the different strike prices to show you the actual dollar value of the option on that particular day. Track ‘n Trade 5.0 users who have this plug-in keep track of options profit and losses concurrent with your futures orders, allowing them to practice mixing futures and options strategies simultaneously.

Seasonal Plug-in: Comprised of three indicators for the seasonal market, this plug-in assists the Track ‘n Trade 5.0 user to calculate seasonal trends and market probability, and gives historical averages. All this information is based on what has happened to a particular seasonal contract in the past.

Spreads Plug-in: Place orders directly on the spread chart and let Track ‘n Trade 5.0 automatically simulate placing both orders in the opposing contracts, and calculate your daily profits and losses in the Accounting and Simulation Plug-in module.

Commitment of Traders Plug-in: Gives you the overall picture of what is happening behind the scenes of each market. It actually tells you who’s buying and who’s selling, from large professional trade, commercial traders, and small speculators. This information is a great indicator for which way the market will turn.

Bulls ‘n Bears Trading System: The first trading system designed for Track ‘n Trade 5.0 users. This trading system includes easily usable tools to see if the market is bullish or bearish. Bulls ‘n Bears allows you to change the sensitivity of the system according to your trading style, whether you are an aggressive trader or a more traditional trader.

Autopilot Plug-in: Autopilot is more than just a simple trading system, it was developed with the individual trader in mind, and with the mindset that trading methods are more powerful and more profitable that trading systems alone. We here at Gecko Software have created the Autopilot system trading platform in such a fashion that we integrate the advantages of system trading, with the advantages of method trading, allowing the Track ‘n Trade Autopilot to automatically execute your own personal trading methodology, not just a simple trading system.

Candlestick Auto-Recognition Plug-in: Track ‘n Trade’s unique method of automatically identifying, cataloging, and signaling buy and sell signals derived from various candlestick formations is unique in the fact that Track ‘n Trade gives the trader the ability to filter out, or ‘decide’ what a true candlestick must match, prior to receiving a signal.

So, before ever attempting to trade in the futures market, develop a strategic plan. Your trading plan should be realistic and well tested over past history. Once it has been developed, take six months and paper trade; "simulate" trading in "real time," using Track ‘n Trade 5.0. If the plan still holds up, then remember the mantra of futures traders: "Plan your Trade, and Trade Your Plan."

Good Luck,
Lan H. Turner, Chairman and Founder
Gecko Software, Inc.