The Shanghai (Overnight Futures) Surprise

This article is submitted by Michael Toma.  

Michael is a Certified Risk Manager, author, and trader and is our “resident risk” contributor at The Trading Edge.

In this fun article Michael shares his recent experience of trading while vacationing in Asia and shares his experience of preparing to trade away from the trading desk.


 

I recently took a trip to Asia to celebrate the Chinese New Year holiday.

I look forward each year to experiencing Shanghai life and eat great food ‘till my heart’s content. The markets however don’t really care about my travels and I spend a few days before each trip preparing to assure I can maintain the ability to work my core trading business.  

Five years ago, I would be closing all open positions and hope to get a futures trade merely for the engagement and praying for connectivity being my primary risk management plan.

These days, one can shoot for ubiquitous trading coverage across most established places in the world. Were my expectations a bit high? Perhaps, but I looked at the following concerns (risk identification) and my plan to overcome each.

My platform needs were simple:

  • OCO bracket order capability
  • A NYSE tick chart to time my entries
  • Market profile data I can obtain online each day
  • Options chains data with greeks

I would average 1-2 futures trades each day, some in the overnight session and placing 2-3 options premium writing trades each day as well.

Other identified business risks:  

Internet accessibility, reliability and consistency:

My trip consisted of 2 weeks in Shanghai and five days in Manila, Philippines and in the island of Bohol.  

Prior to my trip, I verified a new wifi service was installed at my in-laws home. Yipee… problem solved!

Well, almost. With the exception of a few hiccups, all which were in-law driven, I can honestly say I made it through, at least on the consistency front.

Speed?…. not so much but I quickly found out that reliability trumps speed. I met with another trader out in Shanghai and he had connectivity problems nearly everyday. Perhaps next time he should consider staying at my in-laws….bless his heart.  

And for the Philippines? Given what I heard, I lowered my expectations and rightly so.

Bohol is an island where the airport is the size of my right thumb.

Manila had great connectivity however they don’t allow phones near the craps table, so there.

My goal was if I could successfully do my trading in Shanghai, I’d gladly put the platform away and enjoy the Hawaii-like views the Philippines provides.

Time difference challenges:  

This was a tough one. The 13-hour time difference meant the worst case scenario in trading availability, at least during regular trading hours.

The trading junkie that I am found me placing my laptop near my bed stand. This was the week after the Trump U.S. presidential inauguration, so the markets were a rockin’.

It eventually took its toll on me, especially after long days touring the city and visiting friends and family. Picking my entry and letting the OCO orders do the work did just fine. Watching a trade never helps anyway.   

Technological limitations:  

My bread and butter futures and options writing styles rely on market profile, so I don’t need 50 charts and big screens with lots of studies. In fact, I can get my value area figures online, place them in my pocket and I’m ready to go. While I’m out and about, I used the mobile app version of my platform that served me needs perfectly. It has several of the common technical features to jazz up my charts and the ability to place OCO orders as well. … bring it!

Many traders would have struggled here but my mission to simplify my trading really paid off. I’ve worked hard to adapt to a mobile lifestyle which allowed me to trade in coffee shops, stores, around consultation meetings and when I’m out and about. This scenario works back home, so why wouldn’t it work in beautiful Shanghai? The key was the reliability of my phone’s data service, which included regular service overseas albeit at a slower speed. Again, I didn’t need speed, just reliability and they did not disappoint.

I even placed a trade while on the subway, which I never expected to have reliable connectivity. Subway platforms and while in the cars themselves provided great reliability which I could never have dreamed of five years ago.

Wrapping Things Up

Overall I had a great trading experience in Shanghai and I accepted the limitations in the Philippines.

Bad connectivity at the latter combined with beautiful weather and palm trees succumbed to my trading with little regrets.

The biggest challenge I had in Shanghai was not the technology but my schedule itself in the form of family, friends, and holiday gatherings. (How dare they get in the way of my trading!)  Overall I managed to keep my quantity light on the futures and recorded performance results nearly identical to trading back at home base with all the fancy monitors.

My lessons learned?  Simplifying my trading plan in recent years to accommodate travel and trading is really paying off. Mobile technology has really accommodated today’s day trader in both connectivity and charting.  It also contains my risk management tools with OCO bracket orders and backup laptop connectivity where I was staying.

My only wish is for fat-free dumplings, charging outlets at coffee shops and perhaps a bit more in-law consideration for setting dinner time right before the unemployment number release. … how dare they.

 

The Shanghai (Overnight Futures) Surprise

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