Plan Ahead & Be Proactive: Practical Advice from Three Decades of Trading

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I have been an equities trader for almost my entire adult life. I spent time trading in the pits at both the Chicago Mercantile Exchange and the Chicago Board Options Exchange, and I am currently CEO of Prosper Trading Academy. I trade "upstairs" while also educating students on the financial markets.

In this day and age, the market never rests. International markets are more connected than ever, and futures markets can be accessed virtually 24/7. And with the increase in trades around the clock due to COVID-19, there is never really a pause or cease in trading.

With this upwelling of connectivity and fast-moving trading, there are also more tools now than ever before to trade the markets. In addition to trading stocks, options and futures, CME Group products offer access to global markets nearly 24 hours a day. Accessibility to the markets has never been easier, and the addition of Micro E-mini futures at CME Group has increased the ability to manage risk and add flexibility to a trader’s positions. Micro E-mini S&P 500, Nasdaq-100, Russell 2000 and Dow futures are among the most liquid, actively traded equity index contracts available. The fact that equity markets move not only on specific stock earnings and reports, but more than ever on macro environmental news, geopolitical risk, economic reports and other headline risk has underscored the importance of these products. For example, a slowdown in the Chinese economy can affect certain market sectors – or the U.S. market as a whole – and vice versa.

A Day in the Life

While I’m typically in my office by 6:30 a.m. ready to start trading in many of these markets, my trading day does not actually start until 8:30 a.m. CST when the opening bell rings. Fortunately, or maybe unfortunately, it actually never begins or ends. The key to my success has been planning ahead and being proactive, rather than being reactionary. Since markets are so closely correlated, I am constantly searching for any arbitrage opportunities between markets.

I am always prepping for the “next” trade or position, constantly scanning individual stocks for opportunities, concentrating specifically on volatility and potential earnings reports. People can definitely experience “information overload,” so I caution on how much information, news reports, Twitter updates, etc., that any trader is tuned in to. Some of the reports I follow throughout the day to get specific earnings information are Seeking AlphaEarnings Whispers and Bloomberg.

We know that a company’s earnings announcements, which typically happen quarterly, can impact its stock price. However, there are many macroeconomic reports that I also follow closely to help in my decision making. Many of these reports have been more difficult than ever to understand since COVID-19 began because we have all experienced a shock to the market that none of us has ever witnessed before. Indicators like GDP, CPI, PPI and unemployment are typically front and center for most traders, and these reports tend to have the most immediate impact on potential market moves. It is essential to be prepared both from a risk management standpoint and to try and take advantage of any potential opportunity. I use the term "immediate" because I am a trader, not an investor. I leave my long-term investing to my financial planner, whereas I concentrate on short-term moves. A few other reports or markets I closely watch which may impact equity markets are the bond market, retail sales figures and the housing market.

Overall, risk management is my highest priority, and the most important lesson I have learned over my 30 years of trading is never to force a trade. My advice is to not get caught up with FOMO (fear of missing out). There will always be another trade to make.

Experience the excitement, energy and decision-making environment of real-time trading of equity index futures and options (and other CME Group products) during the annual CME Group University Trading Challenge. Learn more or register here.

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