A recent article in The Wall Street Journal provided the basis for why every trader should deploy automated futures trading strategies in their account so as to profit from the advantages that an individual has in the financial markets.
The Wall Street Journal piece by Micahel Rothfeld and Scott Patterson, “Traders Seek an Edge with High Tech Snooping, “ detailed how institutional investors with deep pockets such as Goldman Sachs (NYSE: GS) and hedge funds with billions in assets pay hundreds of thousands of dollars a year for actionable information, all of it allowed by the law. Rothefeld’s and Patterson’s excellent article reported how helicopters with heat-sensitive cameras would perform reconnaissance missions over oil tanks, swooping down to determine how much was crude being stored. That data would then go to clients, who would then trade futures based on the findings.
All of that is perfectly legal and, in many ways, admirable.
The clients of Goldman Sachs and hedge funds should be very pleased that their asset managers are doing everything legally permissible to earn as much as possible for their futures accounts. For individual investors looking to profit from the commodities markets, there are two viable options: invest with Goldman Sachs and the others, or invest in an automated futures trading strategies.
There is no way that an individual investor can compete against Goldman Sachs and other Big Money shops at that level.
But, like the old gun fighter saying goes, if you find yourself in a fair fight, your tactics suck. An individual investor can easily utilize a automated futures strategy to profit handsomely in trading tactics where there is advantage over Big Money accounts. Individual traders, by their very nature, are much more nimble and flexible than institutional investors, which is a huge asset in the futures markets.
This is not only a matter of size, but also of charter.
As an example, many institutional investors, such as mutual funds, cannot go short. That allows for a trader to profit in a down market. Others cannot buy assets below a certain sales price. This is yet another area that favors the individual with automated futures trading strategies programmed to profit from that advantage.
In The Wall Street Journal article, Andrew Lo, a professor of finance at the Massachusetts Institute of Technology, warned that advances in technology can make the markets more efficient, but also more unfair. Lo warned that, “It can drive less-informed investors out of the market. ‘Is the information so valuable and so valuable that only a few people can get it?’ That creates a barrier to entry.”
That is a silly statement as that is the major reason to invest in a mutual fund as it has superior research resources and better trained professionals on its staff making the decisions about what to buy and sell for the shareholders.
For those who are worried about superior resources of institutional investors, an index fund is the right answer. But for those individual investors who are willing, like the Big Money players, to maximize their advantages, the right automated futures trading strategy can be very profitable. Every investor has an asset that no others have (as The Great Gatsby said, no one else in this world has the advantages that you do). The right automated futures strategy optimizes it and ensures that the individual has an edge in the financial markets, rather than finding themselves out gunned by bigger firms.