Dynamic Futures Micro Program

Why Micro Futures are the Ideal Instrument for Small Account Diversification:

There are several reasons to consider adding Micro Futures trading to your strategy portfolio:

  • Smaller margins. Micro Futures contracts are 1/10 th the size of a full futures contract. That means margins are 90% lower! This allows you to cover multiple markets with a relatively low account balance.
  • Multiple markets. Since the margin requirements are low, you can cover several key markets. This reduces overall account risk.
  • Non-correlated markets. Prices on stocks, commodities, currencies, and interest rates move in different ways. When you trade with non-correlated markets, your equity curve is smoother.
  • Hedging advantages. Positions in stocks and equity options are subject to losses when the market moves against you. Futures trading provides a hedge against this kind of adverse move.

The CME currently offers Micro Futures with good volume on the following markets: Gold– E-Mini S&P500 -E-mini NQ100 -E-mini Dow Jones -E-mini Russell 2000- Euro/USD Futures -Crude Oil. There are also other Micro contracts on Metals, FX, Interest Rates, and Crypto but with less liquidity.

Academic Guidelines

  • The Dynamic Futures Portfolio is composed of a pool of systems trading different markets (indexes, commodities, currencies, etc.) to provide diversification to the capital. 
  • The systems are currently trading primarily the Micro contracts on the Nasdaq100 Index, Crude Oil, and Gold, but there will be other markets, such as Currencies, Interest Rates, Crypto, or other Indexes that will be traded and added to the portfolio when and if the market conditions are optimal.
  • The systems will have a mix of breakout logic, such as momentum trading and others that will enter on a retracement in favor of the trend, and others will be a countertrend. There is also diversification regarding different time frames in the same market.
  • For example, we can have a system on the Nasdaq index that works on a 10 or 15-minute time frame to better capture small moves and another system on the same market that works on 30 or 60 minutes to capture a bigger move and swing trade if necessary. Also, some systems will go only long, and others will go only short based on market conditions.
  • Constant monitoring of the performance of the systems. If a system is not performing well, it will be put on standby or discarded and substituted with a new one that better fits the current market conditions. The systems will also be reoptimized and modified, if necessary, based on performance. 
  • Completely automatic, there is no human intervention or discretionary trading. All the rules (entry price, stop loss, target, etc.) are coded, and the computer simply executes the algorithms of each system.
  • All the systems are built and tested using professional protocols based on advanced statistical analysis and artificial intelligence with the goal of finding the most robust systems currently performing in the markets.
  • Portfolio Minimum. $6,000 – $10,000 to cover the contract size and allow cushion within the account.
  • Average Monthly trades could be 15-20 on average.