Jumping into Futures - started trading "Have Fun" on Collective2

Comparing various trading systems on C2, future systems as a class show better performance over stocks, options or forex, so I decided to give it a try.

My worst fear of futures comes from the fact that commodity prices are much more volatile than Gaussian statistics predict and large price moves happen much too frequently. (This is sometime referred to as "fat tails" of the distribution). In those cases it is possible to wipe out many years of gain in a few days or even hours. So, I was looking for a system that makes few very high probability bets and does not stay in the market for too long. Based on that, "Have Fun" was the system I felt most comfortable with.

This system trades futures of Russell 2000 stock index which is a very broad indicator of the US stock market. The reason for my selecting this system is consistency of returns, high realism and reduced exposure to market reported on Collective2 web site. I also like relatively short trade duration of 1.9 days and no significant correlation to stock market.

I began auto trading "Have Fun" system with $35k account. The system is scaled so most of the time only a single contract is traded. The underlying value controlled by one contract is about $70k. So with 1 % change in the underlying security value of my account changes by 2%. So if instead of futures, I was trading the index, I would have to margin 100% to get this leverage. And this is only a single contract. Bottom line, if you only have traded stocks before, trading futures is quite nerve racking. If this is the only money you have - don't do it!

In this system trade signals come very infrequently and you need to be ready all the time. Case in point - last night my kids "hi-jacked" my computer for playing Warcraft and I forgot to set it up for auto trading. Being on the west cost, I did not wake up at 6:30 AM for the beginning of trading and just like that - missed a profitable trade... That's it! No more Mr Nice Guy!

But seriously, if you are auto-trading, equipment malfunction can also destroy many years of gains if you end up on the wrong side of the trade while your DSL line is down or Windows decides to install some type of patch and cause system reboot. These types of things don't happen too often, but realistically they may happen more often then large market moves. So be careful - and if you can help it keep your kids, your spouse, your buddies away from the machine, make sure machine is plugged into unswitched outlet and make sure that there are no screen savers and no other programs running that can interupt the auto-trading program (Trade Bullet) to route orders to your broker.