REAL WORLD
New Opportunities, New Times
Strategies For Single-Stock Futuresby Don Bright
With single-stock futures ready to make an entry into the markets, you need to be armed with the right strategies.
I'm often asked what the traits are that successful stock traders have in common, and although there are many, what I find binds all good traders together is adaptability. We all thrived through the euphoria of the dotcom phase, and the Nasdaq's meteoric rise past common sense into obscenity. Many a genius was behind a computer when the buy-and-hold mentality permeated the shell of proprietary trading. Television analysts and online brokers found gigantic audiences in the nouveau stock market aficionados. Initial public offerings (IPOS) were all the rage and a sure topic for cocktail party discussions, and the Internet had become the vehicle for bathrobe-attired investors to ply their newfound trade. The markets were flying, and paper millionaires were sharing their exploits in chatrooms and videotapes. Yes, it was pretty hard to stay out of a game like that. Everyone seemed to have an interest in the market.
Afterward, after the markets had plunged to the doom of the casual investors, professional traders found themselves in familiar circumstances: They had to adapt or perish. New strategies based on new platforms and new access capabilities emerged, including mergers/arbitrage, pairs trading, opening techniques, and all the rest. Today, we have even more new entries: mergers of electronic communication networks (ECNS) and execution platforms (REDI/ARCA); licensing requirements for traders who want to trade for a living; automation; and single-stock futures (SSFS), which are coming online soon. As Bob Dylan wailed, "The times they are a-changing," and they certainly have changed significantly over the years. Now we need to adapt to the new climate.
...Continued in the May 2002 issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the May 2002 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2002, Technical Analysis, Inc.
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