REAL WORLD
New Opportunities, New Times
Strategies For Single-Stock Futures
by 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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