Trading Methodology

Trading Overview:

The Cake Futures Trading Plan shows step-by-step how to track and mimic the long-term performance of highly successful traders. Using The Cake Futures Trading Plan Portfolio as a model, we illustrate how a trader can develop a strategic plan using a low-cost futures-based swing trading approach.

The Cake Futures Trading Plan also reveals a novel method for traders to reduce their risk through a tactical money management strategy to mitigate the risk of losing trades.  With simple, straightforward advice, The Cake Futures Trading Plan will show traders exactly how this can be accomplished—and allow them the opportunity to achieve an unparalleled level of futures trading success in the process.

With all of the uncertainty in the markets today, The Cake Futures Trading Plan helps the trader answer the most often asked question in trading today – “What do I do”?

Trading Philosophy

The Cake Investment Group trading philosophy stands on 4 pillars:

Low Cost​

As with all investing one of the key drivers of long-term trading performance is keeping expenses low.This is as true in this endeavor as in any other business.  Futures trading is extremely inexpensive in terms of commissions. Even for just a few contracts you can pay as little as $3 round trip per contract.  This compares favorably with stock trading.  There is also no management fee to holding an asset for any length of time.

Simple Strategy

A trading strategy should be simple enough for the non-professional to implement.It is like a light switch; you don’t need to know all the intricacies of the power grid that stands behind it, only when to turn the switch off and on.  This plan tells you exactly when to make a move and does so in plain language.

Rule Based

The temptation to play “hunches” and follow your gut is a sure path to subpar trading returns.  Successful traders have a rule or set of rules that guide their trading actions.  The heat of the moment is no time to formulate strategy.  Choose a strategy that makes sense; look at the back testing, then follow the rule.  Rules based trading removes much of the emotions that can ruin a trading plan.

Emotionally Attainable

This is key.  All of the previous three pillars are for naught if the plan is not emotionally attainable.  By this we mean that a plan that expects you to completely ride out gut wrenching downdrafts is simply not realistic.  Most traders bail out during large, yet short-term drops, locking in substantial losses.  Traders have a long well-documented history of bailing too soon as well as staying in too long due to emotional distress.  The Cake Futures Trading Plan is crafted in such a manner that you will be safely on the sidelines with either solid profits or acceptable losses that do not remove you entirely from the game.

Trading Methodology: The Need for Futures Trading:

There is really nothing quite like futures as a means of building additional wealth.  Unless you devote yourself full-time to trading this will likely not be your main long-term investment tool.  That being said, it is extremely useful as a supplement to your traditional portfolio.

Active futures trading requires a hands-on approach, typically by a trader or other so-called active participant. This does not, however, mean that you need to sit glued to a computer monitor all day long.

Key Benefits of Futures Trading

Some of the key benefits of futures trading are:

  • Highly Leveraged Instruments: This magnifies gains as you can make multiples of the amount you invested. True it magnifies loss, but you can set your own dollar loss limits and The Cake Futures Trading Plan suggests that you do just that.
  • Liquidity: There is always enough volume to execute trades efficiently.
  • Long-Term Value: Since commodities are real items; Gold, Oil, Wheat, etc. there is always some value there. They will never go to absolute zero, therefore there is always profit to be made going either long or short.  The only futures followed by The Cake Futures Trading Plan that could theoretically go to zero is the e-mini which tracks the S & P 500 and if that happens, this would be the least of our worries.

The Cake Futures Trading Plan is designed to mix the benefits from the constant opportunities of commodity futures with our proprietary Cake Trend Identification system to enter markets, either long or short with a good chance of making profits all the while having specified loss limits in place to protect your trading capital.

Trading Portfolio Construction

Asset Allocation:

The Cake Futures Trading Plan subscribers can very possibly perform as well as professionally managed portfolios with the simple Cake Futures Trading Plan comprised of one or more of seven futures markets followed in each of the main asset classes. How many and which markets to track and trade is up to you, based upon interest and amount of trading capital.

The relevant asset classes and the futures markets followed:

            Indices:        E-mini

            Energies:     Natural Gas; Oil                

            Grains:           Corn; Wheat               

            Metals:         Gold; Silver

The Cake Futures Trading Plan offers monthly trading opportunities, if a signal is generated.  This allows you to trade, potentially every month, without being a “day trader”.  If a signal, based upon the Cake Trend Identification, is generated then a suggestion will go out at the close of every trading month and you may, if you choose, act accordingly.           

The Cake Futures Trading Plan based upon the Cake Trend Identification Line, exploits the swing trading effect for these assets by first establishing which side of the long-term Cake Trend Identification Line the asset is on (and only looking for trades in that direction).  Second, we look for movement back to, or past, the short-term Cake Trend Identification Line within the month and then seeing a month end close above/below the short-term Cake Trend Identification Line.  If this occurs, then there is established an entry signal at the beginning of the next trading day.

The only variant to this rule is if there is a long-term/short-term trend line “inversion”.  That is if in an up market the short-term trend line is below the long-term trend line or in a down market the short-term trend line is above the long-term trend line.  In this case The Cake Futures Trading Plan uses the long-term trend line as the intra-month touch point to determine if an entry signal is triggered.

The Cake Futures Trading Plan also seeks to enter markets immediately after the long-term Cake Trend Identification Line changes direction. 

The Cake Futures Trading Plan tracks near-term contracts, not necessarily the front month contract. This allows plenty of time for the trade to work itself out as well as providing plenty of volume and thus liquidity, so entry and exit is not an issue.  While there are no guarantees as to how long it will take for a trade to work itself out, it is likely that it will be within the same month of entry.

Cake Trend Identification Line

The Cake Trend Identification is a metric derived from a proprietary weighting of major and minor trends, momentum indicators and relative strength.  This produces long-term/short-term trend signals that allow us to identify swing trading opportunities.  Therefore, Cake Futures Trading Plan subscribers have the opportunity to capture profitable moves in the market as well as appropriately manage their risk through loss limits.

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