Tutorial #1 – Getting started on Volcube

Overview of Volcube

Volcube is an option market simulator with built-in mentoring capabilities, a suite of trading performance assessment tools and a comprehensive options trading video and article library. You will take on the role of an options market maker in the simulator and learn how to make prices in options, how to delta hedge, how to manage option risk and how to trade implied volatility. These are all fundamental components of the option trader’s education.

In the Game tab, you can set up new option trading simulations. You can either work on a particular Level or you can customize your trading session. Let’s look at both of these in turn.

Levels games are option trading sessions that are pitched at certain levels of difficulty and realism. In Level 1, certain characteristics of the options market are simplified to enable you to learn the basics first. You will only price and trade outright call and put options in Level 1 for example. As you work to higher levels, more and more realism and difficulty will be added to your trading simulations. To pass each Level, you will need to achieve a consistent Trading Performance Index above a certain qualifying level. The Trading Performance Index assesses how well you are trading options on Volcube. It accounts for how much profit or loss you are making, how competitive and accurately you are pricing and also how difficult the actual market conditions are in each game you play. Once you complete a Level you can download your personalised, authenticated Volcube Options and Volatility Trader certificate. These are individually numbered and catalogued by Volcube to make sure your achievement can also be confirmed.

Custom Play sessions allow you to alter the market parameters as you like. You can try out different features and make your games harder or easier for example. You can use Custom Play as a training ground where say you focus really hard on trading certain option strategies such as iron condors or spreads so that you can become as familiar as possible with their risk profiles.

In the games themselves, you will take on the role of an options market maker. This means a broker will ask YOU for a two-way price in some options. You will have to show a price at which you are prepared to buy AND a price at which you will sell the different options that the broker quotes. The broker will then decide whether to trade with you directly or maybe he will show you an order in between your bid and your ask prices. You must decide whether to trade these options and in what quantities. Once you have executed a trade, you then need to do your best to manage the risk associated with these options. You will need to learn how to manage the Greeks (delta, gamma, vega etc.) and keep your risk within its limits. Meanwhile the broker will keep asking you for prices in new option strategies and you need to respond as quickly as you can. As the game progresses, you should look for trades that will reduce your overall risk AND make money in the game. At the end of each session you can see how well you performed and then analyze your games in fine grain detail to see where you need to improve. Maybe your pricing is too inaccurate? Maybe you broke your limits and were ejected from the market?! Volcube provides you with all the tools you need to allow you to analyze very carefully. You can even repeat games again to see if you can improve on your performance. Plus during your trading games, the Volcube Market Mentor is on-hand to give you real-time intelligent advice about how to price and trade options.

How to learn options and volatility trading with Volcube

Your options trading education on Volcube should combine playing on the option market simulator, getting help from the Volcube Market Mentor and learning from your trading mistakes. Plus, you can study the articles and videos in the Learning environment to supplement your practical learning. Start by watching the Quick Start videos and read some of the starter guides in the Learning environment. Then try to play some games and let this lead you to areas where you need to improve. Make sure you understand what the metrics are telling you at the end of the session so you know where you need to improve. Try to register as many Trading Performance Indexes (TPIs) as you can; the more scores you register, the better you will know how you are progressing. TPI is used by professional derivatives trading firms to gauge how well their trainee traders are progressing. It is a good rough guide to your option trading ability so make sure you understand how it works.

Hopefully this tutorial will help to get you to start trading on Volcube straight away. There is plenty more help available on www.volcube.com and in the application’s Learning environment.

Here’s to your success as a Volcube options trader!

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Volcube : options education technology

Volcube : options education technology

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