Futures Trading Systems - Algo Strategies


Futures Trading Systems - Algo Strategies

WHAT ARE TRADING SYSTEMS OR ALGO STRATEGIES 

Algorithmic, systematic, systems, or simply “algo” trading strategies use computerized modeling to buy and sell futures contracts based on pre-defined rules and conditions. In theory, an algorithm can trade in nearly any financial market and employ any desired type of strategy, whether it’s trend following, counter trend, mean reversion, volatility. 

BENEFITS OF USING A TRADING SYSTEM

No Emotional Trading

Emotional decision making is often a trader’s worst enemy (greed, fear, disbelief, etc.) System trading removes this emotional element from trading. In fact, many top-performing  Trading Advisors now rely heavily upon computerized trading system software.

Access to more markets

Algorithmic trading systems make it easier for traders to find trends in more markets than humanly possible. Traders can spread their risk across various markets and sectors to find opportunities in trends that might be overlooked otherwise.

Trading around the clock

Algorithmic trading strategies have the ability to trade while you’re sleeping. No more missing out on markets just because you aren’t awake to trade them.

Capital Investment

Futures trading Systems generally require a lower capital investment amount versus a managed account with a CTA or fund. This allows investors to get started at a level they are comfortable with.

BESIDES ELIMINATING SECOND-GUESSING, WHIMS AND UNINFORMED DECISION MAKING, THE ADVANTAGES OF USING A DISCIPLINED, SYSTEMATIC APPROACH TO TRADING ARE NUMEROUS:

A trading system generates instructions based solely on predetermined rules.A trading system can be tested and researched prior to committing actual capital to trade.A trading system can specify correct capitalization levels based on simulated performance, risk and draw-downs.The system rules determine the timing for order placement, not the trader.System speculation is objective, disciplined, quantitative, technical, logical and precise.Bottom line: Trading systems provide the much needed structure to trading. Each order placed is governed by a predetermined set of rules that does not deviate based on anything other than market action. A trading system will include specific money management parameters and the mechanical placement of those orders insures those rules are being followed.

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