Futures Trading Systems
Futures Trading Systems are often the most effective way to trade futures and commodities markets
Day trading futures including the E-mini S&P500 Index Futures, Foreign Currency and Interest Rate Futures regularly feature substantial volume and sufficient daily ranges, resulting in frequent profit-making opportunities.
Day trading futures can enhance both large and small portfolios because the deep liquidity and enormous daily volume of the underlying products allow you to trade 100 contracts as easily as one contract (provided you have the necessary margin). The absence of overnight risk generally lowers margin requirements, and offers an excellent way to diversify your investment portfolio.
What is Day Trading?
Day trading is the process of buying and selling a futures contract within a single trading day. Day traders leverage the deep liquidity of certain markets and short-term trading strategies in order to capitalize on small price movements and make a profit for the day.
Benefits of a Futures Trading System
It is imperative you have a well-defined futures trading system before trading, regardless of your time horizon. This will help you limit your losses and avoid “false signals” that go against the longer term trends. Day trading systems specify when to enter and exit based on a clearly defined set of conditions, which automates the entire trading process and attempts to effectively eliminate emotions like fear and greed from trading, the major pitfalls of most novice day traders.
Choosing Your Futures Trading System
Many futures trading systems claim to make money everyday and guarantee profits year after year. In most, if not all, cases those results are simply unattainable. Poor slippage estimation is the primary reason: vendors regularly test and advertise their system using “best-case” scenarios and unrealistic slippage estimates and some vendors leave slippage out of their results altogether. However, the high activity of most day trading strategies only serves to make accurate slippage estimation critical. By underestimating average slippage by just $2 on a trading system that trades once a day results in a $1,000 reduction in profits.
Match the best robust futures trading systems available with ones that are suitable to your individual risk/reward profile. Identify each trading system’s strengths and pitfalls to determine their viability to be traded in a real-time environment with real-time slippage.
Execution of Futures Trading Systems Signals
Expert execution of system signals is critical to the performance of your futures trading system. Make sure you understand how your futures trading system execution is carried out after a signal event. There are many automated execution platforms that can execute the trade nearly instantly when a trading system signal is generated. Using these advanced execution platforms, you can often experience little to no slippage.