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Automated Futures trading systems
So what about the algorithms
Automated trading systems, mechanical trading systems, algorithmic trading, system trading, or automated trading, whatever name you know it by, is a trading system that involves the use of software that is often linked directly to a broker. The idea behind this trading system is to help traders automate trading and maneuver the markets with ease and precision.
As the financial markets continue to expand and more players get involved in trading, it has become crucial for traders (both old-timers or newcomers) to explore ways of seeing through the noise and trade with high precision.
Automated trading systems help traders see through the noise and trade with high precision
Day traders will appreciate the importance of such systems more because they understand how much stress and workload it will take off their shoulders in terms of catching market moves in the nick of time.
To satisfy traders’ needs for precision, automated trading systems were developed to allow traders to program their trading strategies and execute trades automatically with a computer. Interestingly, automated trading systems can deliver up to 80% or more precision in spotting profitable market entries and exits.
Having equipped you with an overview of automated trading systems, let’s narrow our discussion to automated futures trading systems.
What are automated futures trading systems?
Automated futures trading systems are no different from what is obtained while trading other financial assets. As we mentioned earlier, automated trading systems take trading precision to another level. Making them helpful in executing complex futures trading strategies that would otherwise have taken a long time to learn.
While the automated futures trading systems are mostly built upon expert traders’ strategies, some trading platforms leverage strategy-building wizards that allow traders to develop custom trading strategies based on their selection of technical indicators. That way, you get to determine the set of rules or criteria upon which your trades will be executed automatically.
For instance, a futures trader can set an automated system that will trigger trades when particular moving average crosses occur in a specific time frame. An example could be to go long when the 50-day moving average (MA) crosses the 200-day MA on the 15 minutes chart.
Similarly, traders can also determine what kind of market orders they want the system to execute. You can set a limit order when a position or trade will be executed, maybe at the open or closed of a candle or bar.
It is not unusual for traders to customize indicators and build their trading strategies and develop an automated trading system with the aid of a programmer.
While this may seem like an arduous task, it offers a greater degree of flexibility and the outcome, more rewarding because it is designed to trade your strategy. Depending on your input settings, the computer will keep tabs on market movements and help you spot long or short opportunities that meet your set criteria. The computer will also generate protective stop losses or trailing stops and profit targets.
However, if all of these are beyond you, you can settle for the default settings provided on the automated futures trading platform.
Advantages of automated futures trading systems
Hopefully, you have understood what automated futures trading systems are and the opportunities they offer traders. Now, let’s shift our focus to the advantages of automated trading systems.
If you joined us from the start of this post, you would already have an idea of the benefits of automated trading systems. Having a computer monitor the markets and execute trades that fit into your trading strategy is ingenious, and it offers a tall list of benefits.
Here are some of them.
Automated trading systems minimize emotions
Minimizing emotions or keeping traders’ emotions in check throughout the trading process is arguably one of the most incredible benefits of automated trading systems.
One of the best traits of a day trader is his ability to control his emotions. Trading futures without emotions is crucial in helping traders stick to their trading plan.
Because trades are executed automagically when trading rules are met, there won’t be room for you to second-guess yourself, hesitate, or question trades. In addition to helping traders “pull the trigger,” automated futures trading systems also prevents traders from over-trading.
Automated trading systems allow you to backtest
As the famous saying goes, you can’t keep repeating the same process and expect to get different results. Similarly, it is important to know when your trading strategy is working and when to fine-tune it in trading. And this can be done by backtesting.
Because computers don’t have a mind of their own, they only do as they are told. You have to constantly check the viability of your trading plan and ensure that the rules upon which your trading strategy is built are still valid.
Backtesting allows you to test and evaluate your ideas by running them through historical data before making any trading decisions. That way, you will be sure of what works and what doesn’t and fine-tune parameters in your plan to reflect current market trends. Backtesting also gives you an idea of what to expect from every trade — telling you what you stand to win or lose per unit risk.
Automated trading systems imbibe discipline
Traders react differently when dealing with volatile markets. While some let emotions get the best of them and develop a phobia for taking a loss, others are propelled by their desire to make a little more profit from a trade.
All of these come to light because such traders lack trading discipline, which will most likely put them in a compromising situation that could cost them their accounts. Automated trading systems eliminate all of these issues and help ensure that traders stick to their plan.
Years of experience have taught many traders that no trading plan wins 100% of the time. Trading101 will teach you that losses are part of the game, and your focus should be on keeping them low.
However, losses can be traumatizing and cause traders to become irrational, especially when losing streak. With discipline, traders can backtest and rest rate give, and it will be only a matter of time before they recover and stabilize their accounts. But all of this is only possible with discipline and consistency. And that’s what automated futures trading systems offer.
Automated trading systems improve order entry speed
Last but not least, automated futures trading systems help traders enhance improve order entry speed. Getting in and out of a trade at the right time and almost in an instant can be the difference between running your trading account aground and raking in profits.
Automated trading systems will execute trades when they meet specific criteria and get you out when you hit profit targets or protective stop losses if the market goes against you. As such, you have both trading precision and speed on your side.
In highly volatile markets, automated trading systems will save you the pain of losing out on big moves or suffering massive losses because you didn’t get to the market on time.
In addition to all we have discussed so far, automated trading systems also allow you to run multiple trading accounts or strategies at a time. To make the most of automated trading systems, it helps to invest in trading education to broaden and sharpen your knowledge of how automated futures trading software works.
Thankfully, platforms like the day trader memberships offer courses and mentorships programs for traders who want to improve their trading skills.
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