Algorithmic Futures Trading Accomplishments

Algorithmic trading involves the use of computer algorithms to initiate trades and has grown dramatically since 2003, such that nearly 80-90% of futures trading for S&P500, gold and oil is by algorithms. This process is quite different from the traditional method of manual trading. By relying on computational power, you enjoy distinct advantages that could boost your investments and profits. These seven key benefits of algorithmic futures trading make the investment of time and resources worthwhile.

Faster Trading Speed

Algorithms immediately respond when trading criteria are met. This means that when the market conditions change, the algorithm can trigger the selling or purchasing of an investment. One second can make a big difference in trading. This is particularly true with futures oil or futures NASDAQ, where price movements can be very volatile. Getting in on a deal at the right time could impact the profitability of your investment, and getting out at the right time helps you hedge your losses. Algorithms can also be set with protective stop losses and profit targets. They respond to those numbers before a person could have a chance to enter a manual trade. For indices such as the emini S&P 500, algorithmic trading elevates market efficiency.

Increased Accuracy

Humans make mistakes. A tired trader might accidentally enter a position to buy 100 shares instead of selling. It’s also possible that a person could enter to sell 1,000 shares instead of 10,000 shares. These types of mistakes could cost a lot of money. Even if a person makes a series of small mistakes, those errors still add up, eating into profits or causing unforeseen losses. Algorithms, on the other hand, do not make errors. They trigger a sale or a trade of a specific number of shares in accordance with how they were programmed. This can be most beneficial to futures markets that have thin volume, such as futures gasoline.

Removal of Human Emotion

Human behavior is often rooted in emotion. An algorithm’s actions have no emotion taken into account. When certain conditions are met, the algorithm is activated. This means that you will not incur losses or forego profits because of an emotional decision. Algorithms will not hesitate to make the trade, and they don’t really have to think about it. They allow you to avoid over-trading and missed opportunities that come from strong emotions. Another advantage of algorithm-based trading is that you can take a step back from the process and breathe. If you need to take a long lunch break or a morning off, you can do it without missing out on a potential opportunity. By being able to relax, you can have a more positive investing experience. This is particularly applicable to slow moving futures indices such as futures bonds, wheat and natural gas.

Back Testing for Honing Algorithms

Forward trading is not the only function that algorithms allow you to perform. They also facilitate back testing. Back testing refers to applying historical data to your current algorithms. You can test the algorithms on past market data in order to see if you would end up with the same results. This process allows you to hone the algorithms. Use your precise set of rules along with a set of historical data and see if you would make money on the deal. With the results, you can fine-tune your plans. You can do all of this back testing without putting any actual money at risk.

Maintain Discipline

Discipline is essential in a volatile market. You create a plan, and the algorithm executes it. This takes the emotion and hesitation out of the decision-making process. The plan you already created is maintained without question. As market conditions change, the algorithm responds as you planned for it to. By trading on logic instead of emotion or irrational thinking, you can take some of the stress out of investing. Relying on algorithmic trading helps you avoid the highs that come with several successes in a row that might trigger you to make a risky decision outside of your predetermined plan. It also helps you avoid the lows that come from several losses in a row that might result in your skipping the next big trade if you were trading manually.

Diversified Trading

Algorithmic trading facilitates diversification. One set of algorithms can be set up to trade on multiple accounts and with different strategies. This aids with the mitigation of risk. Diversification of trading also creates a hedge against losses.

Experience the above benefits and accomplishments, with more to come. Try your hand at automated trading with Targets Trading Pro and take the human element out of the trading process today! Daily videos are posted and can be viewed to see final algorithmic P/L for emini S&P, NASDAQ, gold, oil and Dow taken that day.

Disclaimers

U.S. Government Required Disclaimer –Futures and options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY, SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

At no time is any of the stated performance an endorsement of or a suggestion to trade. I am a trader and an educator desiring to show proof positive of trading efforts in real time. I am not a broker-dealer, nor am I a financial advisor. My trades are not to be considered an endorsement or recommendation for anyone else to trade live accounts nor do trades on my part denote or indicate that trade conditions or trade expectations are more favorable.

Hypothetical Performance Disclosure

Risk Disclosure

The risk of loss in trading futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or to authorize someone else to trade for you, you should be aware of the following:

If you purchase or sell a futures contract, you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. Thus, trading of futures may not be suitable for everyone and may involve the risk of losing part of your money, all of your money, or even more than all of your money.

The placement of contingent orders by you or by your broker, such as a “stop loss” or “stop limit” order will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.the high degree of leverage that is often obtainable in futures trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

Futures prices can be highly volatile and unpredictable. Price movements of futures contracts can be influenced by political, economic and many other factors which are outside of a trading system’s or your broker’s control. No assurance is given that a customer will not incur substantial losses. Futures trading is highly leveraged. The low margin deposits normally required in futures trading permit an extremely high degree of leverage. Accordingly, a relatively small price movement in a futures contract may result in immediate and substantial loss to an investor. Like other leveraged investments, futures transactions may result in losses in excess of the amount of money invested.

Our trading systems are dependent to a significant degree on the proper functioning of the computer systems used to generate trading signals. Accordingly, systems failures, whether due to third party failures upon which such systems are dependent or the failure of the broker’s hardware or software, could disrupt trading or make trading impossible until such failure is remedied. Any such failure, and consequential inability to trade (even for a short time), could, in certain market conditions, cause a client’s account to experience significant trading losses or to miss opportunities for profitable trading.

The trading systems offered here are highly technical. The profitability of trading under these systems depends on, among other things, the occurrence of significant price trends which are sustained movements, up or down, in futures prices. Such trends may not develop; there have been periods in the past without price trends. No assurance can be given that these methods will be successful in the future, or that investment results will be similar to those achieved or illustrated in the past. Although every attempt is made to ensure the accuracy of illustrated results of our trading system, we cannot guarantee such, due to inaccuracies and fluctuations in data or errors in calculation. There are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. Another one of the limitations of hypothetical trading is that such trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading.

Prior to buying or selling a futures contract, an investor will need a broker, and you must meet suitability requirements in order to trade these specific instruments. By accepting this disclaimer you are acknowledging the risks involved in trading the futures markets and are also acknowledging that you, the subscriber, and not trb futures llc, are solely responsible for any losses, financial or otherwise, as a result of using our trading systems. Trb futures llc shall under no circumstances be liable for any lost profits, lost opportunities, misstatements, or errors contained within these pages. You also agree that trb futures llc will not be held liable for data accuracy, server problems, or any special or consequential damages that result from the use of, or the inability to use, any or all of the materials published on our website. You agree to hold trb futures llc harmless for any act resulting directly or indirectly from this site, its data, content, materials, associated pages and documents. You agree to defend, indemnify and hold us and our affiliates harmless from any and all claims, liabilities, costs and expenses arising in any way from your use of any services provided by trb futures llc. Trb futures llc provides the information, services and products on this website “as is” without warranties of any kind. In no event shall trb futures llc, its managers, agents and employees be liable for any loss or injury, direct or indirect, incidental, consequential, special or exemplary damages, or any damages whatsoever arising from the use or performance of this website or from any information, services or products provided through this website.