![]() ![]() Slow or overburdened connections are difficult to overcome and the trader must seek a better technical solution, a different internet provider perhaps. ![]() The biggest problems are of the sort described in the last two points above, where the technical infrastructure between the trader’s computer and the broker’s trade server breaks down. These situations will occur on occasion however and the trader has to be aware that not all trades will execute as expected. In the case where the software has not exited a trade in time it can simply market out. When these happen synchronization can be forced by cancelling the setup in the software or getting in synch at the original entry price where possible. These are just representative examples and many more will depend on the specifics of the strategy and instrument being traded. – Slow internet connections that prevent timely submission and execution of trades. – Low volume and high spread instruments where price gaps may result in cancelled setups. – Fast moving markets where actual price movement outstrips the software’s ability to keep up. The reasons for the break between the trader’s assumed market position and the actual position at the broker’s trade server can include: The biggest challenge for automated systems is our third requirement, maintaining synchronization between the software and the actual trade position at the broker’s and being able to react appropriately when the synchronization is broken. Both can identify the initial setups and both can track stops as they are adjusted.Īny limitations are normally due to limitations in the coding of the strategies. Two popular charting packages that provide automation capabilities are NinjaTrader and TradeStation. Figure 1 – PTU TrendJumper ProĮxactly how the automation takes place and what constraints are placed on it will of course depend on the automation software. How many actually do that while still providing consistently profitable results unfortunately can only be ascertained through testing, both historical back testing and forward testing (or paper/demo trading). You can search the internet and find thousands of results for systems that claim to do just that. The first two are fairly straightforward. – Maintain synchronization with the actual trades executed by the broker – Track the active trade and adjust stops and targets as needed – Identify the entry, initial stop and target price for the commodity Let’s first consider automated futures trading systems in general.Īn automated trading system needs to do several things: But can it really be done? The short answer is yes, but with cautions. That is the dream for many traders, that their computer can be programmed to do the trading for them. Wouldn’t it be great if we could just turn on the computer and let it do the trading for us?Īutomated Trading Systems Do The Heavy Lifting This still leaves us with a problem however if we do not reside in the same time zone in which the commodity is traded, unless we don’t mind staying up late or getting up early.Īnother problem that affects day traders primarily is the fact that sometimes trades set up and trigger very quickly and unless you have the reflexes of a Ninja you will miss many a profitable trade. This should probably be done in any case as margin requirements for commodity futures trading can be quite hefty. One is to research and test all candidate commodities and select the two or three best ones for active trading. ![]() There are a couple of solutions to this problem. Unfortunately there are so many different commodities that it is impossible to actively monitor and trade all of them. Day trading or swing trading commodity futures can be a very profitable business.
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