Automated Futures Trading Archives • Futures Day Trading Strategies

Posts in Category: automated futures trading

10 tips to potentially help you survive the next Drawdown

 

Drawdown is a Reality of Every Trader

Being able to deal with and understand drawdowns are among the most important concepts in trading and in the life of a futures trader. Misinterpreting drawdowns lead to wrong assumptions and decisions that not only may result in larger drawdowns, but can even mean the “end” of a trading account.

Conventional drawdown parameters and risk metrics such as the Sharpe and Sortino ratio may add value when it comes to understanding one’s own performance. However, we think that on their own, they are not sufficient to understand drawdowns and you may require the understanding of additional concepts to fully appreciate the positive and the negative of your own style, and/or the analysis of an automated system or a managed account run by a commodity trading adviser.

A good starting point is the so-called ‘peak to valley’ drawdown metrics where a trader analyses the largest drawdown periods

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The parts of a trading method you should consider automating

 

Automating trading systems is a very popular approach because people generally believe that it can help them make decisions free of emotions and be more consistent in their trading. Although the intention behind automating trading systems are usually good, the execution is often not. In this article, we will show you why you should consider optimizing certain aspects of your trading and which parts should stay manual.

 

The idea behind automating a trading system

FOMO (the fear of missing out) is a very strong driver of emotionally driven trading decisions. Just think about how often you have seen a potential setup but it wasn’t giving you all the confirmation, but you still jumped. Such scenarios can be very tempting and FOMO makes you enter such trades too early and then often lose – you have your trading rules for a reason.

Inconsistent trading leads to inconsistent results and a trading strategy that

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When do losing streaks end? What is the gambler’s fallacy?

 

losing streaks

Losing streaks happen to every futures trader. However, Variance drives trading performance and influences the way traders think and act. Variance means account volatility, and it describes how the outcome of your trades impact your account development.

In trading, results can’t be forecasted, and you will never know when you enter a winning or losing streak, or how long it will last once you are in it. Therefore, understanding variance and how wrong assumptions can lead to significant underperformance is of great importance to traders.

Gambler’s fallacy

The gambler’s fallacy describes a phenomenon when people misjudge the likelihood of events. If something happened more frequently than you’d expect it to happen under normal circumstances, people then mistakenly believe it’s going to happen less often in the near future.

For example,

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How to use Fibonacci extensions as profit targets for your trades

 

The Fibonacci tool is a very commonly used tool among traders, but one of the greatest functions of the Fibonacci tool is often neglected. Whereas most traders use the Fibonacci retracements to determine entries – which can be tricky because it is always unclear which Fibonacci level price will adhere to – the Fibonacci extensions are much less subjective. With the help of the Fibonacci extensions, identifying potential profit targets becomes very simple and it takes out a lot of guesswork.

What are Fibonacci extensions?

Whereas most traders only know about the regular Fibonacci retracement levels (0.382, 0.618 and 0.764), the Fibonacci extensions are levels that extend beyond current price. When it comes to Fibonacci extensions, there are mainly two levels traders need to be aware of: 1.382 and 1.618.

Once you have identified a trend-leg with a retracement (an A-B-C move), you can use the Fibonacci tool and the extensions project the

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Multicharts Trading Platform and Software: Review and Interview

 

This week we conducted an interview with Dave Masalov, Customer Care Manager at Multicharts. MultiCharts is an award-winning trading platform that has gained popularity with both automated and discretionary traders due to its quick learning curve and a clean interface coupled with efficient and common sense layouts. It has established trading integrations with multiple data feeds such as TT, Rithmic, and CQG while also facilitating different asset classes like Commodity Futures and Forex.

Optimus customers trading on Multicharts have always been very impressed with their stability, support, and execution. So we wanted to chat with Dave and discuss the software and how they plan to differentiate themselves in the crowded futures trading platform marketplace.

What did you think was missing from other futures trading platforms when you first started building Multicharts?

DAVE: When we started there was not enough flexibility among trading platforms. Every application had only one proprietary data feed

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