For traders that look to increase their P/L, using a futures trading system can give you the returns you’ve been looking for.
What is a futures trading system? First, let’s start with the term “trading system”. A trading system is a set of rules that quantify how to place trades for a basket of or a single security or commodity. It is very typical for these rules to be computer-based and to have the ability to run truly in a hands-free manner. 선물옵션
What are futures? The term futures describes a group of contracts that are openly traded on futures exchanges across the globe. While these contracts are technically agreements to transact an amount of the underlying asset at some point in time in the future, the simplest way to think of them like stocks that expire on a certain date. Gold, stock indices (like the Nasdaq), currencies, oil, and treasury bonds are some of the most popular contracts.
Why trade futures? Trading futures gives that extra something special that is badly needed in a stock-heavy portfolio: diversification. It is quite common in the past that as stocks go up, futures tend to lose value. And when stocks drop, futures tend to rally. This pattern isn’t perfect, but it is quite common. At other times they move in completely unique and independent ways. This means that the futures market is only weakly correlated to the stock market. This is is a big advantage and it help an investor’s portfolio to survive the storm of stock market bull and bear markets.
And don’t forget that most futures are based on commodities: things like gold, oil, coffee, and wheat. These commodities have a global demand and aren’t subject to the “fads” that can really take stocks for a ride. When global prices for these commodities gain in value, we can gain from these price shifts by entering trades on commodities through futures.
Most importantly, why use a trading system? Trading systems offer several advantages over a discretionary approach. Discretionary trading involves making non-systematic choices about in what and when to invest. The advantage to using a trading system is that, rather than making decisions on what “feels right”, the astute investor can can make informed trade decisions that are founded on profitable patterns with a high historical likelihood of success.
Secondly, and just as important, systems trading provides a means to control your emotions when making trading decisions. How many times have you sold after a long losing streak and then you see your stock suddenly turns around and gains back all the losses, leaving you reeling? How many times have you bought when the security looked like it would never stop going up, and then see your investment tank in the coming weeks? We are all subjects to “herd mentality”, and this often leads to bad investment decisions. Thankfully by using systems, we can avoid this faulty thought process and make truly objective investment decisions.
Lastly, and possibly most important, using trading systems frees up your time. Who wouldn’t want to enjoy your time, have extra time to spend with your family, or keep up with your hobbies, rather than endlessly debating your next portfolio decision. With most trading systems now being computerized, they run automatically, and this frees up your time to spend how you please. For those of you that aren’t computer savvy, there are many futures brokers will now faithfully execute trades for your chosen system each and every market day for you and that means you don’t have to be involved in the daily operations at all.