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Futures Trading Software
Choosing a Package For Big Profit Potential!
The growth of the Internet has seen traders look more
at the use of futures trading software as a way to increase their profit
potential.
Today, many vendors are selling futures trading software
packages that make 50% annualised gains a reality. While there are many good
systems, there are also many that don’t perform.
This article is
all about picking the ones that do and making big profits.
So what
should you look for when choosing a futures software package to trade?
Here are some tips to help you choose correctly.
1 -
Don’t buy a “black” box system
A black box system does
not reveal the logic the system uses to trade the markets and this presents two
concerns:
Firstly, futures and commodity trading is all about
discipline and it’s a fact you will have more confidence in a system if
understand the logic it is based upon. If you don not, you will not have the
confidence to follow it through inevitable periods of losses.
Secondly,
many unscrupulous vendors simply create a track record that makes profit by
tweaking the rules to fit the data.
This is known as “curve
fitting” and is one of the main reasons a huge majority of futures trading
software fails to make profits.
2. Curve fitting
Many
traders buy systems that are “curve fitted” to the data and they see
different rules to trade individual commodities.
If a system uses
different rules to trade individual contracts its “curve fitted” and
likely to fail.
“Curve fitting” is simply fitting the rules
of the system to the data to make a profit. When the system enters the real
world and trades you can’t curve fit in hindsight!
The result
is inevitable, losses
A clue to a “curve fitted” system is one
that has lots of different variables and “unique” rules to trade
individual commodity contracts.
If a system is based on sound logic
then it should work on any commodity that, trends with the same rules and
parameters.
Most of these systems have hypothetical track records with
low drawdowns and should be avoided
3. The best systems are simple
and easy to understand
The best systems tend to be simple to understand
and only contain a few rules or parameters. Many traders make the mistake of
thinking you need a complicated system to trade successfully, but this is
totally incorrect.
4. Hypothetical v real time track
records
It’s always best to look for real time performance; this
can be in the form of audited figures or figures from a rating agency such as
Futures Truth that trades systems with realistic commission and slippage in
real time.
If a vendor is selling futures trading software without
trading it themselves or independent verification of results, then don’t
buy it. If they won’t risk their funds why should you?
5.
Commodities traded
Try and look for systems that trade long term and
focus on trending markets such as:
Stock indices, Bonds, Currencies and
Energies.
These markets tend to be the best for technical trading and
are likely to produce the best results.
6. Diversified or individual
commodities?
This is really a matter of choice. If you trade an
individual commodity your reward may be higher but so to is your risk. A
diversified portfolio may have less profit potential but the diversification
should reduce risk.
It’s a matter for each trader to decide, but
diversified systems tend to perform better than ones that focus on a single
commodity and have less downside volatility.
Final words...
The above are general guidelines and will help you choose futures
trading software that can help you target above average capital gains
potential.
Many systems are sold and many look to be good to be true
and more often than not they are. Hypothetical track records with only small
drawdowns are not the reality of futures and commodity trading.
Use the
above guidelines to choose your futures trading software then take a long term
view and follow your system with discipline and you could be making the above
average profits all traders desire.
Learn More about a Legendary
Trader
Why not attend one of our FREE Seminars held in London and
cheshire. click here to book on-line or
telephone 0161 285 4488.
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