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FUTURES
TRADING
SYSTEMSAnatomy of Automated System ExecutionASSET DIVERSIFICATION & TODAY'S FINANCIAL MARKETS
The globalization of financial markets has made asset diversification and managing portfolio risk more important than ever. Investors seeking a more sophisticated method of portfolio diversification have been turning to com-modities. Futures contracts such as stock indices, debt instruments, currencies, energies, metals, and agricultural commodities offer an effective separate asset class to diversify an investor's securities portfolio. In fact, studies have shown that a portfolio consisting solely of stocks and bonds may potentially have inferior performance and more risk than a portfolio that diversifies using commodity futures. The recent growth of automated futures trading systems offers investors a viable and low-maintenance approach to achieving such diversification in commodities. Through Automated System Execution at Daniels Trading, it has never been easier to get started.
WHAT IS A FUTURES TRADING SYSTEM?
A futures trading system is a computer run software program that generates specific buy and sell instructions for futures contracts. To generate the entry and exit signals, the trading software may analyze both historical and real-time price data. Using simple to very complex algorithms, the system efficiently examines price patterns, trends, divergence, momentum and many other key technical indicators. By constantly monitoring price data, a mechanical system is designed to assess risk factor, profit potential, and probability of trade success. Trading systems have the ability to scan the market and pinpoint potential trading opportunities more efficiently than a human trader ever could. Trading systems are the product of a system developer's unique experience in trading the markets. Oftentimes the developers have dedicated years and even decades to constructing their trading strategies.
WHY USE A TRADING SYSTEM?
Whether you are a novice or an experienced trader, you must contend with the emotional aspect inherit in speculative investments. Traders frequently fall victim to the pitfalls of greed, stubbornness, fear, and disbelief. Each can damage the confidence of a trader and lead to irrational decisions in the market and losses. Mechanical trading systems offer investors a disciplined and unemotional approach to trading.
In addition, the sheer processing power of computerized trading systems ensures that a watchful eye is kept on the markets around the clock. It would be impossible for a human trader to perpetually monitor and analyze all global markets 24 hours a day. Below you will find a comparison of common characteristics of an Independent Trader versus the Trading System Investor:
2INDEPENDENT TRADER TRADING SYSTEM INVESTOR. Trades emotionally . Mechanical, unemotional & consistent
. Rarely trades with a plan . Predetermined parameters filter trades
. Unable to monitor all markets . Constant analysis of global markets
. Spends hours studying markets . Minimal or no time commitment required
. Results vary erratically . Attempts to "smooth" the equity curve
. Subject to Human Error . Professional account management
WHAT IF I DON'T HAVE EXPERIENCE IN COMMODITY TRADING?
No experience in commodities is required to participate in trading systems. In fact, this is one of the primary benefits of trading systems. You don't have to be a market analyst or trading guru to be successful. After you have thoroughly researched and selected a trading system, you may request that the trading system be automated by a brokerage firm. Many choose to defer execution to a brokerage firm because they prefer a "hands free" approach that ensures professional execution and minimal time commitment. Automated system execution prevents an investor from having to be confined to a computer all day awaiting trade signals or monitoring the software. The vast majority of system developers recommend that investors employ the services of a reputable broker special-izing in trading system execution.
HOW DOES DANIELS TRADING'S AUTOMATED SYSTEM EXECUTION SERVICE WORK?
Daniels Trading offers professional brokerage execution to help investors put trading systems into action in the marketplace. Our Automated System Execution program is designed to offer comprehensive support from... [download for more]
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