Things to Know About Automated Futures Trading Systems

Automated Futures Trading

Futures are excellent trading tools to leverage bullish or bearish movements in markets or underlying assets. Swing Trading or day trading commodity futures can be a pretty profitable business. Futures are financial derivative contracts that compel the parties to execute the asset’s transaction at predetermine future price and date. It is an agreement to sell or buy a currency, commodity, or other types of the asset at a price predetermined at a particular time in the future. There are many automated futures trading systems available that help in its trading. 

Need For Automated Trading Systems

Though this trading can help you earn huge profits, unfortunately, some commodities are there for which it is next to impossible to monitor them actively and trade them all. But there can be solutions to these issues. 

You can research and test such commodities and chose the best two or three for active trading. It should be done in any situation where the margin requirements for commodity futures trading can be heavy.

Another problem is when you don’t reside in the time zone in which the commodity is being traded. But, of course, unless you don’t mind sacrificing your biological sleep cycle, then its fine.

Moreover, the issue that mainly concerns day traders is that sometimes trades are set up and triggered very fast. However, if you have the reflexes of a Ninja, you won’t miss any profitable trade. 

So, seeing the issues, wouldn’t it be helpful just to turn the computer and leave the rest of everything to it to handle and do trading for you?

Automated Trading Systems Do All the Laborious Work

It is a dream for many traders to let their computer algorithms do the trading for them. But is it possible?

Yes, of course! However, you must take some caution while using them. An automated trading system must do the following things:

  • Recognize the entry, target price, and initial stop for the commodity
  • Known when to stop trading
  • Maintain synchronization with the real trades being done by the broker
  • Adjust targets and stops as required
  • Track active trade

Some of them are fairly straightforward. On the internet, you can search and find several results for systems that claim to do. However, how many really do that while still providing a consistent profit. Unfortunately, not much! You can ascertain it via historical back and forward testing. 

Challenges of Automated Futures Trading Systems

The main challenge for an automated trading system is maintaining the synchronization between the actual trade position and the software and reacting when there is a break in the synchronization. 

The reasons behind the synchronization break between the actual position and assumed market position include:

  • Broken or slow internet connections as it timely between execution and submission of trades
  • High-speed instruments and low volumes where price gaps may result in canceled setups
  • Faster moving markets

These are just examples that represent, and many more depend on the instrument and strategy being traded. When such things happen, the setup is canceled, forcing the synchronization in the software.


Futures are the ideal instrument to be used in automated trading systems. This is because trading starts with instruments, and it comes with particular features to be suitable for trading systems.