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Trading Robots Can Work Well In The Futures Market

Trading the global futures markets is very similar from a chart standpoint as trading the stock market. The primary difference is the futures markets are naturally leveraged (little amount of money controls a relatively large asset). Even if you use margin on trading stocks, you do not approach the leverage of the futures market. This is what can make the futures markets attractive as a day trading vehicle, or as a swing trading vehicle. Rarely do traders invest in futures for the long term - at most the trade might be a few months.

If all you want to do is day trade, then the futures markets really should be on your list to trade. If you have the SEC required $25000 minimum to day trade the stock market, then you can easily day trade the futures markets as well by opening a futures account. There is generally a bit more volatility day trading in the futures markets than in the stock market, and this can grant some great opportunities. Most futures brokers will require you to deposit about $5000 in order to open an account, some might be higher. Intraday margins to trade a contract or two are generally much less than the overnight margin. This is because overnight there can be significant gaps in price caused by news events and an individual is required to hold enough money in your account to cope with that level of volatility. Additionally, it is possible if you hold futures positions overnight (or even intraday if you tend not to use stops) to have your account go into a negative balance as a result of the leverage. Most firms will never let this happen and will liquidate all your positions before this happens. This type of event is plausible and the risks should be understood. Intra-day it is rare, but overnight it can happen with higher odds.

While these hazards should not be downplayed, they should not keep you from trading futures either if you are a day trader. From a technical point of view, trading futures is similar to day trading stocks, with the exception that there are no "news events" on the futures such as analyst upgrades or downgrades to concern yourself with. Financial events and news happen daily, and these affect both stocks and index futures who trade off them, so this is nothing new. There are many websites now where you can get a free demo account to practice day trading the futures markets. If you find that you benefit from doing it, consider adding the futures markets to your current trading.

The futures markets work especially well for testing out a day trading robot, simply because there is more volatility. The futures are often a better choice for any type of auto trading robot because they tend to be more range bound than stocks. While a stock can run from 10 to 200 in a few months, the futures markets never have this big a run, although they do trend up and down over months of time.

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