Looking to Trade Futures? Here are the Top 6 Things to look for in a Futures Trading platform
We will cover these points:
• Speed and Execution
• Reliability and Stability
• User-friendly Interface
• Technical Analysis Tools
• Auto Trading Functionality
• Depth of Market (DOM) Execution
Imagine you just got your driver's license for the first time and you're behind the wheel of a new Tesla. It's a sunny day, you're excited because you finally have your license and to top it all off, YOU'RE IN A TESLA! Now imagine you got your license and you're stuck behind the wheel of your grandma's 20 year old Buick that smells like moth balls and the BINGO hall, yeah, your driving experience probably isn't going to feel the same. Just like in this example, the broker that you use can impact how well you trade and how your overall experience is with the market. Just as grandma's old Buick will get you from point A to point B, an inferior broker will do the same but it's always a better option to find the best broker that fits your needs.
If you're not very familiar with futures, this is a great place to start in knowing what you need to look for when finding your futures platform.
Speed and Execution
Speed of your traders would, at times, determine a winning trading strategy from a losing. Where do traders “lose” when they execute trades? Two places:
1) Market Orders: You get “slippage” when you run trades and lose a tick or point because your order was slow in execution.
2) Stop-Loss Orders: You place these orders when you want to exit the trade, but this is also a Market Order because the Stop-Loss has to hit before it gets executed, and then it turns into a market order.
When you trade a Future contract, the leverage of each point is high, so a loss of points and ticks adds up over time.
The measure of latency is not measured in seconds anymore; it is milliseconds. Professional traders in hedge funds and banks compete for nanoseconds (1 Millionth of a second!).
Consider using technologies such as Rithmic, CQG, CTS, and TT for your execution. These are the top low latency execution data for 3rd party platforms such as Multicharts, Sierrachart, Optimus Flow, or the native application that belong to these data feeds like CTS-T4, CQG Desktop, and TT Web.
These technologies have the right infrastructure to deliver fast execution, and the server location worldwide to support your specific area.
Reliability and Stability
Consider using technologies such as Rithmic, CQG, CTS, and TT for your execution. These are the top low latency execution. When you trade, you need to make sure that the trading technology you are using is highly stable. Stability is not only the platform you are applying for the execution of your futures traders but also what you use along with your trading platform. We will get to that in a minute.
Every software is written with a specific code, and the secret of that code is called “source code”. The components of this code could make the software stable or not. Instead of getting into the “tech talk” of systems, make sure you do your due diligence about the trading platforms you are going to trade through.
You should consider Futures brokers such as www.optimusfutures.com as experts in the field of technology and execution if you are not sure about the platform you should use. We urge you to inquire with them about your specific situation.
As we mentioned above, consider that whatever you run along with the platform, may interrupt the stability of your platform. The less you have open with hour platform when you trade, the better you are off.
Whether you are a beginner Futures trader or advanced, you should choose a trading platform that is easy to navigate and intuitive. You should be able to identify your charts, your order placement panel, and the ability to see your fills and working order.
Some platforms are designed with a modern appeal, and some may not be. However, you should choose your platform based on your specifications, regardless of their visual design. There may be particular features that you may need, such as order flow, volume analysis, and other methods that may be unique to our situation as a trader. If that is the case, consider getting the right platform for your system.
Technical Analysis Tools
Most trading platforms have traditional Technical analysis tools, and that works for the majority of traders. However, many platforms would allow you to choose the parameters that you want to change within the technical analysis tools. That would provide to be valuable as you would become familiar with the tools and the ability to customize them. For example, you may want your moving average of the last 20 days overlaid on range bars.
When you play around with the tools, you should try and explore what the advantages and disadvantages of the major technical analysis indicators are.
Auto Trading Functionalities
Many trading platforms have traditional Technical analysis tools, and that works for the majority of traders. However, you may want to automate your trading one day. Some automation is placing OCO orders and attaching them to your limit orders, and some may be writing a script that would auto trade your method.
Either way, you need to learn how to use the “auto” functionalities that could be essential in managing your trades. For example, when you have a winner, and you want to move your stops, you should be able to put in the details how you want your stopped trailed. For example, you may want to have a rule that every time the market moved five ticks in your favor, you want your stop loss to be trailed by two ticks, or when the market moves ten ticks in your favor, you want to move it to a breakeven point. Keep in mind that stop-losses are never guaranteed to get filled where you placed due to gaps and other circumstances like liquidity; as mentioned above, all stops are market orders at the end of the day.
If you want your method to be fully automated, then you need to check if the platform can execute the trades according to your method and contain a useful and accurate back testing engine. Many do not provide that, unfortunately. Some of the better ones are Multicharts and direct APIs like Rithmic.
If you ever build a fully automated system, consider hosting it next to the exchange you are trading with.
While futures may seem complex at the beginning, there are several reasons I believe that futures is a great investment vehicle for new traders. For starters, the futures market is the most liquid market on earth. With a trillion dollars traded daily and the market being open 23 out of 24 hrs per day, it offers a great place to get started. Second, with futures you do not have to scan and search for stocks to trade. You simply trade one chart and that's that! Lastly, with futures, you are NOT subject to that pesky PDT rule that you are while trading stocks. In futures, you can get started with less capital and not have to worry about a limit of 3 day trades per week. As always, getting started in any market is tough and that's why I highly recommend getting a mentor such as Young Money Investments. Mentors are going to help you learn at a greatly accelerated pace over what you could do on your own. They are going to teach you skills that they have learned the hard way so that you don't have to. A good mentor is going to help boost your self-esteem and put you on track to becoming an independent, self sufficient trader as quickly as possible! If you're looking for a mentor, head over to Young Money Investments private mentorship and give it a try!