Wednesday, December 14, 2011

Futures Trading Systems

Futures trading systems are reliant on the analysis of the commodity markets.  The commodities are traded on controlled exchanges and the means by which they are traded called the futures contract.  There are different types of futures trading systems attempting to capitalize on market situations.  Thus, trading systems are developed to provide the investors advantage over other market participants.  Most futures trading systems are patterned to speculate on the price performance of an essential asset and most futures traders are called speculators. Fundamental and technical analyses of commodities lead to futures trading systems. Seasonality, issues of supply and demand and weather conditions are all related to fundamental systems while technical systems can be based on chart patterns and indicators. There are three major categories of futures trading systems and these are long term, short term and day trading.  Usually, day trading is based on technical analysis and this form of analysis results in systems developed to capitalize on the intraday price fluctuations of heavily traded futures contracts.  Major tables and indexes are often traded using indicators such as moving averages, Fibonacci retracements and chart studies.  Day trader investors are using charts and price ladders with time frames as small as one tick.   Fundamental analysis is most generally used by long-term investors on futures trading systems. This form of analysis might include certain published weekly reports.  Large speculator and commercial positions are reported and can be charted and this can be a useful information for the investor interested in following the big fish or sometimes called the big money.

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