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Trading Robots Can Work Well In The Futures Market
Trading the futures markets is very similar from a chart perspective as trading the stock market. The primary difference is the futures markets are inherently leveraged (little amount of money controls a relatively large investment). Even if you use margin on stocks, you do not approach the leverage of the futures. This is what tends to make the futures markets attractive as a day trading vehicle, or as a swing trading vehicle. Rarely do people invest in futures for the long term - at most the bet might be a couple of months.
If all you want to do is day trade, then the futures markets ought to be on your list to consider. If you have the SEC required $25000 minimum to day trade stocks, then you can easily day trade some futures also 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 offer some great possibilities. Most futures brokers will require you to put up about $5000 initially to open an account, some might be higher. Intraday margins to trade a contract or 2 are generally much less than the overnight margin. This is because overnight there can be big gaps in price caused by news events and you are required to maintain enough money in your account to deal with that level of volatility. Furthermore, it is possible if you hold futures overnight (or even intraday if you do not utilize stops) to have your account go into a negative balance due to the leverage. Most brokers will never let this happen and will close out all your positions before this happens. This type of event is a possibility and the risks should be understood. Intra-day it is rare, but overnight it can happen with higher odds.
While these dangers should not be ignored, they should not keep you from trading futures either if you are a day trader. From a technical perspective, trading futures is very similar to day trading the stock market, with the exception that there are no "news events" on the futures such as analyst upgrades or downgrades to be worried about. Financial events and news happen daily, and these affect both index futures and stocks who trade off them, so this is nothing new. There are many places now where you can get a no cost demo account to practice day trading the futures markets. If you find that you like doing it, consider adding the futures markets to your current trading.
The futures work especially well for testing out a day trading robot, because there is more volatility. The futures markets are often a good choice for any type of automated trading robot because they tend to be more held in a range than stocks. While a stock can run from 10 to 200 in a few months, the futures markets do not have this big a run, although they do trend up and down over months of time.
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