What Are the Different Types of Futures Trading Systems?

The futures trading system is to calculate the relevant parameters of trading and risk control through a high degree of quantification, organization and a large number of mathematical analysis, so as to obtain the probability of successful operation according to the empirical numerical value.

Futures trading system

The futures trading system is to calculate the relevant parameters of trading and risk control through a high degree of quantification, organization and a large number of mathematical analysis, so as to obtain numerical operations based on experience

The futures trading system is a complete set of trading rules composed of interrelated trading rules. It is generally composed of a market judgment subsystem, a fund management subsystem and a risk management subsystem. Among them, the more important market judgment subsystem should include more than two trading rules. These rules should have organic links with each other and can complete at least one complete trading cycle.

The futures trading system has to be tested in the actual combat stage. Since the system operator is also part of the trading system, whether he can overcome his own psychological obstacles is one of the important conditions for success. However, in general, the use of futures trading systems, because it is a 100% objective decision-making mode, can effectively eliminate the interference of human subjective will and individual emotions on the signal generation process, making the system trading with high operational stability and disaster resistance The capacity for sexual errors. ^[1]

The design principle of the futures trading system is mainly based on two basic principles:

The first is that futures prices are random. Modern investment theory proves this principle with a lot of sophisticated mathematical methods. In theory, any investor is likely to make money locally and in the short term. If a random strategy is used to determine the futures trading strategy, the correct rate will approach 50%. But from a global and long-term perspective, the probability of winning is very low. If you consider the cost of investment, it will be an inevitable loser.

The second principle is that the futures price still has a non-random fluctuation part, and you can find the law from it. Because the futures market is composed of numerous investors, and the investor's psychological state determines that the investment behavior has a certain memory, it still has some non-random parts in highly random price fluctuations. If non-random price fluctuations can be successfully captured through computer decision-making, then operations will be closer to success. ^[1]

There are four elements in the trading system: direction prediction, timing,

A successful futures investment strategy should include proper investment analysis, risk management, and investment psychology. The futures trading system has obvious advantages over traditional investment strategies in all three aspects. Taking investment analysis as an example, if investors want to win long-term and stable in stock and futures investment, they must successfully capture the correct price fluctuation trend. There are some successful stock and futures investors in China who do not use the trading system for trading, but in fact these investors still embody the principles of the trading system through other methods. For example, relying on its good disk feel, and the disk feel mainly comes from the summary and inspection of a large number of transaction records. In this regard, it has something in common with the trading system. However, if the trading cycle is too long, no matter it is a sensory, news or experience investor, it is difficult to effectively control its own psychological weakness. Even if some investors can achieve short-term success by relying on their own understanding and a shallow, conceptual summary of market technology trends, once the market changes or it is in a highly stressed operating state for a long time, it will easily lead to disaster Sexual errors. According to the operation of the trading system, human subjective judgment is basically eliminated. As long as the trading parameters are continuously adjusted as the market changes, it can make a long-term and stable profit and become a favorable assistant for investors. As a simple example, the success rate of a futures trading system inspection is 70%, which means operating according to the buy and sell signals sent by the trading system. There is no guarantee that each transaction will be successful. The probability of a successful transaction will be around seven.

In terms of risk management, the trading system can also help investors effectively control risks. It is difficult for investors who do not use the trading system to accurately and systematically control risks, while using the futures trading system can tell investors the expected profit rate, expected loss amount, expected maximum loss amount, expected number of consecutive profits, expected continuous amount of each transaction Losses, etc. These are important parameters for investment risk management. These parameters are calculated before the fact (before the transaction occurs), not after the fact.

In short, without the help of the trading system, investors may need to explore for many years in order to make their psychological quality reach the level required by successful investors. With the help of the trading system, this process is likely to be greatly accelerated. Investors can simply judge the soundness of their psychological quality based on their own implementation of the signal system. When the investor can execute all the operating signals of the trading system in a long-term, accurate and comprehensive manner, it can be said that the door to the hall of success has really been pushed at this time. ^[1]

There are many trading systems in the domestic market. Although the design principles are basically the same, there are complex and simple differences due to different statistical models based on computer technical indicators or statistical models of basic analysis data. The following outlines the outline of a WH futures trading system:

The WH futures trading system mainly includes three major subsystems: market judgment subsystem, fund management subsystem, and risk management subsystem. Taking the market judgment subsystem as an example, it is mainly composed of a price change warning system and a market price situation detection system, including trading principles, trading targets, trading ranges, and so on. According to the technical aspects (mainly according to the arrangement of the high and low points of the weekly K-wave band, the starting price level and the elapsed time, analysis and confirmation according to the definition of the trend, the 30-week moving average can be regarded as the general long-short dividing line) and fundamental (The number of warehouse receipts, spot prices, etc.) The general trend is to determine the bull, bear and wide fluctuations (the high and low spreads of new varieties after the listing are calculated at low prices are close to 20%) and the stage they are in. Do not open positions in the speculative area until there is no signal that the trend has changed. Its simple average line trading rules are as follows:

Rule 1. Go long when the XX-day short-term average crosses the XX-day long-term average upward.

Rule 2. Hold the order before the short signal occurs.

Rule 3. When the short-term average of the XX day breaks down the long-term average of the XX day, go short and close out.

Rule 4. Hold the order before the long signal occurs. Taking the capital management subsystem as an example, the following basic principles must be included: the basic position is 10% -30% of the available funds (10% at the end of the trend), but do not exceed 1% of the total position of the contract; China has to endure the shock but resolutely close out and exit at the stop loss level; all positions are closed after reaching the highest target level; when the account fund loss reaches 10%, all positions are cleared out and patiently wait for the opportunity to enter the market. ^[1]