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Execution of Commodity Trading Systems |
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Commodity Futures Brokers
We understand that good execution is the key to attempting to maximize profits with commodity trading systems. While most markets offer multiple platforms for execution, knowing which platform is best suited for a particular market or order type can make a world of difference. At Worldwide Futures Systems, we utilize our over three decades of experience, market and system evaluation, and broker relationships to determine which commodity trading platform will give our clients the greatest possible edge.
Execution is Critical to Day-Trading Systems
When looking at the performance of a day-trading system Worldwide Futures Systems feels the most important factor in deciding on a brokerage or commodity trading system is execution. Since day-trading systems trade in higher volume, execution in every trade signal is essential to the systems success.
Often day-trading systems will have a wonderful history (track record) but once that same system is released to the public the system because ruined, why? This is what is known as slippage. Slippage occurs when the price that is bid or asked for is not the price that is filled. The difference between them is known as slippage.
For example, Worldwide Futures Systems was trading a 3rd party system in 2008. When we first started trading the system the slippage was under $10, after a number of months the system had become over subscribed and the slippage rose to $70 in one quarter.
At Worldwide Futures Systems our day-trading systems have never been released to the public and are only available through Worldwide Futures Systems. This means that we have complete control over the volume of trading in our systems. Therefore, we can monitor the slippage on a daily basis. As we write this our slippage is $7.29 in the Condor system, a phenomenally low figure, which we have maintained for three plus years. Other systems offered by WWFS may differ in slippage from that of the Condor system.
Why does Execution Matter?
How you choose to execute your commodity system trading signals directly affects the amount of slippage, or the difference from the entry price generated by a trading system to the actual fill price, and the overall performance of your trading system. Although most markets offer traders multiple platforms for execution – usually a traditional open-outcry trading floor platform and a computer-based electronic platform such as GLOBEX or eCBOT – most commodity system trading firms automatically route client orders to whichever platform has the lowest fees, regardless of fill quality, in order to save the firm dollars per trade. However, each platform has its own strengths and can be better suited for a particular market or order type.
For futures and commodity market system trading, it is essential that these strengths are utilized to their full extent to reduce or eliminate slippage. When you consider a commodity trading system that makes more that 100 executions per year, it is easy to see that great execution and strict slippage control can make or break a commodity trading strategy. Read our “Slippage Discussion” for a more in depth discussion of the importance of managing slippage.
At Worldwide Futures Systems, we use only the execution platform that will result in the best execution and minimal slippage , this does not guarantee that substantial loss will not occur.
In our 30 plus years of experience, we have nurtured and maintained relationships with floor brokers of every major exchange in Chicago and New York. If a broker’s or platform’s execution changes over time, we adjust our methods accordingly. Contact Worldwide Futures Systems at 888-989-WWFS so that we can begin improving your portfolio with a commodity trading strategy today!
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