Direct Access Trading Provides The Perfect

Platform For My Futures Trading.

With the advent of direct access trading my future(s) became clear. Until this time I had been using delayed data and placing orders with my broker by phone. Now an online trading platform enabled me to trade on equal terms with the professionals while sitting in front of my own computer.

My situation works like this:

Through my broker I am able to log on to a futures trading platform supplied by a third party. There is a fee for this, but together with royalties, is reduced relative to how much and how often I use the trading platform.In fact, the broker I use has a range of web based and software based platforms to enable direct access trading, so regardless of the market I which to trade there is a direct access trading platform to suit my needs.

Advantages of Direct Access Trading

I use a browser based futures trading platform. This has given me the speed and reliability needed to develop and test my system. It is also a reliable direct access platform for many other markets around the world should I wish to change my trading strategy.

For testing my system I particularly wanted a trading platform that would allow not only direct market access to the ASX SPI 200 (see below) but a range of features that I could personalise to my needs. The futures trading platform I opted for gives me a great selection as follows:

• Australian Futures

My system development revolved around trading the ASX SPI 200 (Australian Securities Exchange Share Price Index 200), the benchmark derivative product of the Australian equity index market (previously SFE 200). SPI Futures enabled me to trade movements in the ASX SPI 200 Index in a single transaction, which gave me exposure to the top 200 companies in this country without having to buy stocks in each.

From the beginning I needed a method of direct access trading that would:

1. suit my intra-day rules
2. give me the ‘live’ control I needed
3. give me a visual perspective of several aspects of the market. Using this menu, I can open a number of frames (or windows) at the same time.

The graphic at right shows how the frames can be altered, while below is an example demonstrating a 4 frames horizontal split configuration.

4. allow me to monitor every aspect of my online trade.

Live Prices

Having decided on electronic trading as my preferred method for index trading, it was essential that my futures trading platform could deliver live prices. By that I mean deliver the current market price without any delays in the feed. The software provided by my broker for direct access trading does exactly that and I know that my orders are placed at exactly the price shown on my screen.

Charting

The charting facility is a major feature of my electronic day trading. The chart screen takes up a large proportion of my computer screen as my system is a visual one and requires that I see patterns relative to time.

A key reason I wanted a direct access trading facility was to use a chart with variable frequencies. This would give the variety of time frames I needed. For example, a daily frequency would show a chart spanning a twelve month period, or a monthly frequency would display the trend over a 20 year period.

More importantly, I needed a charting facility that would display the live data on any one day. Currently I can access one minute, two minute and five minute data in this way. The graphic shows the frequency function on my direct access platform.

One other feature of my trading platform that has become significant is the chart style. There is a suite of available styles with my particular futures trading platform. When I started researching my system I used a bar chart almost exclusively, but as time went on I changed to a OHLC (a line showing open, hi, lo and close prices for a particular time frame). Later still I changed to a candle chart plus volume as I found this type of chart gives a more realistic appreciation of what is happening.

Depth of Market

Depth of market screen is shown in the graphic in the right hand column. This is a useful feature for many traders as it is a method for analysing what others in the market are doing and what volumes are bid or asked at the current market price.

I tend not to use this feature, as my system rules are often contrary to market emotion. However it is there if required.

Profit/Loss Summary

Where would we be if our direct access trading was without this particular feature? As soon as I have entered an online trade I am able to see how many index points my trade has gained or lost. At the same time I can see the total gains or losses both as Index points and in dollar terms during any point of my trade as well as at the conclusion.

One Click Trading

This is another essential feature of my futures trading platform that I could not be without. I have a pull down menu for buy orders, and another for sell orders and these menus enable me to type in price, quantity and order type. Then I enter the order simply by clicking the ‘buy’ or ‘sell’ button. My order status screen confirms what has happened, and my profit loss screen begins monitoring how my trade is progressing.

Stop Loss Function

While I’m engaged in direct access trading, I want the ability to exit a trade quickly so that I can limit losses if the market moves against me. This particular feature on my trading platform is called a contingent order. As the name suggests, a contingent order facilitates the automatic generation of market orders when specific market conditions are met. For example, if I have an active buy order I can generate a contingent sell order at the level I have decided is my stop. If the market reaches that level the order is generated automatically and I exit.

So for me direct access trading is the only way to go.

The electronic platform is an essential part of my system.