Financial markets undergo constant evolution, so developing successful trading strategies requires equally constant iteration and innovation. However, releasing an unproven strategy into a live trading environment poses too significant a liability when real money is on the line. Backtesting is an indispensable tool that developers can take advantage of to limit this risk.
The concept of backtesting is straight-forward: feed historical market data into a strategy and measure how it performs. Here the assumption developers make is that good performance in the past implies similar performance in the future (and vice versa).
The growth of algorithmic trading over the last decade has made a huge impact on the markets, effectively automating order execution in ways previously unthought of. Today, it is estimated that around 60% of trades are executed by computer systems, and that number looks set to grow over the next decade. However, some have argued that algo trading is a victim of its own success, and the countless algorithms currently available make choosing and justifying allocation increasingly difficult.
Over the past decade, market structures have changed so dramatically as to be almost unrecognizable. A steady stream of new regulations designed to increase transparency and minimize the risks presented by rogue traders has left its mark, carving ever deeper valleys into self-regulated markets. MiFID II is just the latest in series of far-reaching reforms that are setting the tone for the future. Put simply, it seems that markets should brace themselves for more regulations over the coming years and not less.
For any independent futures trader, choosing the right platform from which to navigate the market is among the first and most fundamental considerations. Not all platforms are created equal, and the sheer number of options available today can be overwhelming. What is clear, however—whether you are a beginner or a seasoned trader—is that the right platform can mean the difference between success and failure.
Selecting a platform that fits your requirements can be tricky, with an endless stream of features, tools, and technologies offered at a variety of price points—some of which are more cost-effective than others...
MiFID II – A Game Changing Piece of Legislature or Simply Another Restrictive Directive? We Ask the Question!
Celebrated by some, maligned by others, when MiFID II finally came into force on Jan 3rd, 2018 it represented a seismic change for the industry. From investment banks to insurance firms, you’d be hard pushed to find anyone, however disparately connected, who has not been deeply affected by its implementation—with certain factions making their displeasure heard. However, is the road to hell really paved with good intentions? Or is ESMA merely trying to change market structures without demonizing those involved? Here, we look at the good, the bad, and the ugly as we try to balance the books on MiFID II and what it means for the future of the markets.