Fully automated futures trading

Discussion in 'Journals' started by globalarbtrader, Feb 11, 2015.

  1. All of them. This was part of their so-called "NextGen ETD" project which they implemented a couple of months ago. I think it was around February, and was mentioned in this thread. This project included creating weekly expiries, next to the existing monthly expiring futures contracts. The monthly expiring contracts have the month (MMM) in their contract name, whereas the weekly expiring contracts have the full expiry date (YYYYMMDD) in their name.
     
    #3721     Jun 5, 2023
    newbunch likes this.
  2. blink18

    blink18

    Not all monthly contracts have old monthly naming convention. If you look at DAX contracts:
    FDXM (multiplier 5) has name "FDXM SEP 23", but FDXS (multiplier 1) has "FDXS 20230915 M".
     
    #3722     Jun 5, 2023
  3. Hmmm, that is strange. I have a software tool to get an overview of the available contracts. I use this tool when selecting the next contract to rollover into. I ran it for all three versions of DAX (multiplier 1, 5, and 25) futures. In all cases I only get the contracts that expire each quarter (March, June, September, December). When requesting available contract details I provide exchange (EUREX), symbol (DAX), currency (EUR), security type (FUT) and local class (FDAX, FDXM, FDXS). I get none of the weekly expiring contracts with this.
     
    #3723     Jun 5, 2023
    Kernfusion likes this.
  4. There is discussion of this in the penultimate chapter of my new book.

    As others have said, it's a balance between running short of cash (and having to pay borrowing costs with a spread), and FX tracking error (large currency balances creating p&l over and above what you earn in futures). Personally I'm quite relaxed about the latter, which means my FX can add/subtract 3% a year to performance.

    So for example right now, I have 10K CHF, 11K EUR, 85K JPY and about 150K USD in surplus cash (not used for margin). If I was less lazy, I'd sweep those balances to GBP every night, and sweep back if I needed margin. But I'm lazy. Also, this (daily currency funding by trading with central treasury) is one of the jobs I had to do as the desk junior in my first IB trading job, so maybe the activity triggers bad flashbacks.

    (I guess I could write code that did this, but I'm too lazy even to do that)

    And that would mean that the carry strategy wouldn't work in FX, but it does; the theory is nonsense.

    Having said that, I wouldn't allocate cash in a futures account according to interest rate premia, as that's effectively doubling on the FX carry strategy that I already run in futures (and it's a poor way of doing it, because of the broker rate spreads that aren't present in futures).

    Rob
     
    #3724     Jun 5, 2023
    Kernfusion likes this.
  5. blink18

    blink18

    Local name: FDAX JUN 23
    https://pennies.interactivebrokers....fo&wlId=IB&conid=540729661&lang=en&ib_entity=

    Local name: FDXM JUN 23
    https://pennies.interactivebrokers....fo&wlId=IB&conid=540729504&lang=en&ib_entity=

    Local name: FDXS 20230616 M
    https://pennies.interactivebrokers....fo&wlId=IB&conid=586729815&lang=en&ib_entity=
     
    #3725     Jun 5, 2023
    Kernfusion likes this.
  6. Thanks for your input Rob, and others. So if I want to be as lazy as possible, and I don't care much about which currency is paying a higher interest rate would the laziest approach be:

    Allocate all your cash to each currency based on how many instruments in that currency make up your total instrument universe. So if I have a 100K USD account, my instrument universe consists of 2 USD instruments 1 EUR instrument and 1 JPY instrument, I would have 50K in USD, 25K in EUR, and 25K in JPY.

    Then, I probably would never have to think about foreign currency balances again. Any pitfalls to this strategy?
     
    #3726     Jun 5, 2023
  7. Not all instruments require the same margin. Some contract sizes are small, others are much larger. So it could be, for example, that your 2 USD instruments require more than 50 k USD, and your one JPY instrument requires less than 25 k USD.
     
    #3727     Jun 5, 2023
  8. newbunch

    newbunch

    If you are willing to pay a little bit in margin interest for a short period of time, I'd suggest letting your system run without doing any currency trades. Then you can run a margin report and see how much margin you using in each currency. Then you can convert from your base currency to the various other currencies as needed.
     
    #3728     Jun 5, 2023
  9. Let's say there are all essentially the same contract size. Would it be a good idea, then?
     
    #3729     Jun 5, 2023
  10. Good thought, but my account would be a retirement account, so I don't think they let you have loans in an IRA.
     
    #3730     Jun 5, 2023
    newbunch likes this.