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Futures Trading Brokers: Are You Choosing Proprietary or Public Domain Indicators?

January 31, 2019 by Daniels Trading| Futures 101

In modern futures trading, technical analysis garners respect from market participants around the globe. It really doesn’t matter if you’re trading soybeans, natural gas, or the E-mini Dow ― price action itself drives the strategy of countless retail traders.

The popularity of technical analytics has given rise to a vast catalog of indicators designed for active trading. These tools may be supplied by futures trading brokers or developed in private for access via a software trading platform.

Public Domain Indicators: Free Doesn’t Mean Worthless

By definition, the term “public domain” refers to something that belongs to the collective whole. A public domain technical indicator is one that is not subject to copyright and is freely accessible to anyone interested in using its functionality.

Sometimes the best things in life are actually free. For the technical trader, the public domain is an area rich with valuable analytics that provide many advantages:

  • Free of charge: Public domain indicators may be used without paying a fee.
  • Variety: Hundreds of unique options are readily available.
  • Easy access: Access to these indicators is often provided by futures trading brokers automatically via the supported features of the trading platform.

Many of the most powerful, tried-and-true technicals exist in the public domain. Here are several that have attracted fans for decades:

  • Moving Averages
  • Fibonacci Numbers
  • Momentum Oscillators

The beauty of public domain analytics is that they are often furnished to individuals by futures trading brokers as an added incentive. If you are interested in these tools, there’s good news ― chances are you already have access to them!

Read our e-book Don’t Lose Money: Common Mistakes to Avoid as You Learn New Trading Skills and avoid the common mistakes new futures traders make>>

Proprietary Indicators: Pay to Play

For those traders interested in cutting-edge analytics, buying and using proprietary indicators can be an attractive proposition. Whether you’re an advanced market technician looking for extremely specific functionality or in the market for a complete trading system, proprietary indicators can provide viable solutions.

In practice, there are a few areas where proprietary indicators differ from the public domain. First and foremost, they’re private and subject to copyright laws. This fact ensures that access to their functionality is limited, typically only available for a fee. Second, their methodology and derivations are not transparent. Essentially, proprietary indicators are a function of their track record and not guiding principles. Due to this fact, many traders are skeptical of these devices, citing that they will not stand up to intense scrutiny.

Proprietary technicals afford those willing to pay the freight many advantages. Here are a few of the largest:

  • Performance-oriented: Proprietary indicators, or “trading signals,” are designed solely to produce a positive P&L. In the event that they cease doing so, or are ineffective from the start, there’s no guesswork for the trader. Simply move on to the next one!
  • Comprehensive expertise: Most of the time, the best and brightest in the futures industry work for large firms or offer their expertise on a paid basis. Proprietary indicators work in a similar vein, providing exclusive analytics and trading signals not found anywhere else in the markets.
  • Systematic: Proprietary technical indicators are typically designed within the framework of a comprehensive trading system. Trading signals, money management parameters, and even automated trade execution are frequently included.

In practice, there are thousands of private indicators for sale to active traders. The variety can certainly be overwhelming, especially when you’re new to the market. A great place to begin searching for trading tools worthy of purchase is among affiliates and third parties associated with reputable futures trading brokers.

All Futures Trading Brokers Are Not Created Equal

When it comes to trading, it’s important to remember that there’s no holy grail. No indicator, public or proprietary, can achieve your market-related goals for you. Nonetheless, having a strong set of technical tools in your trading repertoire never hurts.

For expert advice on how to incorporate technical indicators into your trading plan, look no further than the futures pros at Daniels Trading. With more than two decades in the business, Daniels Trading has seen it all, from fad to fantastic.

Ready to think like a technical trader? Download our free guide to learn how to identify chart formations and take action when the time is right.

Filed Under: Futures 101

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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