Trading futures can cost you money, and it costs most people who try it money. This page says how, in plain words. It is not a complete statement of every risk of trading, and it is not personal advice: it is what we think you should have read before you use software that tests trading ideas.
Read it together with our Terms of Service, and with the risk disclosure statement your own broker is required to give you before you open a futures account. If the two disagree about your account, your broker's document governs your account.
The short version
Substantial risk of loss
Futures are leveraged instruments. A small move against you can produce a loss much larger than the money you put up, and you can lose more than your initial investment and owe your broker the difference. Trade only with money you can afford to lose entirely, and never with money you need.
Around 70% of day traders lose moneyPROXY — an indirect figure standing in for one we do not haveF16F17F18 over time. We cite that because it is the reason a validation engine exists, not because we claim to reverse it: nothing here makes you the exception, and no result this software produces is a promise about your account.
What leverage means in practice
A futures contract controls a much larger notional value than the margin your broker asks you to post. That is what makes the instrument efficient, and it is what makes it dangerous:
- Gains and losses are computed on the full contract value, not on your margin.
- Your position is marked to market and settled every day. A move against you becomes cash out of your account that day, not an unrealized number you can wait out.
- If your equity falls below the maintenance requirement, your broker issues a margin call and may liquidate your position without asking, at whatever price the market offers.
- Margin requirements and daily limits are set by your broker and the exchange, and can change without notice, including intraday.
Risks that come from automation
Software that places orders fails differently from a person who places them.
- Speed. An automated strategy can send many orders before anyone notices something is wrong. A defect in a strategy, in our software, at your broker or in the market data can produce losses faster than a human can react.
- Connectivity. Networks, brokers, exchanges and cloud providers have outages. An open position during an outage is a position you cannot manage.
- Stops are not guarantees. A stop order becomes a market order when it is touched. In a fast or gapping market it can be filled far from its price, or not at all.
- Overnight and event risk. Markets move on news, on economic releases and while you sleep. Risk limits do not stop a gap; they size what you hold when one happens.
- Model risk. A strategy is a hypothesis about the past. Markets change, and a hypothesis that survived every test can still be wrong tomorrow.
Simulation is not the market
Everything this build produces is simulated. Market data in it is generated by a statistical model
and labeled SYNTHETIC; it is not data from CME Group or any other exchange, and it is not a
record of any market. No broker is connected, and no real-money trading is being executed by
anything we operate.
Simulated trading does not experience slippage, partial fills, queue position, outages, margin calls or the temptation to override the plan after a losing week. A backtest is evidence about a rule, not evidence about a result.
CFTC Rule 4.41(b)(1)(i) — Hypothetical performance disclosure
These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.
That notice is the statement prescribed by U.S. Commodity Futures Trading Commission Rule 4.41(b)(1)(i), reproduced verbatim, and it accompanies every simulated result in this Service. What the rule requires and where we apply it has its own page.
What this software is, and is not
It is a tool for testing ideas with discipline: two language agents propose and interpret, an engine in code produces every number, and a human approves before anything is acted on. It is not a broker, a futures commission merchant, an exchange or a custodian; we never hold your money or your positions.
It is not investment advice. Quant24 is not a registered investment adviser, a commodity trading advisor, a broker-dealer or a futures commission merchant. The software does not know your finances, your obligations or your tolerance for loss, and nothing it outputs is a personalized recommendation. Decisions are yours, and so are their consequences.
Past performance — real or simulated — does not guarantee future results.
Before you trade
- Read the risk disclosure statement your broker gives you, and understand how margin calls, liquidation and settlement work at that broker.
- Decide, in advance and in writing, how much you are willing to lose in a day, a week and a month.
- Understand every strategy you approve well enough to explain why it should work. If the evidence does not convince you, do not approve it.
- If you are not sure whether futures are suitable for you, talk to a professional who is licensed to advise you. That is not us.
Questions: b.caldera@quant24.io.