Commodities on the menu

First Published in Automated Trader Magazine Issue 10 Q3 2008

Hard and soft, edible and not-so-edible commodities have been a hot topic recently. But what substance is there behind the sizzle? Automated Trader has been looking into the current commodity boom, and asking, are these markets ripe for automation, and if so, what are their trading characteristics and their long-term potential for automated alpha generation?


In the first of our series of linked articles on this theme, Dr. Robert Brady, CTO of Brady PLC analyses the current use and likely future evolution of automated trading in commodities markets. This is, as Dr. Brady observes, a whole asset class in transition. Some of its trading practices are arcane, but some put it right up on the screen alongside already heavily auto-traded markets such as FX and stock indices. Shouldn’t you be getting a feed on commodities?

Dr Robert Brady, CTO, Brady plc
Dr Robert Brady, CTO, Brady plc

The commodity markets are unique because they contain such a wide range of automation practices - ranging from virtually 100% openness and automated trading in the case of the US exchanges, to partly open processes in the London M

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