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FREE Commodities Futures Trading Tools, Educational Resources and Articles

Browse our FREE commodity futures trading tools, trials, articles and other valuable educational resources for any commodity and futures trader.

Commodity Futures Trading Tools & Resources

At Cannon Trading, we place great emphasis on trader education. We believe having access to insightful information and good tools is crucial for successful online commodity futures trading. As such, we've curated a variety of Commodity Futures trading tools and educational resources such as quotes and charts to help our traders gain an in-depth understanding of the trade execution and decision making process involved in commodities futures trading. Whether you’re a novice in online commodity trading, or a seasoned trader, we have a comprehensive set of educational resources, tools and software to help you meet your trading goals.

A Brief History of Commodity Trading

In the 1800’s, Finding a trader who was willing to take a position in a forward contract was relatively easy to do; finding that trader at the time of contract settlement was not. So the Chicago Board of Trade created futures contracts.

The need for Grain Farmers to spread risk through hedging is to take a futures position that is equal and opposite to a position held in the cash market. The objective is to mitigate the risk of an adverse move in prices. Commodity futures trading allowed this mechanism.

The most important structure of commodity futures trading is the role of the commodity clearing house. Every clearing-house member must put up fixed original margins and maintain them with the clearing house in the event of adverse price fluctuations. In such instances, the clearing house may call for additional margins throughout the day without waiting for routine end-of-day settlement. Examples of commodity clearing houses in the U.S. are the Chicago Mercantile exchange CME, The Chicago Board of Trade CBOT, the New York Mercantile Exchange NYMEX and the Commodity Exchange incorporated COMEX.

The Importance of Commodity Market Liquidity

Commodity market liquidity is a market's ability to facilitate the purchase or sale of an asset without causing drastic price change. It can be sold rapidly, with minimal loss of value, any time within market hours. The essential characteristic of a liquid market is that there are always ready and willing buyers and sellers. It is similar to, but distinct from, market depth, which relates to the trade-off between quantity being sold and the price it can be sold for, rather than the liquidity trade-off between speed of sale and the price it can be sold for. A market may be considered both deep and liquid if there are ready and willing buyers and sellers in large quantities.

How to Start Trading Commodity Futures Online

When starting out with trading futures, it is very important to do your research about futures. Both understanding the risk involved in trading futures and understanding the leverage in futures are two very important key factors. When researching the risk of futures, you have to understand that you can be exposed to substantial risk that may not be suitable for all investors. Certain reports and different movements in these markets can either cause minimal losses or wipe out your account, or just the opposite cause minimal wins or substantial gains in your account. Also the leverage in the futures markets allows you to trade a large sum of money in one futures contract with a substantially smaller account size of capital in your account. Doing your research on these two factors can help you tremendously in seeing if trading futures is something you would like to dive into and start trading.

If you find that trading futures is something you would like to start, some great advice is to keep your focus on one or two markets. Really study these markets and learn how they trade certain times of the days, when they have the most volatility and how they react to certain reports when release. If you steer your focus to more than 2 markets and you are completely new to trading, it can substantially decrease your sustainability in the future markets. Trying to learn market movements, volatility, different front months, and market reaction for different reports for more than two markets can be very difficult when starting out. Focus on at most 2 markets you that interest you, build a strategy, keep a trading journal and work from there.

Make sure you set up a demo, get comfortable with the platform, place trades, and ask your broker for a walk through the platform. Implement the strategy on your demo for the 1 or 2 markets you will be trading and practice for about 3 to 4 weeks. Keep a trading journal of your trades, how the market is moving for the day, and when you find the most volatility in that specific market. After 4 weeks, start to trade live but do not over trade. Also a good thing to remember is NOT TO LIVE IN DEMO TRADING. Take what you learned from those 4 weeks and start implementing that in your live account. If you do not, you may live in demo trading and never pull the trigger to trade live. Start off by trading 1 contract, do not over trade and do not let your emotions get the best of you when you start trading live.

Is Investing in Commodities a Good Idea?

Commodities offer that quality around which any financial portfolio should be built diversification. Their characteristics – the type of asset class they are and how their components react to the economic world – make them unique. In other words, they’re not like stocks, bonds and real estate. Diversification in and of itself, however, isn’t a reason to invest in something. Studies regularly surface from time to time showing that when portfolios allocate assets to commodities, their overall risk can be reduced. And because commodities futures are extremely liquid – their contracts trade electronically on major U.S. exchanges – they have an enormous advantage over their related physical forms. Dealing in crude oil, gold, or Swiss Francs is a cumbersome approach to diversification.

The challenge, of course, is to gain exposure to commodities in an intelligent way. For most investors, that would require the benefit of aid. Even those who opt to trade commodities on a self-directed basis look for guidance in their decision making. These days, probably the better approach would be to apply the techniques of investing in more traditional asset classes administered portfolios, either in the form of broker management or automated trading systems are apt choices. Developments in algorithmic trading systems have gained ground dramatically in the field of commodities trading and are unquestionably worth considering.

Commodities Trading Categories

Categories in Commodities Trading is synonymous with market groups or also often called sectors. Categories are ways to organize the different futures contracts by likeness and similarity.

Below will highlight each sector along with some important information including trading hours, leader by volume, and other pertinent information that is helpful when trading futures commodities.

Currencies

Currencies are often understood as FOREX. FOREX trading is differently than trading currency futures though closely related. Currency Futures is trading on commission not a spread. Secondly currency futures are deliverable contracts and all the orders are routed to the CME -Chicago Mercantile Exchange. The most popular Futures Currencies are the Euro symbol usually 6E and the Japanese Yen usually symbol 6J. Currency Futures are traded 23 hours a day, closing with most Futures at 5pm Eastern time.

Energies

Energy futures are also mostly traded on NYMEX a subsidiary of CME. These products are as the name indicates commodities used for energy, such as fuel for cars or heating homes. The most popular contracts are Crude Oil symbol CL and Natural Gas symbol NG. These markets are also traded 23 hours per day closing at 5pm on Friday and opening again at 6PM Sunday.

Financials

Financial Futures are associated with interest rates, including bonds and notes. These markets are also traded 23 hours. The most traded financial futures are the Eurodollar symbol GE and the 10 year note symbol ZN. These markets are traded on CBOT – Chicago Board of Trade

Metals

Precious metals are one of the most commonly considered commodities. Gold - GC, Copper- HG and Silver- SI are the most popular metals and trading futures metals is the most direct way to trade at the current price. These markets are traded 23 hours per day on COMEX also owned by CME.

Meats and Grains

Meats and Grains are two separate sectors, but they are joined here due to similarity. Both Meat and Grain futures have daily limits. These need to be observed and come into play occasionally while trading. Meats and Grains also close earlier and have shorter trading hours than other futures. Meats are Traded Monday through Friday 9:30am – 2:05 pm Eastern Time. Grains are traded Sunday through Friday night from 8pm until 8:45 am Eastern Time, pause, and again from 9:30 am until 2:20 pm. Grains Futures are Traded on CBOT and Meat Futures are on CME. Lean Hogs -HE and Live Cattle –LE are popular meats and Wheat- ZW and Soybeans- ZS are popular grains.

Indices

Albeit futures indices are among the most popular, the conventional investor doesn’t associate stock trading and commodity trading. Stock indices including the S&P 500 –symbol ES, Dow Jones- symbol –YM and NASDAQ symbol NQ are all commodities traded on the exchange. These markets will give you a highly levered exposure directly to the stock market. Depending on the market it is traded on a different exchange, including the most popular European Index DAX–FDAX traded on EUREX.

Softs

Last but not least we have soft futures, which are traded on ICE, one of the few exchanges listed above not owned by parent CME. These markets have shorter market hours (all different) similar to meats and grains. They also have daily price limits that need to be understood in depth before trading. The most popular contracts are Coffee- KC, Sugar – SB, and Cotton-CT.

The Role of Speculators in Commodity Trading

Speculation Defined: What is common to all speculative purchases of oil, for instance is that the buyer is anticipating rising oil prices and the seller is anticipating lower commodity prices.

If for Grains, all purchases of this commodity result in less than 10% of physical delivery and of course, buyers are looking for an increase in price over time and sellers a decrease over time, speculators represent 90% of the market volume.

No actual delivery of grain occur in more than 90 % of contracts ( http://eh.net/encyclopedia/a-history-of-futures-trading-in-the-united-states/) Commodity trading Volume vs the annual average amount of crops produced during any period fluctuate over time. In the late 1960’s Commodity futures volume outstripped crop production by a factor of 4, in the 2000’s commodity futures volume bested crop production by a factor of 11 and the trend continues. Commodity markets are liquid.

It is immediately clear that speculation defined in this manner need not be morally reprehensible, In fact, speculation may make perfect economic sense and indeed is an important aspect of a functioning oil market or any commodity market for that matter. For example, it seems entirely reasonable for oil companies to stock up on crude oil in anticipation of a disruption of oil supplies because these stocks help oil companies smooth the production of refined products such as gasoline. The resulting oil price response helps alleviate future shortages by curbing current oil consumption and providing incentives for additional exploration and production. Speculators would be wise to capture the resulting market imbalances.

Speculators as liquidity providers but are not the only ones who provide liquidity during the price discovery process, Market makers are employed by all commodity exchanges to provide liquidity for the market place.

Two Main Participants - Commodity Hedgers and Commodity Speculators

Commodity Hedgers

Commodity Producers: Looking to protect their price of commodity products against decrease in the price of their commodity and want to reduce their price risk.

Commodity Consumers: Looking to ensure they get the commodity at a given price and protect their commodity products against increase in the price of their commodity.

Hedge Funds: Use various strategies to maximize returns for their investors. One of the most common commodity strategies is long/short futures strategy; taking long and short positions in commodity futures.

Commodity Speculators

Individual traders These days, electronic trading is widely available for commodity futures market. Now individual traders can easily trade commodities with low cost transaction fees.

Prop Traders: Financial investment company who trade commodity futures with their own money.

Hedge Funds: Use various strategies to trade commodity futures and work on a large number of contracts simultaneously to provide the most possible outcome for their investors with manageable risk.

Market Makers: continuously provide bid/offer (spread) prices by adding liquidity to the commodity futures market. They generate profit through the bid/offer spread over a large number of transactions.

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Futures Quotes & Charts

Access the latest trading quotes and charts on futures, complete with the open, high, low and rise/ fall numbers for easy analysis.

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Futures Trading Glossary

These are the terms that are most commonly used in our trading room.

Listed in alphabetical order, these terms are not all inclusive but do represent those that are most commonly used. If you cannot find the term you are looking for or have comments about the terms, please let us know.

Move your pointer over the letter and click to take you directly to that alphabetical category.

Visit Trading Glossary Page.

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Education and Added Value

Additional services at Cannon Futures include daily support and resistance levels, live alerts for breaking news, customized technical analysis on demand for all futures contracts, educational webinars, and many more.

  • Commodity Future Trading Tools
  • Market Information
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    Support & Resistance Levels

    This section provides outlook for different futures and commodities market news, and support and resistance levels for currencies, gold futures trading, crude oil futures, etc. It also includes expert advice and day trading learnings from Ilan Levy-Mayer, Vice President, Cannon Trading.

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    Intraday Signals

    Learn from the expert! Ilan Levy-Mayer shares his learnings and experiences in commodity futures trading through webinars. See his trading charts and trading signals real-time; and learn from his experience to gain more from your trading.

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    Financial Stability

    What is your commodity broker's background?

    Our online brokers have been in the commodity futures trading business for as many as 20 years, from working the floor to being among the first to specialize in online trading. They have the experience and the know-how to help you with virtually any aspect of trading.

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    Knowledge

    How long has your commodity broker been in business? Will he be there when needed? Does he have a record you can trust?

    Cannon Trading has been in business since 1988, received several customer service awards, and has maintained its good standing with the NFA and CFTC since its conception.

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    Software Choice

    Most commodity brokers will work with one FCM and one or two platforms; but the more complex nature of commodity futures suggests that for different type of traders, different platforms are more suitable.

    Cannon Trading offers your choice of more than 10 commodity futures trading platforms. Not sure which platform is right for you? Our experienced online futures brokers can help you find the best fit. Give them a call at 310-859-9572.

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    Price

    The Cannon Team provides excellent customer service while offering some of the lowest rates available.

    Whether you are a high volume trader or a low volume trader, we will meet your needs with the high quality of service and dependable platforms we offer. Every client enjoys the opportunity to a special discount commission rate.

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    Daily Research

    Sign up to get the latest feeds and updates on commodities and futures from JS Services Price Map reports delivered directly to your inbox.

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    News Feed

    Sign in to access daily audio clips on news that has had the futures and commodities market moving. Experienced analysts dig into daily market news to make available facts and figures that are of meaning to the trade only, in the form of technical analysis, videos, research, and scrolling news.

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    Trading Advice

    This section bring together in-depth information on everything that a commodity futures trader should know for successful trading. Compiled by our team, this section offers valuable advice and guidance to the commodity futures trading markets.

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    Contract Specifications

    This section is created to provide traders with a brief history, current prices, trading volumes, contract specifications, and settlements of Crude Oil, E-Mini S&P 500, Eurodollar, T-Bond, E-Mini Dow Jones, E-Mini NASDAQ 100, U.S. Dollar Index, Wheat, Silver Futures, Copper Futures, among others.

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    In addition to these commodity futures trading educational resources, we also have seasoned brokers to help you out. With decades of combined experience in futures and commodity trading, our brokers can guide you with the information, advice, and resources you need for your trading. To speak to one of our brokers at Cannon Trading, call us at 1-800-454-9572.

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    Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.


    Cannon Trading respects your privacy, all transactions are safe and secure with High-grade Encryption (AES-256, 256-bit keys). We do not sell your information to third parties.

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