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5 Mistakes of Commodity Trading & Futures Levels & Economic Reports 12.05.2013

December 4th, 2013 | Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog

Connect with Us! Use Our Futures Trading Levels and Economic Reports RSS Feed.

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1. Market Commentary
2. Futures Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Commodities Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Commodities Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Futures Economic Reports for Thursday December 5, 2013

Hello Traders,

For 2013 I would like to wish all of you discipline and patience in your trading! 

5 Common Mistakes of Commodity Trading by Joe Easton Senior Commodity Broker with Cannon Trading

As a broker who serves different types of clients with different backgrounds, risk capital and risk appetite, I have observed the following 5 common mistakes traders make, in hopes you can learn and avoid!

  1. Trading with lagging indicators. As a Broker, I get to see the whole range, from traders making their first trade, to traders making their last trade, and everything in between. The beginner traders almost always start along the same path. Using MACD, Williams %R, Stochastic, RSI and most other indicators you can find to predict price is a very common mistake. These indicators often follow price movement, not predict future price movement. Sure when looking at a chart in hindsight, they match up great, but in real time they are lagging. This style of trading will more than likely lead to losses.
  2. Trading Undercapitalized. This mistake should be placed in the premarket (before opening an account) because an account shouldn’t even be opened without proper capitalization. Assuming you did open an account, trade within limits. Each Trader has different risk tolerance, but across the board, no one should be trading with funds they cannot afford to lose. When trading with limited funds or overleveraged 1 day can end your trading career before it began. Cannon offers aggressive day trading margins, as do our competitors, but by no means do we endorse taking advantage of all that leverage. In futures trading some markets are leveraged 100:1 or even more. Meaning you are controlling a lot more capital then you may think. For example: The ES is trading at 1695 right now. You are controlling 1695*50= $84,750.00 with a mere $500 or approximately 170:1 leverage. With all that leverage account balances can fluctuate rapidly. When Trader’s take losses psychology shifts, when a shift in psychology meets lack of funds or overleveraged trading decisions are affected. Trading on low balance or outside reasonable limits is a sure recipe for losses.
  3. Overtrading. This mistake is common among beginner and advanced traders. Until it is overcame, significant profits will be lost to commissions. More importantly, your trading profit potential will be limited. Whether trading 1 lot or 1000 lots per order there is still only so many moves a market can make in a given trading period. Intraday trading typically results in three moves or less. Sure there are days that bounce between the high and the low all day, but that is one move, sideways. Other days include trend days (one direction), or 3 move days, which I believe to be most common. A 3 move day is up then down (usually a retracement) then up, or down then up then down. A two move day would be up then down or down then up. If most days fall under these formats, what reason would a 1 lot trader have to make 100 trades? Not a good one, I’ll tell you that.
  4. Losing Days. About every Trader has losing days, it is part of the business. The key is to limit losses, similarly to trading. You should monitor your account balance like you monitor your trades. When you see it going the wrong way, you should become impatient and look to cut it short. There are infinite factors why you are having a losing day, the fact is you are and you need to know in advance where the bleeding stops. Many skilled and professional traders regularly take profits from the market day in and day out only to blow the account up the one day the market doesn’t react the way they expect. Often ego or anger can block rational thoughts and averaging in and reversing is all too easy. Having hard rules like maximum lot size and maximum daily loss can preserve your capital and prevent losing days from burying your account.
  5. Chasing the market. There are so many mistakes, it is hard to only choose five, but chasing the market will conclude this list. Markets do not move in straight lines. Aside from major news there are very few large moves without retracements. Depending on the market a “big” move can be calculated by taking the average daily range and multiplying by 2 or 3. Market conditions are constantly changing, but in all circumstances, when a market makes a big move, it is more likely to retrace or reverse before continuing. Traders that buy the ES after 15 points up or sell gold after a $50 move down are behind the ball and more times than not will be stopped out with a loss. Wait for the retracement or play the other side, this will help limit loses by chasing.

I was informed  that our blog is being nominated for the STAR award by traderplanet.com which is very nice to hear and know that the work and amount of time we put into it is not going unnoticed!

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GOOD TRADING  and review us on Elite Trader!

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. 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.

If you like Our Futures Trading Daily Support and Resistance Levels, Please share!

Futures Trading Levels

Contract Dec. 2013 SP500 (big & Mini) Nasdaq100 (big & Mini) Dow Jones (big & Mini) Mini Russell Dollar Index
Resistance 3 1824.00 3542.33 16138 1152.43 81.27
Resistance 2 1811.75 3518.17 16046 1141.07 81.10
Resistance 1 1802.25 3501.58 15969 1131.63 80.88
Pivot 1790.00 3477.42 15877 1120.27 80.71
Support 1 1780.50 3460.83 15800 1110.83 80.50
Support 2 1768.25 3436.67 15708 1099.47 80.33
Support 3 1758.75 3420.08 15631 1090.03 80.11
Contract Feb. Gold Mar. Silver Jan. Crude Oil Mar. Bonds Dec. Euro
Resistance 3 1300.4 2113.0 98.99 131 3/32 1.3700
Resistance 2 1276.0 2051.0 98.28 130 19/32 1.3655
Resistance 1 1259.7 2013.0 97.71 129 29/32 1.3619
Pivot 1235.3 1951.0 97.00 129 13/32 1.3574
Support 1 1219.0 1913.0 96.43 128 23/32 1.3538
Support 2 1194.6 1851.0 95.72 128 7/32 1.3493
Support 3 1178.3 1813.0 95.15 127 17/32 1.3457
Contract Dec Corn March Wheat Jan .Beans Jan. SoyMeal Jan. bean Oil
Resistance 3 449.0 667.9 1360.92 445.87 40.83
Resistance 2 444.0 666.6 1347.83 440.23 40.64
Resistance 1 440.3 664.2 1338.67 435.27 40.49
Pivot 435.3 662.8 1325.58 429.63 40.30
Support 1 431.5 660.4 1316.4 424.7 40.2
Support 2 426.5 659.1 1303.33 419.03 39.96
Support 3 422.8 656.7 1294.17 414.07 39.81
For complete contract specifications for the futures markets listed above click here!

5. Economic Reports

source:http://www.forexfactory.com/calendar.php

All times are Eastern time Zone (EST)

 

Date 4:00pm Currency Impact Detail Actual Forecast Previous Graph
ThuDec 5  7:30am USD Challenger Job Cuts y/y -4.2%
7:45am EUR Minimum Bid Rate 0.25% 0.25%
8:30am EUR ECB Press Conference
USD Prelim GDP q/q 3.0% 2.8%
USD Unemployment Claims 328K 316K
USD Treasury Sec Lew Speaks
USD Prelim GDP Price Index q/q 1.9% 1.9%
10:00am USD Factory Orders m/m -0.9% 1.7%
10:30am USD Natural Gas Storage -141B -13B


This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading.

 

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