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Category: Commodity Trading

Investment is a game of money of securing future money by taking a risk today. Trading therefore comes with a list of rules to play by. Commodity trading in particular offers tremendous potential for becoming a completely different asset class.

However, before investing in any kind of commodity, you must do an in depth research and also ask your broker as many questions as possible. Through this category archive we provide you as much information and valuable insights into the world of commodity trading.

We at Cannon Trading are here to help you with your commodity trading needs. You as a trader should select your commodity trading advisor only after performing a due diligence on him/her. We in fact do that for you. This way, you get only the best advice to help you with your commodity trading.

We’ve got the information that you might need at every step of commodity trading, and you’ll find it all right here in the commodity trading section of our blog. Read up, and read on to get equipped!

Future Spreads & Futures Levels & Economic Reports 11.20.2013

Posted on November 19, 2013September 16, 2014 by Ilan

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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 Wednesday November 20, 2013

Hello Traders,

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

Trading Futures Spreads

“A basic and important strategy for commodities traders using spread trading.”

By: Mark O’Brien, Cannon Trading Commodities Broker

Over my 20+ year career as a commodities broker, I have studied and traded a wide range of approaches to trading the futures markets. From candlestick formations to the commodity channel index, from condors to turtle trading, there’s an enormous catalog of tools and methods available for traders to consider.

One method I have noticed is surprisingly underrepresented among retail traders is futures spread trading, where a single position in the market consists of the simultaneous purchase of one futures contract and sale of a related futures contract as a unit. I call it surprising because some of the most invested players in futures trading – and arguably the most sophisticated – include large speculators and commercial firms who regularly employ spreads. This includes traders in the markets who often actually buy and sell the physical commodities we trade. Farmers, ranchers and other food growers along with food producers, petroleum companies who either drill for oil or natural gas or refine these products – or both, financial institutions with enormous holdings in treasuries, equities or currencies, mining interests and their buyers – all these areas of production and distribution employ spreads from time to time as an important aspect of their businesses. Indeed, spread trading is a fundamental and essential part of the commodities futures markets.

At the same time, despite the remarkable increase in interest and in the growth in the volume of the futures markets over the years, spread trading is typically dismissed by most other traders in search of a trading strategy. With so much attention focused on other approaches related to straightforward directional trading (and within that category, day-trading) it’s not difficult to see how spread trading can be overlooked.

READ THE FULL ARTICLE

Continue reading “Future Spreads & Futures Levels & Economic Reports 11.20.2013”

Futures Trading Levels & Economic Reports for November 15, 2013

Posted on November 14, 2013September 16, 2014 by Ilan

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

Learn to lose….

Many different factors go into trading. Too many to discuss efficiently in one blog post. Some relate to trading techniques, other to money management, mental aspect, risk capital and much more.

But one that sticks in my eyes is the ability to take a loss. I see many clients who can make money and have days where they make money but when they lose, they lose much more, sometimes even losing control and losing a big portion of their account.

I am not sure how a trader can embed this into their trading mind, BUT in my opinion if you train your brain to expect losses, understand losses and losing days will happen, you will increase your chances of surviving in this business, which in return will actually give you a chance to succeed….

Losses are part of trading and as long as your losses are part of the plan and are quantified in advance and you can adhere to your rules, then you have a chance. I think it’s easy when traders are winning…making money etc. Much harder when you lose or down. your brain starts playing tricks on you…it tells you to double down, maybe reverse even though your analysis does not say so….all of a sudden you start pulling trades out of instinct, fear rather than a calculated plan that has solid risk/ reward. If a trader learns how to lose, to accept losses, to have realistic expectations, then he/ she can avoid having one of those terrible days when traders can lose almost of all their account.

I went into this subject and detailed day-trading money management in an article I wrote a few years back for SFO magazine.

You can read the full article at: https://www.cannontrading.com/community/newsletter/Survivor-Day-Trading-Different-Day-Trading-Money-Management-Modified-Hours-E-Minis#two

Continue reading “Futures Trading Levels & Economic Reports for November 15, 2013”

Gold Daily & Trading Levels & Economic Reports 11.13.2013

Posted on November 12, 2013September 16, 2014 by Ilan

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

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

Gold and Silver took a hit today, selling off 1% and 2.5% respectively.

Gold and silver are much different markets in my opinion than mini SP or us tbonds for example. Gold, silver and crude oil for that matter are quite volatile with fear and greed playing a bigger role than in other markets. I have seen these markets make some very large moves intraday at times.

I do think that both gold and crude oil are GOOD markets to observe as potential for day-trading as long as you use stops…if you are a trader that “uses mental stops” , these markets are not for you…Good news is that both crude and gold have a mini contract .

Gold chart for your review below with some possible levels to watch for:

GCE - Gold (Globex), Equalized Active Daily Continuation — GCE – Gold (Globex), Equalized Active Daily Continuation

Continue reading “Gold Daily & Trading Levels & Economic Reports 11.13.2013”

Real Time Trade Alerts & Futures Levels & Economic Reports for 11.08.2013

Posted on November 7, 2013September 16, 2014 by Ilan

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

BIG DAY tomorrow. Many reports including monthly unemployment figures. Be ready for higher volatility.

To continue on what i wrote yesterday regarding volume / range charts and using overbought / oversold indicators, below you will see 36 ticks range bar chart of gold futures from today’s session. The example below is of a good day for the model ( two sided trading ranges with volatility) and there are bad days just as well ( strong, one sided trend days).

The charts are sierra charts and the signals that appear are based on proprietary indicators developed by Ilan Levy-Mayer of LEVEX Capital Mgmt Inc. and VP of Cannon Trading Co, Inc.

The concept is a simple concept that looks for exhaustion in either buying/ selling and reversal. The signals that appear on the charts are alerting you for potential buy or sell IF/ONCE price confirmation occurred (crossing of the hull moving average). Full explanation along with chart samples included in the 23 page PDF booklets that comes with the free trial.

Would you like to have access to the DIAMOND and TOPAZ and 5T ALGOs as shown above and be able to apply for any market and any time frame on your own PC ? You can now have a three weeks free trial where the ALGO is enabled along with few studies for your own sierra/ ATcharts. The trial comes with a 23 page PDF booklet which explains the concepts, risks and methodology in more details.

Continue reading “Real Time Trade Alerts & Futures Levels & Economic Reports for 11.08.2013”

How Does Crude Oil Affect Gas Prices? What Else Does?

Posted on November 6, 2013September 16, 2014 by Ilan

The answer to the question in the title of this piece was stated pretty assuredly in a 2005 publication by the Federal Trade Commission. The most important factor in the price of gasoline, the 166-page report concluded, was “the world price of crude oil“. It went on: “Over the last 20 years, changes in crude oil prices have explained 85% of the changes in the price for gasoline in the U.S.”1 And there aren’t too many macro-unknowns out there to affect the price of crude oil. The world produces roughly 85 million barrels of oil every day and every day the world’s population consumes about 90 million barrels. And the generally accepted relationship between crude oil and gasoline is that for every $1 dollar per barrel crude oil moves, gas prices move about 2 ½ cents at the pump. It’s also generally accepted that there’s approximately 1.5 trillion barrels of oil yet to be extracted from the planet – what are called proven reserves – equal to about 50 more years of supply based on our current consumption rate. And according to OPEC’s web site, that cartel – created over 50 years ago – controls about 80% of those reserves.

OPEC Share of World Crude Oil Reserves 2012

Account for some margin of error and those are all pretty workable numbers for a global commodity like crude oil to live with. The quandary for tracking gas prices isn’t that you can’t measure them accurately against the price of crude oil. That relationship is pretty ingrained. It’s the many other factors that also come into play – at different levels of influence and intensity and at irregular intervals – that cause gasoline prices to move.

Just take a look at the last 6 months. Crude oil shot up over 20% from $86 per barrel to almost $110 per barrel. It then fell over 10% back down to near $96 per barrel.

Continue reading “How Does Crude Oil Affect Gas Prices? What Else Does?”

30 Yr Bonds & 10 Yr Notes – Trading Levels & Economic Reports for 11.05.2013

Posted on November 4, 2013September 16, 2014 by Ilan

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

Each market has different personality, different behavior along with different times of the day when it is most active. If you are finding that the ES is not giving you enough risk/opportunities then start monitoring a couple of other markets and perhaps explore them in demo / simulated mode.

I will try over the next few blogs to shed some light on other markets i think are suitable for day-trading along with what is unique about these markets, personality and most active trading hours.

Today I am going to start with interest rates, mostly the ten year and 30 year.

In most platforms, the symbols are ZB for 30 year bonds and ZN for 10 year notes. The current front month is December which is Z. So ZBZ3 for example.

Product Symbol	ZB

Contract Size	The unit of trading shall be U.S. Treasury Bonds having a face value at maturity of one hundred thousand dollars ($100,000) or multiples thereof

Price Quotation	Points ($1,000) and 1/32 of a point. For example, 134-16 represents 134 16/32. Par is on the basis of 100 points.

Product Symbol	ZN

Underlying Unit	One U.S. Treasury note having a face value at maturity of $100,000.
Deliverable Grades	U.S. Treasury notes with a remaining term to maturity of at least six and a half years, but not more than 10 years, from the first day of the delivery month. The invoice price equals the futures settlement price times a conversion factor, plus accrued interest. The conversion factor is the price of the delivered note ($1 par value) to yield 6 percent.
Price Quote	Points ($1,000) and halves of 1/32 of a point. For example, 126-16 represents 126 16/32 and 126-165 represents 126 16.5/32. Par is on the basis of 100 points.
Tick Size (minimum fluctuation)	One-half of one thirty-second (1/32) of one point ($15.625, rounded up to the nearest cent per contract), except for intermonth spreads, where the minimum price fluctuation shall be one-quarter of one thirty-second of one point ($7.8125 per contract).
Contract Months	The first five consecutive contracts in the March, June, September, and December quarterly cycle.

These contracts are often affected by many of the economic reports that come out at 8:30 Am Eastern and there is very active volume between the hours of 8 am EST and 3 PM EST.

Volume on both contracts is very good. Ten years will often have 1 million contracts traded per day ( might be the second most active US futures market after the mini SP 500) and the bonds will avg. around 300,000 contracts.

These markets can experience very volatile movements during and right after different reports but then will often trade smooth or in an intraday trend the rest of the day.

Follow these two markets in demo mode for a while if you have not traded them before and get a feel for the movement, reaction to reports, execution etc.

If you have any questions, feel free to contact me.

Continue reading “30 Yr Bonds & 10 Yr Notes – Trading Levels & Economic Reports for 11.05.2013”

Real Time Trade Alerts – Trading Levels & Reports for 11.01.2013

Posted on October 31, 2013September 16, 2014 by Ilan

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

To continue our mini Dow story from yesterday….After the close I got one of my “reversal” indicators to generate a sell signal as a counter trend trade. Personally to me, it gave a bit more confidence in the short side of the trade, HOWEVER, I think that actual trade management, where to place a stop, where to take profits, do you place a limit order for the target or do you just trail your stop ? these and other questions are probably the most important factors when it comes to success or failure of trades.

Daily chart for your review below.

YM - E-Mini Dow Futures - $5 Multiplier, Equlaized Active Daily Continuation — YM – E-Mini Dow Futures – $5 Multiplier

On a different note, I have a daily newsletter where I share trade set ups like the one above:

Get Real Time Trade Alerts Service via text and email
Would you like to receive a 30 day free trial to a new trade alert service?

Get new buy/ sell ideas along with suggested stops and profit targets in real time.

This trade alert service was developed and published by LEVEX Capital Management Inc. ( “LEVEX”) a registered CTA with the CFTC and member of the NFA.

“LEVEX” will transmit alerts via text and/or email with potential buy and sell recommendations for different commodities along with suggested stops and profit targets. The alerts are based on technical analysis and using a computerized model developed by “LEVEX”.

Each day the program runs a market scan to look for markets that fit certain technical criteria / trade algorithm developed by LEVEX Capital management Inc. Once a market has been identified as a possible high probability set up, you will receive a trade alert with the trade idea.

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Mini Dow Futures Outlook & Risk/Reward – Trading Levels & Reports for 10.31.2013

Posted on October 30, 2013September 16, 2014 by Ilan

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

So FOMC came and gone and like I said many times before, many times the real reaction comes the next day.
Which way, I am not sure but I am sharing a daily chart of the mini Dow futures where I see either potential for double top if we hold below today’s high OR potential for a break above and move towards the next FIBONACCI extension as seen on the chart.

As always in our business….time will tell, which brings me to a different point I would like to share:

My thoughts are as follow, there is probably 65% chance this market will try to make a new high and break today’s high ( in my opinion), however, I think that is we make a new high it will not be that much further than were we at now. While I think there is better chances for a move up, I think that if we do make a move down, there are HIGHER probabilities for a larger move downside than a larger move to the upside….hope this make sense. Based on this personal view of mine, I will look for a short set up with relatively small stop in hopes to catch the next big wave down. it may take a few attempts on my end but I like the risk / reward of this set up and hope that by sharing the thought process I gave you an idea on another approach for trading.

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Stock Index Futures = Different Personalities, Trading Levels and Economic Reports October 29, 2013

Posted on October 28, 2013September 16, 2014 by Ilan

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

Big week ahead for stock index futures as well as other markets.

We have FOMC taking place tomorrow and Wednesday with rate announcement coming out Wednesday.

A few other reports that did not take place during the shut down are released this week. Make sure you check forexfactory.com for updated report times.

I think that stock index futures have been a little harder to trade these past few years…With the Fed injecting money using the QE program, the “normal market forces” are not in play as much as in other markets. I personally miss the days where stock index futures traded “freely” and can’t wait for what I consider normal, free market forces to determine price action. That being said, it is what it is and I guess FED action is part of the market right now and we as traders need to adjust.

What i wrote above is part of the reason i find markets like crude oil, gold, grains and even bond futures more appealing for trading. So if any of you have some what of a similar feeling to what I described above and looking for alternative markets – let me know and I can be of help by suggesting different markets and pointing out some of the characteristics for the different markets.

Continue reading “Stock Index Futures = Different Personalities, Trading Levels and Economic Reports October 29, 2013”

Different Ways to Invest in Commodities and Futures

Posted on October 28, 2013September 16, 2014 by Ilan

When it comes to investing in commodities/futures there are several different ways to do so. I’ve been a futures broker at Cannon Trading Company for about 4 years and I wanted to touch base on a few different ways I have seen clients trade and invest in futures and commodities over the years.

I have seen many investors (small and large) participate in trading ETFs or ETF funds. With ETFs you do not own the actual commodity but you are looking to track the performance on either a single commodity or commodity index containing many different commodities through either its physical storage or derivatives positions in the market.

I do not accommodate trading ETFs or ETF funds with my actual clients. I am a registered futures broker and here at Cannon Trading Company we do not accommodate ETF trading for our clients. Please keep in mind the differences when trading ETFs versus commodities and futures. With ETFs you may experience management fees where as if you have a self directed futures and commodities trading account you will not experience those types of fees. Also when trading futures, unless you have a limited power of attorney on your account where you authorize another individual to trade your account, there is not a third party making your trading decisions and trading your account on your behalf. Here, at Cannon Trading Company many futures/commodities trader have self directed accounts where he or she makes their own decisions when it comes to trading.

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Trading Futures Spreads

“A basic and important strategy for commodities traders using spread trading.”

Gold and Silver took a hit today, selling off 1% and 2.5% respectively.

BIG DAY tomorrow. Many reports including monthly unemployment figures. Be ready for higher volatility.