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Category: Day Trading

Here is a subject that a lot of people don’t understand at all. Day Trading can be risky. So, it is something that you should stay away from unless and until you are absolutely sure about what you are doing.

There are a number of items about Day Trading such as the minimum mantaince requirementand more that need to be taken into consideration. With the blogs and write-ups listed in this section, you can learn a great deal about day trading.

We at Cannon Trading can help you understand the different concepts of trading and present you with the latest information on the same. Our team of professional and smart people can help you in your day trading transactions and more. In order to understand day trading more clearly, we advise that you go through all the write-ups listed in this category archive on Day Trading.

Trading Styles in Futures: Concepts for Futures Traders

Posted on by Ilan

Futures trading is a dynamic and complex field that offers numerous strategies to accommodate different trading styles and objectives. Futures traders must understand the various approaches and tools available to them to make informed decisions and optimize their trading performance. This article provides a detailed exploration of several key trading strategies and concepts in futures trading, including swing trading, momentum trading, calendar spread futures trading, butterfly spread, high-frequency futures trading, crack spread, statistical arbitrage, and the impact of low margin rates on futures trading.

Trading Styles in Futures

1. Swing Trading in Futures

Definition and Overview

Swing trading is a popular trading strategy in the futures market that involves holding positions for several days or even weeks to capitalize on short- to medium-term price movements. Unlike day trading, where positions are closed within the same trading day, swing traders aim to capture the “swings” in the market—short-term price fluctuations caused by market volatility.

How Swing Trading Works

Swing traders typically use technical analysis to identify potential entry and exit points. They look for patterns such as head and shoulders, flags, and triangles to predict price movements. Swing traders may also use indicators like moving averages, RSI (Relative Strength Index), and MACD (Moving Average Convergence Divergence) to confirm their predictions.

The key to successful swing trading lies in timing. Traders must be able to accurately predict when a trend will start and end, which requires a deep understanding of market dynamics and the ability to interpret chart patterns.

Advantages of Swing Trading
  • Flexibility: Swing trading allows traders to maintain a regular job or pursue other interests because it does not require constant monitoring of the markets.
  • Lower Transaction Costs: Since positions are held for longer periods compared to day trading, swing traders incur fewer transaction costs.
  • Potential for High Returns: By capturing significant price movements, swing traders can achieve substantial returns over time.
Disadvantages of Swing Trading
  • Overnight Risk: Holding positions overnight exposes swing traders to risks from unexpected market events, such as geopolitical developments or economic announcements, that can lead to significant price gaps.
  • Requires Patience: Swing trading requires patience, as traders must wait for the right market conditions to enter and exit trades.
Best Practices for Swing Trading
  • Use Stop-Loss Orders: To manage risk, swing traders should always use stop-loss orders to limit potential losses.
  • Stay Informed: Swing traders must stay informed about market news and events that could impact their positions.
  • Focus on Liquid Markets: Trading in highly liquid futures markets ensures that positions can be easily entered and exited without significant price slippage.

2. Momentum Trading in Futures

Definition and Overview

Momentum trading is a strategy based on the idea that assets that have been performing well will continue to do so in the near future, while assets that have been underperforming will continue to decline. Momentum traders aim to capitalize on the continuation of existing trends by entering trades in the direction of the momentum.

How Momentum Trading Works

Momentum traders use technical indicators like the Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and the Momentum Indicator to identify trends and assess their strength. Once a trend is identified, momentum traders enter positions in the direction of the trend, holding the position until signs of a reversal or a slowdown in momentum appear.

Advantages of Momentum Trading
  • Potential for Quick Profits: Momentum trading can generate quick profits if the trader accurately identifies and capitalizes on strong trends.
  • Clear Entry and Exit Signals: Momentum indicators provide clear signals for entering and exiting trades, making the strategy easier to implement for traders who are skilled in technical analysis.
Disadvantages of Momentum Trading
  • High Risk of Reversals: Momentum trading carries the risk of sudden trend reversals, which can result in significant losses if the trader is not quick to react.
  • Requires Constant Monitoring: Momentum traders need to closely monitor the market to act swiftly when trends begin to reverse.
Best Practices for Momentum Trading
  • Trade in Active Markets: Momentum trading works best in highly active markets where trends are strong and persistent.
  • Use Multiple Indicators: Relying on a combination of momentum indicators can help traders confirm trends and reduce the risk of false signals.
  • Set Tight Stop-Losses: To manage risk, momentum traders should set tight stop-losses to protect against sudden reversals.

3. Calendar Spread Futures Trading

Definition and Overview

Calendar spread futures trading, also known as a time spread or horizontal spread, involves simultaneously buying and selling futures contracts on the same underlying asset but with different expiration dates. This strategy is used to profit from changes in the price difference (spread) between the two contracts.

How Calendar Spread Trading Works

In a calendar spread, the trader typically buys a futures contract with a longer expiration date and sells a futures contract with a shorter expiration date, or vice versa. The idea is to profit from the change in the spread between the two contracts as market conditions evolve. The spread can widen or narrow based on factors such as supply and demand, seasonality, or changes in market sentiment.

Advantages of Calendar Spread Trading
  • Reduced Risk: Calendar spreads generally have lower risk compared to outright futures positions because the trader is exposed to the price difference between the two contracts rather than the full price movement of the underlying asset.
  • Lower Margin Requirements: Because the risk is lower, margin requirements for calendar spreads are typically lower than for outright futures positions.
Disadvantages of Calendar Spread Trading
  • Complexity: Calendar spreads can be more complex to manage than simple long or short futures positions, as traders need to understand the factors that influence the spread.
  • Limited Profit Potential: The profit potential in calendar spread trading is generally lower than in outright futures trading because the price movement of the spread is typically smaller than the movement of the underlying asset.
Best Practices for Calendar Spread Trading
  • Monitor Market Conditions: Traders need to stay informed about market conditions that can affect the spread, such as changes in supply and demand or seasonal trends.
  • Use Technical Analysis: Technical analysis can help traders identify opportunities in calendar spreads by analyzing historical spread patterns.

4. Butterfly Spread in Futures Trading

Definition and Overview

A butterfly spread is a neutral options strategy that combines a bull spread and a bear spread. It involves buying and selling options with three different strike prices but with the same expiration date. In futures trading, a similar strategy can be applied using futures contracts.

How Butterfly Spread Trading Works

A typical butterfly spread in futures trading might involve buying one futures contract at a lower price, selling two contracts at a middle price, and buying one contract at a higher price. The goal is to profit from the price of the underlying asset remaining close to the middle strike price at expiration. The strategy profits if the underlying asset’s price is close to the middle strike price and losses are minimized if the price moves significantly in either direction.

Advantages of Butterfly Spread Trading
  • Limited Risk: The maximum loss is limited to the initial cost of setting up the spread.
  • Potential for High Reward: If the market price ends up near the middle strike price, the potential reward can be high relative to the risk.
Disadvantages of Butterfly Spread Trading
  • Limited Profit Potential: While the risk is limited, so is the profit potential, which is capped by the distance between the middle and outer strike prices.
  • Requires Precise Market Prediction: To profit from a butterfly spread, the trader must accurately predict that the market will remain within a narrow price range.
Best Practices for Butterfly Spread Trading
  • Use in Low Volatility Markets: Butterfly spreads work best in markets where volatility is low and prices are expected to remain stable.
  • Monitor Implied Volatility: Changes in implied volatility can affect the pricing of the options or futures contracts used in the butterfly spread, so traders should keep an eye on volatility levels.

5. High-Frequency Futures Trading

Definition and Overview

High-frequency trading (HFT) is a type of algorithmic trading characterized by the use of powerful computers to execute a large number of orders at extremely high speeds. In futures trading, HFT involves placing and executing orders within fractions of a second to take advantage of small price discrepancies in the market.

How High-Frequency Trading Works

HFT firms use sophisticated algorithms to analyze market data and execute trades at lightning speeds. These algorithms are designed to identify and exploit inefficiencies in the market, such as temporary price discrepancies between different exchanges or financial instruments. The profits per trade are usually very small, but the high volume of trades can result in significant overall profits.

Advantages of High-Frequency Trading
  • High Profit Potential: HFT can generate significant profits due to the sheer volume of trades executed.
  • Market Efficiency: HFT contributes to market efficiency by quickly correcting price discrepancies.
Disadvantages of High-Frequency Trading
  • Requires Advanced Technology: HFT requires significant investment in technology and infrastructure, including powerful computers and high-speed internet connections.
  • High Risk: The high speed and volume of trades mean that small errors in the algorithm can lead to substantial losses.
Best Practices for High-Frequency Trading
  • Develop Robust Algorithms: The success of HFT depends on the quality of the algorithms used, so it’s essential to invest in the development and testing of robust trading algorithms.
  • Monitor Latency: In HFT, even milliseconds can make a difference, so traders need to minimize latency in their trading systems.

6. Crack Spread in Futures Trading

Definition and Overview

The crack spread is a trading strategy used in the energy markets, particularly in oil and gas futures. It involves taking positions in the futures of crude oil and refined products like gasoline and heating oil to profit from the price difference (spread) between crude oil and its refined products.

How Crack Spread Trading Works

A typical crack spread trade involves buying or selling crude oil futures while simultaneously selling or buying futures contracts for refined products. The trader profits from changes in the spread between the price of crude oil and the prices of its refined products. For example, if the price of gasoline increases relative to crude oil, the spread widens, and a trader holding a long crack spread position would profit.

Advantages of Crack Spread Trading
  • Hedge Against Refining Margins: For companies involved in refining, the crack spread can serve as a hedge against fluctuations in refining margins.
  • Speculative Opportunities: Traders can speculate on the future direction of the spread based on factors such as seasonal demand, refinery outages, and changes in crude oil supply.
Disadvantages of Crack Spread Trading
  • Complexity: Understanding the relationship between crude oil and its refined products requires specialized knowledge of the energy markets.
  • Volatility: The crack spread can be highly volatile, leading to significant risks if not managed properly.
Best Practices for Crack Spread Trading
  • Stay Informed About the Energy Markets: Traders need to be aware of factors that can affect the supply and demand for crude oil and refined products, such as geopolitical events, weather patterns, and refinery capacity.
  • Use Risk Management Tools: Given the volatility of the crack spread, it’s essential to use risk management tools like stop-loss orders to protect against adverse price movements.

7. Statistical Arbitrage in Futures Trading

Definition and Overview

Statistical arbitrage (stat arb) is a trading strategy that uses mathematical models to identify and exploit price inefficiencies in the market. In futures trading, statistical arbitrage involves trading pairs or groups of futures contracts that have historically shown a statistical relationship, with the expectation that any deviations from this relationship will eventually revert to the mean.

How Statistical Arbitrage Works

Stat arb traders use historical price data and statistical models to identify pairs of futures contracts that are expected to move together. When the price of one contract deviates from its expected relationship with the other, the trader takes a long position in the undervalued contract and a short position in the overvalued contract. The positions are then held until the prices converge, at which point the trader closes the positions for a profit.

Advantages of Statistical Arbitrage
  • Market Neutrality: Because statistical arbitrage involves taking both long and short positions, it is generally market-neutral, meaning it is less affected by overall market direction.
  • Diversification: Statistical arbitrage strategies can be applied across multiple asset classes, providing opportunities for diversification.
Disadvantages of Statistical Arbitrage
  • Requires Advanced Analytical Skills: Implementing a statistical arbitrage strategy requires a deep understanding of statistical methods and access to large datasets.
  • Execution Risk: The success of statistical arbitrage depends on the accurate execution of trades, and small delays or errors can lead to losses.
Best Practices for Statistical Arbitrage
  • Use Robust Statistical Models: The key to successful stat arb trading is the accuracy of the statistical models used to identify trading opportunities.
  • Continuously Monitor Positions: Market conditions can change rapidly, so it’s important to continuously monitor positions and adjust the strategy as needed.

8. What Low Margin Rates on Futures Means for Your Trading

Definition and Overview

Margin is the amount of money required to open and maintain a futures position. It acts as a good faith deposit to ensure that the trader can cover potential losses. Low margin rates mean that traders need to put up less capital to control a larger position in the futures market.

Impact of Low Margin Rates on Futures Trading

Low margin rates can have a significant impact on futures trading by increasing leverage. With lower margins, traders can control larger positions with a smaller initial investment, which can amplify both potential profits and potential losses.

Advantages of Low Margin Rates
  • Increased Leverage: Lower margin requirements allow traders to leverage their capital more effectively, potentially leading to higher returns on investment.
  • Greater Market Access: Lower margins make futures trading accessible to a wider range of traders, including those with smaller account balances.
Disadvantages of Low Margin Rates
  • Higher Risk: While low margin rates increase potential profits, they also increase the risk of substantial losses. Traders need to be careful not to over-leverage their positions.
  • Margin Calls: If the market moves against a highly leveraged position, traders may face margin calls, requiring them to deposit additional funds or liquidate positions at a loss.
Best Practices for Trading with Low Margin Rates
  • Manage Leverage Carefully: Traders should be cautious about over-leveraging their positions and should always have a clear risk management plan in place.
  • Use Stop-Loss Orders: To protect against large losses, traders should use stop-loss orders to automatically close positions if the market moves against them.

Futures trading offers a wide array of strategies and approaches, each with its own set of advantages and challenges. Whether you are engaging in swing trading, momentum trading, calendar spread trading, or any of the other strategies discussed, it is crucial to have a deep understanding of the market dynamics and to implement effective risk management practices. Additionally, the impact of low margin rates cannot be overstated, as they can significantly influence the risk and return profile of your trading activities.

By mastering these strategies and understanding the underlying concepts, futures traders can better navigate the complexities of the market and increase their chances of success. Each strategy requires a unique set of skills and knowledge, and the choice of strategy should align with the trader’s individual goals, risk tolerance, and market outlook.

For more information, click here.

Ready to start trading futures? Call us at 1(800)454-9572 (US) or (310)859-9572 (International), or email info@cannontrading.com to speak with one of our experienced, Series-3 licensed futures brokers and begin your futures trading journey with E-Futures.com today.

Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if 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.

Important: Trading commodity futures and options involves a substantial risk of loss. The recommendations contained in this article are opinions only and do not guarantee any profits. This article is for educational purposes. Past performances are not necessarily indicative of future results.

This article has been generated with the help of AI Technology and modified for accuracy and compliance.

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Weekly Newsletter: FOMC next Week, Bonds Outlook & Trading Levels for April 29th

Posted on by Ilan
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Cannon Futures Weekly Letter Issue # 1191

In this issue:
  • Important Notices – FOMC & NFP Next Week
  • Futures 101 – Understanding Volume
  • Hot Market of the Week – June Bonds
  • Broker’s Trading System of the Week – ES intraday System
  • Trading Levels for Next Week
  • Trading Reports for Next Week

 

Important Notices – Next Week Highlights:

    • FOMC Rate Announcement Wed.
    • Heavy Earnings, AMZN and AMD Tues, AAPL Thur. all after the close
    • Heavy Data, Chicago PMI, Consumer Confidence, Construction Spending, ISM Manufacturing PMI, Jobless Claims.
    • NON FARM Payrolls to cap off the week on Fri. , preopening

 

 

Futures 101 : Understanding VOLUME

Volume is reported for all futures contracts. It is calculated by counting the number of contracts that have been bought and sold over a given time. You can track volume using different time intervals like daily or intraday.
When a futures contract is traded, whether bought or sold, it counts towards volume for that contract.
For example, a trader closes a short position in the E-mini S&P 500 (ES) futures contract by buying one contract in the ES, so volume will increase by 1.
Traders often use and interpret the rise or decline of volume in a futures contract to help make trading decisions.
Volume can give important information to traders such as:
  • Indicate the price levels at which traders are more or less interested in trading a futures contract
  • During the roll, indicate to traders when to switch to trading the front month futures contract as volume decreases in the expiring contract
  • Identify the times of day when a futures contract is most liquid
Price Levels
When volume changes as price of a futures contract moves towards certain levels, this can indicate to a trader that a change in direction may occur. Some traders may use this information to indicate whether to buy or sell at those key levels.
­Contract Roll
During the futures rollover, traders pay attention to the contract that is taking the higher levels of volume. Traders use this information to determine when to start trading the next month contract. As volume decreases in the expiring contract, trading will shift to the next available month contract.
For example, say the June ES (E-mini S&P 500) futures contract is about to expire and September will become the new front month. On the Thursday of rollover week, watch how the June contract starts to lose volume and the September contract begins to pick up volume. When the September contract has more volume than the June contract, it is time to switch to the September contract.
Active Periods
Traders typically prefer higher volume times to trade, as it means that more traders are actively interested in buying and selling. When volume is high, the bid-ask spread is typically smaller, orders are filled faster and less gaps may exist between ticks.
For example, markets can have lower volume between the hours of 12:00 p.m.-2:00 p.m. ET, before major economic releases; conversely, market often see higher volume around the open and close of the trading day.
Traders also can look at average daily volume over a longer time period, such as a few weeks or months, to see if the markets currently are in a lower or higher volume than is typical.
Summary
What volume can’t show however, is whether traders are buying or selling, or opening or closing a position.
For example, if the ES contract is trading at 2375 and suddenly pushes down to 2360 while volume increases, the volume that comes into the market could be from traders opening new long positions at key levels of support. That could indicate a bullish sentiment. Volume also can be generated by liquidation of exiting long positions or opening of new short positions, a possible bearish indication.
A spike in volume at 2360 doesn’t necessarily mean that buyers are coming into the market and that the price will bounce.
Volume data is readily available for each futures contract and for the market as a whole. Although traders may use volume in different ways to interpret how to trade, volume can be an important factor to help inform your trading decisions.

 

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  • Hot Market of the Week – June Bonds
Hot market of the week is provided by QT Market Center, A Swiss army knife charting package that’s not just for Hedgers, Cooperatives and Farmers alike but also for Spread traders, Swing traders and shorter time frame application for intraday traders with a unique proprietary indicator that can be applied to your specific trading needs.
June 30 Year T-Bonds
The June 30 Year T-Bond break found temporary stability at its second downside PriceCount objective recently. Now, the chart has resumed its slide into new lows which, if sustained, would project a run to the third count in the 109^20 area.
PriceCounts – Not about where we’ve been , but where we might be going next!
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The PriceCount study is a tool that can help to project the distance of a move in price. The counts are not intended to be an ‘exact’ science but rather offer a target area for the four objectives which are based off the first leg of a move with each subsequent count having a smaller percentage of being achieved. It is normal for the chart to react by correcting or consolidating at an objective and then either resuming its move or reversing trend. Best utilized in conjunction with other technical tools, PriceCounts offer one more way to analyze charts and help to manage your positions and risk. Learn more at www.qtchartoftheday.com
Trading in futures, options, securities, derivatives or OTC products entails significant risks which must be understood prior to trading and may not be appropriate for all investors. Past performance of actual trades or strategies is not necessarily indicative of future results.

  • Broker’s Trading System of the Week

With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.
PRODUCT
SYSTEM TYPE
Intraday
COST
USD 110 / monthly
Recommended Cannon Trading Starting Capital
$10,000
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The performance shown above is hypothetical in that the chart represents returns in a model account. The model account rises or falls by the average single contract profit and loss achieved by clients trading actual money pursuant to the listed system’s trading signals on the appropriate dates (client fills), or if no actual client profit or loss available – by the hypothetical single contract profit and loss of trades generated by the system’s trading signals on that day in real time (real‐time) less slippage, or if no real time profit or loss available – by the hypothetical single contract profit and loss of trades generated by running the system logic backwards on back adjusted data. Please read full disclaimer HERE.
Would you like to receive daily support & resistance levels?
Yes
S
No
S

 

Daily Levels for April 29th 2024

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Trading Reports for Next Week

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First Notice (FN), Last trading (LT) Days for the Week:
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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

* 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 here in 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 judgement in trading.

PCE Tomorrow!  + Levels for April 26th

Posted on by Ilan
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The U.S. GDP experienced a modest increase of 1.6% in the first quarter, marking the slowest expansion in two years. This news prompted a downturn in U.S. stock markets. But should investors be concerned about this figure?

Ben Laidler, the Global Markets Strategist at eToro, appeared on Wealth! to shed light on the implications of the GDP data for investor portfolios.

Laidler commented, “The recent GDP figure isn’t ideal, yet it’s not as dire as it may seem. The core elements that matter to us—business investment and consumer spending—are holding strong. The observed softness is largely attributed to less critical factors, which are expected to rebound in the next quarter, specifically trade and inventory levels.

  • While the inflation metric is slightly unsettling, it’s best to wait for the upcoming release of the monthly Personal Consumption Expenditures (PCE) index. This will provide us with more clarity on the extent of our concerns regarding the current economic situation.”

 

 

 

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Daily Levels for April 26th, 2024

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Economic Reports
provided by: ForexFactory.com
All times are Eastern Time ( New York)
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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

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* 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 here in 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 judgement in trading.

GDP Tomorrow, Earnings Season in Full Play  + Levels for April 25th

Posted on by Ilan
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A few tips for tomorrow:

  • If you are trading stock index futures, note price action has been VERY choppy during the day session as most earnings come out after the close…
  • Coffee and Coca volatility is as high as I have seen in recent months. Large intraday and overnight moves in both, as much as +/- 8% per day!
  • We have GDP and home sales tomorrow.
  • Big pullback in both silver and gold and the key question is: Was this profit taking/ deflation of geo political fear and GOOD entry to the long side? OR…is this the near term top for both markets??
  • Corn daily chart for your review below.

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Daily Levels for April 25th, 2024

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Economic Reports
provided by: ForexFactory.com
All times are Eastern Time ( New York)
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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

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* 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 here in 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 judgement in trading.

Bullet Points, Highlights, Announcements  + Levels for April 24th

Posted on by Ilan
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Bullet Points, Highlights, Announcements    

by Mark O’Brien, Senior Broker

General:  

 

Futures traders with positions in deliverable futures contracts keep an eye on the calendar for important dates at the end of the month. First Notice Day (FND) and Last Trading Day (LTD) for many futures contracts are close at hand. Make sure you steer safely clear of receiving delivery notices for physical commodities (FND), or greatly reduced liquidity (LTD). If you’re unsure, contact your Cannon Trading Co. broker.

 

The economic calendar for the rest of the week is scarce with Thursday’s Q1 GDP report taking center stage.

 

Prospects for a fed rate cut announcement at the Fed’s 4/30-5/1 meeting, as well as its mid-June meeting have all but evaporated and many Fed watchers expect the central bank to keep its “higher for longer” mantra in place for most and possibly all of 2024.

 

Worries over a wider Middle East conflict have subsided and traders are discounting the risk of further escalations. Case in point, June gold lost ±67 per ounce (±2%) yesterday after posting its latest all-time record high close of $2,413.80/ounce on Friday. Iran downplayed Israel’s retaliatory drone strike against it, in what appeared to be a move aimed at averting regional escalation.

 

Energies: 

 

  • The ±$2.50/barrel selloff in May crude oil and the ±¢9.75/gallon May RBOB gasoline futures last week likely signaled the markets do not see an Iranian supply disruption in the near future, so the markets will be given to focusing on global energy demand going forward

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Softs:  

 

May Cocoa futures declined sharply yesterday and today, down nearly $1,300/ton (a $13,000 per contract move) marking its worst two-day slump since February. This after a 3-day / Wed.-Fri. rally of $1,635/ton to its all-time record high close of 11,878/ton on Friday. ICE U.S. has set the initial margin requirement to $11,260 per contract.

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Daily Levels for April 24th, 2024

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thumbnail?url=http%3A%2F%2Fi.ytimg.com%2Fvi%2FJnHAMUGdNoM%2Fhqdefault

Economic Reports
provided by: ForexFactory.com
All times are Eastern Time ( New York)
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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

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* 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 here in 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 judgement in trading.

Notes from a Day Trader + Levels for April 23rd

Posted on by Ilan
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The Week Ahead and Controlling your Emotions

by John Thorpe, Senior Broker

No Fed speakers this week, it is the blackout period in advance of next weeks FED meeting and rates decision.

Look for earnings to move the market this week  MSFT, GOOG, META, XOM, Visa, TSLA

Last week, my colleague posted an article about FOMO just about the same time a client of mine was battling his own fear of missing out.

Of course I asked my client if , after redacting account information, he wouldn’t mind if I shared his “journal Entry” with everyone.

 

John,

I’ll give you an explanation of what happened yesterday. After we talked I left for my job. I returned at 2:30 and saw that I missed all the “short” activity yesterday.

Disappointed, I made the mistake of trying to catch up . I had several positive trades and then several negative trades that put me in the negative for the day.

I was active in a “short” trade, sitting at my desk. I nodded off. I don’t know how long, but it must have been enough seconds that the price action had dramatically turned “long”. Unfortunately, I nodded off with my hand on my mouse. It seems that I touched the mouse and now I discovered that I had clicked a second contract. I was hoping to recover the $1800 loss but it was too late.

1. I went back to practice simulation. First on the 15th from 9 AM and with 3 clicks I had made $2300. Then stopped while ahead.

2. Today I again started practice at 9 AM and within 2 hours made $530. Then stopped while ahead My mistakes. What do I learn from this:

1. Don’t fall asleep while trading.

2. Don’t fall asleep with your finger hovering over the mouse.

3. Stop when you’re ahead and don’t try to make money on the short price action movements.

4. Reminding again to only trade with the trend.

One of the most common pitfalls of traders in Futures Trading is the fear of missing out (FOMO).

Understanding FOMO in Trading:

  • FOMO, or the fear of missing out, is a powerful emotion that can cloud judgment and lead to impulsive decisions.
  • Recognizing the signs of FOMO is crucial for traders to maintain a disciplined approach to their strategies.

The Role of Emotions in Trading:

  • Emotions play a significant role in trading, influencing decisions and reactions to market movements.
  • Acknowledging emotions like greed, fear, and excitement is the first step towards effective emotional control.

Strategies for Controlling Emotions: 

1/ Establishing a Trading Plan:

Having a well-defined trading plan helps set clear goals and guidelines, reducing the influence of emotions.

2/ Setting Realistic Expectations:

Realistic expectations prevent disappointment and impulsive actions based on unrealistic goals.

3/ Utilizing Risk Management:

Implementing risk management strategies ensures that trades are within acceptable risk limits.

4/ Taking Breaks:

Stepping away from the screen during intense market movements can provide a fresh perspective and prevent emotional reactions.

Mindfulness Techniques:

  • Incorporating mindfulness practices, such as deep breathing or meditation, can help traders stay focused and calm during stressful trading situations.

Learn from Past Trades:

  • Analyzing past trades, especially those influenced by emotions, provides valuable insights for improvement.
  • Keeping a trading journal helps identify patterns in emotional responses and areas for growth.

 

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Daily Levels for April 23rd, 2024

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thumbnail?url=http%3A%2F%2Fi.ytimg.com%2Fvi%2FJnHAMUGdNoM%2Fhqdefault

Economic Reports
provided by: ForexFactory.com
All times are Eastern Time ( New York)
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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

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* 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 here in 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 judgement in trading.

Weekly Newsletter: Role of Speculators, Coffee Outlook & Trading Levels for April 22nd

Posted on by Ilan
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Cannon Futures Weekly Letter Issue # 1190

In this issue:
  • Important Notices – Israel, Iran, PCE Report & More
  • Futures 101 – The Role of Speculators in Futures Trading
  • Hot Market of the Week – July Coffee
  • Broker’s Trading System of the Week – NQ intraday System
  • Trading Levels for Next Week
  • Trading Reports for Next Week

 

Important Notices –

  • The situation in the Middle East will loom over the markets next week. More on that below.
  • Keep an eye on these potential futures market movers:
  • It was hardly unexpected, but Israel’s missile strike on Iran Friday may foreshadow a dangerous series of tit-for-tat retaliation between the Middle East powers – and unsettle world markets. At the same time, the limited scale of the attack and Iran’s muted response appears so far to signal a successful effort by diplomats who have been working to avert all-out war.
  • At the outset of Israel’s offensive last night, volatility amplified in key futures markets – stock indexes (S&P 500, Dow, Nasdaq), currencies, energies (crude oil), metals (gold), financials (30-yr. bonds, 10-yr. notes). Into late evening and on into today, there has been a virtual across-the-board drop-off in the inflated price fluctuation seen when news broke of the military action.
  • GDP and PMI along with homes sales, durable goods and overall a packed week with economic reports.
  • PCE Friday will provide additional clues as to the future of interest rates
  • big earnings week MSFT, GOOG, META, XOM, Visa, TSLA
  • Volatility in Cocoa and Coffee continues. Copper broke higher.

 

 

 

Trading Resource of the Week: Understanding the Role of Speculators

What Are Speculators?
Speculators are primary participants in the futures market. A speculator is any individual or firm that accepts risk in order to make a profit. Speculators can achieve these profits by buying low and selling high. But in the case of the futures market, they could just as easily sell first and later buy at a lower price.
Obviously, this profit objective is easier said than done. Nonetheless, speculators aiming to profit in the futures market come in a variety of types. Speculators can be individual traders, proprietary trading firms, portfolio managers, hedge funds or market makers.
Individual Traders
For individuals trading their own funds, electronic trading has helped to level the playing field by improving access to price and trade information. The speed and ease of trade execution, combined with the application of modern risk management, gives the individual trader access to markets and strategies that were once reserved for institutions.
Proprietary Trading Firms
Proprietary trading firms, also known as prop shops, profit as a direct result of their traders’ activity in the marketplace. These firms supply their traders with the education and capital required to execute a large number of trades per day. By using the capital resources of the prop shop, traders gain access to more capital than they would if they were trading on their own account. They also may have access to the same type of research and strategies developed by larger institutions.
Portfolio or Investment Managers
A portfolio or investment manager is responsible for investing or hedging the assets of a mutual fund, exchange-traded fund or closed-end fund. The portfolio manager implements the fund’s investment strategy and manages the day-to-day trading. Futures markets are often used to increase or decrease the overall market exposure of a portfolio without disrupting the delicate balance of investments that may have taken a significant effort to build.
Hedge Funds
A hedge fund is a managed portfolio of investments that uses advanced investment strategies to maximize returns, either in an absolute sense or relative to a specified market benchmark. The name hedge fund is mostly historical, as the first hedge funds tried to hedge against the risk of a bear market by shorting the market. Today, hedge funds use hundreds of different strategies in an effort to maximize returns. The diverse and highly liquid futures marketplace offer hedge funds the ability to execute large transactions and either increase or decrease the market exposure of their portfolio.
Market Makers
Market makers are trading firms that have contractually agreed to provide liquidity to the markets, continually providing both bids and offers, usually in exchange for a reduction in trading fees. Market makers are important to the trading ecosystem as they help facilitate the movement of large transactions without effecting a substantial change in price. Market makers often profit from capturing the spread, the small difference between the bid and offer prices over a large number of transactions, or by trading related futures markets that they view as being priced to provide opportunity.
Conclusion
All types of speculators bring liquidity to the market place. Providing liquidity is a crucial market function that enables individuals to easily enter or exit the market. Though speculative trading activity generates considerable liquidity, all market players benefit. In contrast to speculators who aim to profit by assuming market risk, some buyers and sellers have a vested interest in the underlying asset of each contact. These market participants aim to offset or eliminate risk and are referred to as hedgers.

 

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  • Hot Market of the Week – July Coffee
Hot market of the week is provided by QT Market Center, A Swiss army knife charting package that’s not just for Hedgers, Cooperatives and Farmers alike but also for Spread traders, Swing traders and shorter time frame application for intraday traders with a unique proprietary indicator that can be applied to your specific trading needs.
July Coffee
July Coffee satisfied its third upside PriceCount objective in where it would be normal to get a near term reaction in the form of a consolidation or corrective trade, at least. At this point, IF the chart can sustain additional upside we are left with thelow percentage fourth count to aim for just above $300.
PriceCounts – Not about where we’ve been , but where we might be going next!
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The PriceCount study is a tool that can help to project the distance of a move in price. The counts are not intended to be an ‘exact’ science but rather offer a target area for the four objectives which are based off the first leg of a move with each subsequent count having a smaller percentage of being achieved. It is normal for the chart to react by correcting or consolidating at an objective and then either resuming its move or reversing trend. Best utilized in conjunction with other technical tools, PriceCounts offer one more way to analyze charts and help to manage your positions and risk. Learn more at www.qtchartoftheday.com
Trading in futures, options, securities, derivatives or OTC products entails significant risks which must be understood prior to trading and may not be appropriate for all investors. Past performance of actual trades or strategies is not necessarily indicative of future results.

  • Broker’s Trading System of the Week

With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.
PRODUCT
SYSTEM TYPE
Intraday
COST
USD 55 / monthly
Recommended Cannon Trading Starting Capital
$25,000
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The performance shown above is hypothetical in that the chart represents returns in a model account. The model account rises or falls by the average single contract profit and loss achieved by clients trading actual money pursuant to the listed system’s trading signals on the appropriate dates (client fills), or if no actual client profit or loss available – by the hypothetical single contract profit and loss of trades generated by the system’s trading signals on that day in real time (real‐time) less slippage, or if no real time profit or loss available – by the hypothetical single contract profit and loss of trades generated by running the system logic backwards on back adjusted data. Please read full disclaimer HERE.
Would you like to receive daily support & resistance levels?
Yes
S
No
S

 

Daily Levels for April 22nd 2024

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Trading Reports for Next Week

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First Notice (FN), Last trading (LT) Days for the Week:
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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

* 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 here in 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 judgement in trading.

FOMO May be Your Worst Enemy when it Comes to Trading + Levels for April 19th

Posted on by Ilan
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Subscribe to our YouTube Channel

 

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“Mastering the Market: Strategies to Overcome FOMO in Day Trading”.

By Ilan Levy-Mayer, VP

The unpredictable fluctuations in stock index futures can prompt a discussion on a significant challenge that day traders often encounter: the Fear of Missing Out (FOMO). This phenomenon is particularly prevalent in day trading, where the rapid pace, high leverage and high stakes can lead to hasty decisions.

Imagine a scenario where a trader is monitoring the charts and notices a significant downward trend. The immediate thought might be a concern that the market is on the verge of plummeting to new lows. While this could indeed happen, the trader also has a guideline: avoid initiating short positions when the market is below the lowest Volume Weighted Average Price (VWAP) band. This rule is based on the reasonable expectation that the market may rebound before continuing its descent. However, the swift movements of the market, coupled with emotional impulses and the desire to recoup losses, can result in a trader disregarding their own rules in the heat of the moment.

So, how can one manage this internal conflict? Here are some strategies:

• Document your trading rules. Writing them down can reinforce their importance and make it easier to adhere to them.

• Implement a system of self-discipline. If you find yourself breaking your own rules, consider setting consequences for such actions.

• Accountability is key. Enlist a trusted individual to review your trades with you and hold you responsible for your trading decisions.

• Practice mindfulness. Before making a trade, take a moment to breathe deeply and count to five. This brief pause can help you maintain composure and avoid impulsive actions.

• Embrace patience. Often, the decision not to trade can be as crucial as the trades you make. By reducing the number of impulsive trades and focusing on deliberate, well-thought-out actions, you are likely to see progress and improvement in your trading performance.

Remember, overcoming the urge to act on FOMO is a challenging but essential part of becoming a successful day trader. It’s about finding a balance between being proactive and not letting emotions dictate your trading strategy.

 

 

 

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Daily Levels for April 19th, 2024

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thumbnail?url=http%3A%2F%2Fi.ytimg.com%2Fvi%2FJnHAMUGdNoM%2Fhqdefault

Economic Reports
provided by: ForexFactory.com
All times are Eastern Time ( New York)
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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

3b644da2 2bee 4d39 8d98 5208a20bec39

* 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 here in 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 judgement in trading.

More Fed Members to Speak Tomorrow. Volatile Markets Across the Board! + Levels for April 18th

Posted on by Ilan
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Subscribe to our YouTube Channel

 

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What to look for the rest of the trading week:

By Mark O’Brien, Senior Broker

General:   

 

It’s not far fetched to state that there is anxiety in the marketplace.  Gold and silver prices have exploded – the former to all-time highs, the U.S. dollar has climbed the entire first quarter including a sharp ±200 point rise over the last two weeks and financial institutions worldwide are facing rising interest rate pressures.  Here in the U.S. last week’s hotter-than-expected March CPI and PPI reports reflected a growing economy straining to “tap the brakes.”

 

Moreover, in the Middle East tensions have reached their highest levels in decades as the region braces for potential Israeli retaliation after Iran launched hundreds of missiles and drones at Israel over the weekend in response to an apparent Israeli strike on Iran’s embassy compound in Syria on April 1 that killed 12 people, including two Iranian generals.

 

Energies: 

 

Noteworthy for its downside move, natural gas has been contending with substantial inventories and muted demand for months and the front month May futures contract has now lost nearly half its value since November – from ±$3.300 down to $1.675 per MMBtu, a ±$16,000 per contract move for the standard 10,000 MMBtu contract.

 

Softs:  

 

The latest commodity futures contract to make a break for higher prices is coffee.  After trading within a ± 20-cent range between ±$1.80 and ±$2.00/pound all year, the last two weeks have seen a brake above $2.40/pound, roughly a $7,500 per contract move (each 1-cent move in coffee = $375), driven by fears of decreased output from Brazil and Vietnam, which are major producers in the coffee industry.

 

Metals:   

 

June gold is poised to set its latest all-time high closing price at the close of trading today, above $2,400 per ounce.  On Friday, it traded to an intraday high of $2,447.6 per ounce only to plummet $97.00 per ounce to an intraday low of $2,350.60 per ounce – a $9,700 move for the 100-oz. contract – in a span of ±4 hours!

 

 

 

 

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Daily Levels for April 18th, 2024

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thumbnail?url=http%3A%2F%2Fi.ytimg.com%2Fvi%2FJnHAMUGdNoM%2Fhqdefault

Economic Reports
provided by: ForexFactory.com
All times are Eastern Time ( New York)
d5697cbc 0967 49bb 88a9 ab0625bb121e

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

3b644da2 2bee 4d39 8d98 5208a20bec39

* 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 here in 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 judgement in trading.

Coffee Outlook, Beige Book and Crude Oil Numbers + Levels for April 17th

Posted on by Ilan
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Subscribe to our YouTube Channel

 

C33

 

Powell spoke and stock index futures traded in a volatile, zig zag type of trading most of the day unable to break one way or the other and closing near the unchange.

On the daily chart, both the SP and NASDAQ are noticing more pressure to the downside.

One of the keys for day Traders is to try and establish early on what type of day trading environment they are in.

Is this going to be a trend day it is this going to be a choppy low volatility trading day? is the day unfolding has a potential to be a volatile two-sided type of trading day?

Being aware of the top of trading day that is unfolding in front of you can help you decide which strategies to apply on that trading day.

Knowing what reports are coming out. the general direction of the long term charts can help you.

Different strategies will work better in different type of trading environments.

On a different note, softs, i.e. Cocoa, cotton, Coffee , Sugar, OJ are experiencing much higher volatility than historical norms. Cocoa just dropped close to 8% today after trading above the historical mark of $100 per metric ton.

below you will see a daily chart of Coffee futures and possible future direction.

 

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Daily Levels for April 17th, 2024

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thumbnail?url=http%3A%2F%2Fi.ytimg.com%2Fvi%2FJnHAMUGdNoM%2Fhqdefault

Economic Reports
provided by: ForexFactory.com
All times are Eastern Time ( New York)
611bf28a 191a 4e89 bb29 ea18ac3b07a0

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

3b644da2 2bee 4d39 8d98 5208a20bec39

* 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 here in 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 judgement in trading.

RISK DISCLOSURE: Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.