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Category: Futures Trading

Futures trading is done by two main parties, one of which is the hedger and the other one is the speculator. Where a speculator is there to trade for either their own accounts or that of their clients, a hedger always uses futures as a possible protection from losses. Hedgers can also be described as individuals or business owners who are more risk averse. Speculators and hedgers are likely to benefit from futures trading if the trader has a strong ability to analyze the markets and understands that future behavior. Though futures can behigh risk, they offer an equally high return and are thus very tempting.

In case you are new to futures trading you need to understand how things work. We at Cannon Trading are there to help with your understanding of all the elements of futures trading and also counsel and advise you with the same. Our knowledge base featured on our website, is a store house of information. In order to know every aspect of futures trading, you must read through these articles that have been listed in this category archive. Go through it and get better informed!

Face the Pros: Test Your Skills in a Simulated Trading Challenge

Posted on November 14, 2024 by Ilan

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Trade Against a Pro

Prepare to face off against fellow traders and an industry pro

in a risk-free, simulated environment to see who comes out on top.

Challenge Details

Test-drive strategies with our range of futures, including standard- and Micro-sized contracts across Cryptocurrency, Equities, FX, Agriculture, Metals, Energy and Interest Rates. Gain valuable experience in a simulated, risk-free environment while trading against peers and industry professional Scott Bauer.

All trades during the competition will be completed in the Challenge Simulator.
All traders will begin with a virtual account of $100,000, aiming to maximize their balance by the competition’s close.
Cash prizes will be awarded to the top three eligible traders with the highest account balances in the Overall Leaderboard and also to the top trader from the Alternate Leaderboard (up to four total prizes available, each with a cash value as set forth to the right; traders are only eligible for one prize).

START NOW

Ask a Broker: Why Trade Bitcoin Futures?

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Daily Levels for November 15th 2024

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Economic Reports

provided by:ForexFactory.com

All times are Eastern Time ( New York)

Good Trading!

About: Cannon Trading is an independent futures brokerage firm established in 1988 in Los Angeles. Our mission is to provide reliable service along with the latest technological advances and choices while keeping our clients informed and educated in the field of futures and commodities trading.

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.

Cannon Trading Company

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Suite 1640

Los Angeles, CA 90025

(800) 454-9572

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Inflation Uptick and Bitcoin’s Surge: Navigating New Highs in Crypto and CPI

Posted on November 13, 2024 by Ilan

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CPI, Bitcoin New highs and More!

By Mark O’Brien, Senior Broker

General:

Inflation perked up in October though pretty much in line with Wall Street expectations, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, which measures costs across a spectrum of goods and services, increased 0.2% for the month. That took the 12-month inflation rate to 2.6%, up 0.2 percentage point from September.

Excluding food and energy, the move was even more pronounced. The core CPI accelerated 0.3% for the month and was at 3.3% annually.

Both upticks were in line with economists’ expectations.

Next up, tomorrow at 7:30 A.M., Central Time, the Bureau of Labor Statistics releases its latest reading on prices at the wholesale level: its Producer Price Index.

Energy: 

Dec. crude oil traded briefly below $67.00 per barrel today for the second day in row – prices not seen in a couple of weeks. Crude oil prices have stayed under pressure most of the year as China, the world’s second-largest economy and leading crude oil importer, has endured a sluggish post-Covid recovery in demand.

OPEC has been considering an unwinding of OPEC+ supply cuts in 2025 – if gradually. In September, OPEC+ postponed plans to begin steadily rolling back on the 2.2 million-barrel-per-day voluntary cut by two months in an effort to stem the slide of oil prices. The 2.2 million bpd cut, which was implemented over the second and third quarters, had been due to expire at the end of September.

Even if OPEC+ doesn’t unwind the cuts, the future of prices is still looking bleak as key oil producers outside the OPEC alliance like the U.S., Canada, Guyana and Brazil are also planning to add supply.

The forecast for oil demand next year has hovered near the 1-million barrel-per-day level.

Crypto: 

December Bitcoin futures continued its powerful upward price move today, puncturing 90,000 with an intraday high of 94,795, a ±$20,000 per contract move in just seven trading days to its latest all-time highs. Traders believe the record-run in the world’s largest cryptocurrency is poised for even more gains on the back of U.S. elections that saw a swell of pro-crypto candidates win office in the Senate and House of Representatives.

TRY trading micro bitcoin futures in demo mode!

Daily Levels for November 14th 2024

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Economic Reports

provided by:ForexFactory.com

All times are Eastern Time ( New York)

Good Trading!

Cannon Trading Company

12100 Wilshire Boulevard

Suite 1640

Los Angeles, CA 90025

(800) 454-9572

Visit Our Website

Bull Market Pause: Equity Stalls, Crypto Surges with Presidential Boost

Posted on November 12, 2024November 12, 2024 by Ilan

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Movers and shakers!

By John Thorpe, Senior Broker

While in the current Bull market, the equity Indices stalled today in likely anticipation of tomorrows CPI. Another bull, Crypto, has a slightly different motivation and that is the warmth of president elect Trump’s endorsement of the crypto industry. Crypto has once again captured many an imagination, here are some data points you may be interested in about Bitcoin Futures ( and MICRO Bitcoin futures):

During the election 4 years ago, Bitcoin was trading near $14K, Ether around $560 and the suite traded a total of close to 11K contracts ($761M)
Nearly 2/3 of volume was traded before the US open, twice what we typically see, as traders were accessing our markets
Compared to 4 years ago, there was shift in volume distribution from Prop to now HF trading as paper continues to enter the space
By EOD on the 6th the suite traded a record $16B, over 20x more than last election
Ranked #2 in total contracts traded (until yesterday)
Total OI was a record $18.4B, with various other records primarily in the bitcoin products
These figures underscore the robust liquidity, client demand and trust in our crypto market place
NOW: Bitcoin trading at record of around $88K
20% increase from just a week ago heading into the elections (+500% since prior election)
Ether trading around $3,300, +35% from last week, +490% vs. prior election
Bitcoin & Ether futures continue to reach new OI records,
Both hit OI records Friday
Yesterday we topped the Friday total notional OI record by over 20%
Micros are trading a combined ADV in November is nearly double that of Oct
Volatility is below YTD averages, margins remain steady for both
It’s the 1 year anniversary of CME becoming the leading exchange for Bitcoin Futures Notional Open Interest

Today’s News:

Updated: November 12, 2024 7:55 am

Redbook Weekly US Retail Sales Headline Recap

**Redbook Weekly US Retail Sales were +4.8% in the first week of November 2024 vs November 2023

**Redbook Weekly US Retail Sales were +4.8% in the week ending November 9th vs yr ago week

Watch Tomorrow’s Movers and Shakers:

CPI Consumer Price Index @ 7:30 am CDT.

CPI Consensus Outlook

More of the same is the call with a familiar 0.2 percent increase for total CPI on the month and a 0.3 percent rise for the core. Year on year, forecasts center on 2.6 percent for total CPI, up from 2.4 percent in September, and the consensus looks for a 3.3 percent increase for the core. Reports like this have been making investors restless about lack of progress toward the 2 percent target.

Earnings: After the close 233 Billion Market cap Cisco Systems reports. A total of 203 companies report

Daily Levels for November 13th 2024

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Economic Reports

provided by:ForexFactory.com

All times are Eastern Time ( New York)

Good Trading!

Cannon Trading Company

12100 Wilshire Boulevard

Suite 1640

Los Angeles, CA 90025

(800) 454-9572

Visit Our Website

Election Highs and Market Surprises: Navigating the 2024 Bull Run

Posted on November 11, 2024 by Ilan

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This bull market has a story behind it.

11 November 2024

By GalTrades.com

This bull market has a story behind it.

SPX rose 22.44 points (0.38%) to 5,995.54 to end the week up 4.66%; posted its best weekly gain of the year.
Dow Jones Industrial Average® ($DJI) added 259.65 points (0.59%) to 43,988.99 to end the week up 4.61%
Nasdaq Composite®($COMP) climbed 17.31 points (0.09%) to 19,286.78 to end the week up 5.74%.
10-year Treasury note yield (TNX) fell four basis points to 4.31%, but the 2-year yield added three basis points to 4.25%. Shorter-term yields, which are more closely connected to near-term rate policy, gained on longer-term ones this week.
Cboe Volatility Index® (VIX) fell to 14.99, near a two-month low.

The S&P500 is above 6,000 at the time of this writing, as the rally to record highs continued. Interestingly, the yield on the 10-Year Treasury is pacing to finish the week lower despite a huge swing higher in reaction to the election outcome. Donald Trump’s victory has caused bank and industrial stocks to surge on the expectations of less regulation and a pro-business environment. Technology stocks are a notable underperformer Friday, with all the Magnificent 7 in the red except for Tesla.

Did anyone predict the market will up so much with a trump victory? I was following lots of analyst and portfolio managers in order to understand what to expect from the markets with a Trump or Kamala victory. And no one predicted the markets will go up as much as they did with a Trump win. In fact, there were lots of predictions the markets will sell off after the elections.

So now what? From what I read it was institutional money that drove the markets up and not retail investors. And that should be a positive for the markets. From a near-term perspective, new all-time highs are bullish, and we haven’t yet seen any evidence that the post-election rally is exhausted. The bearish view would likely cite a near-term overbought technical status and a valuation that has become even more stretched. I do feel the markets are stretched and it’s always healthy to have a pull back, parabolic moves tend to have a rubber band effect. Trade with caution. On top of the Trump rally, we got a ¼ point rate cut from the FED; which finally sent bond yields down a bit. Keep a close eye on the 10 year this week and going fwd. Respect the uptrend, that’s what I keep hearing.

We remove the risk of higher corporate tax under Trump or higher regulations, but Valuations for the S&P is at 22.5, that’s a bit stretched. And earnings estimates have been getting trimmed the last few months.

So, if we’re overbought, what can be a catalyst that will trigger some kind of cool off? The CPI/PPI reports this week have the potential to create a “profit taking” excuse, regardless of the data, given the recent rally. It may Jostle the trend for the short term.

Usually when the dollar rallies it’s not a positive for equity markets.

Financial ETF XLF slated for best day in two years

Bank shares got a boost with JPMorgan Chase climbing 11.5% and Wells Fargo jumping 13%. The SPDR S&P Regional Bank ETF (KRE)continued to climb in midday trading and is now up about 12%.

Credit card stocks soar

Two leading credit card companies were among the top performing stocks in the S&P 500 in early trading, according to FactSet. Shares of Discover Financial jumped 22%, while Capital One popped about 17%.

Solar stocks sold off Wednesday ETF TAN Republicans won control of the Senate, amid fears the Inflation Reduction Act, which helps fund clean energy manufacturing in the U.S., will be repealed.

The small-cap benchmark Russell 2000 surged, hitting a 52-week high. Small companies, which are more domestic-oriented and cyclical, are believed to enjoy outsized benefits from Trump’s tax cuts and protectionist policies. Trump is viewed as supporting lower corporate tax rates, deregulation, and industrial policies that favor domestic growth, all of which could provide more stimulus to the U.S. economy and benefit risk assets

Historically speaking, stocks rallied into year-end from Election Day. However, the S&P 500 and Russell 2000 perform even better during presidential election years, while the Nasdaq Composite does worse.

Goldman Sachs’ Kostin says earnings growth will drive stocks higher into 2025

“Robust earnings growth should drive continued equity market appreciation into next year,” he wrote in a Wednesday note. “We forecast EPS growth of 11% in 2025 and 7% in 2026, although those estimates may change as the new administration’s policy agenda comes into clarity.” Kostin’s team is keeping its 12-month S&P 500 target of 6,300, suggesting upside of about 9% from Tuesday’s close. The magnitude of the rally in stocks could be curtailed by a sharp rise in the 10-year Treasury yield, the strategist said.

Futures:

Bitcoin, which could benefit from relaxed regulation, soared to an all-time high and topped $76,000. The dollar index climbed to its highest level since July on the belief that Trump’s proposed tariffs against major U.S. trading partners would boost the greenback. The 10-year Treasury yield jumped to around 4.43% on speculation Trump’s proposed tax cuts and other spending plans would spark economic growth, but also widen the fiscal deficit and reignite inflation.

Dollar at overbought levels, says strategist

On a technical level, the dollar has cleared the 104 resistance level, leaving the 106-107 level as the next major hurdle to overcome.

“Momentum is confirming the breakout but is overbought short-term. Support for pullbacks sets up at 104 and the 200-day moving average at 103.85,” said LPL Financial chief technical strategist Adam Turnquist.

Corn futures (/ZCZ24) closed higher to end the past week (+0.82%) with the December contract trading at highs last seen in late June. The USDA in its November World Agricultural Supply and Demands Estimates (WASDE) report estimated U.S. corn production at 15.143 billion bushels. This was below October’s 15.204 billion bushel estimate and below average analysts’ estimates for 15.190 billion bushels.

Cotton futures (/CTZ24) posted modest declines on Friday (–0.10%) after the USDA lowered U.S. cotton export projections by 200,000 bales to 11.3 million bales. The USDA also raised U.S. ending stocks projection by 200,000 bales to 4.3 million bales.

Crude oil futures (/CLZ24) ended the past week in the red as U.S. oil inventories posted a larger than expected build during the reporting period.

In its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles increased by 2.1 million barrels during the week ending November 1. This was above expectations for a 1.8-million-barrel build.

U.S. oil production remained unchanged last week and averaged 13.5 million barrels per day. This was up 300,000 barrels per day from one year ago.

On the oil product side, distillate inventories increased by 2.9 million barrels, contrary to market expectations for a 1.5-million-barrel draw. Distillate inventories are now 6% below the five-year average for this time of year.

Gasoline inventories rose by 400,000 barrels, contrary to forecasts for a 1.6-million-barrel draw. These stockpiles are now 2% below the five-year average.

EIA said gasoline production increased modestly from the previous week and averaged 9.7 million barrels per day. Distillate production also increased versus last week, averaging 5.1 million barrels per day.

The agency also reported that U.S. ethanol production increased last week, averaging 1.105 million barrels per day. Expectations were for 1.096 million barrels per day.

Ethanol inventories increased last week to 22 million barrels. Traders were expecting inventories of 22.4 million barrels.

Bonds: a run to 5% on the 10-year Treasury has been a level that gave markets pause in the recent past.”

China: China stock ETF drops amid Trump tariff fears. China-related stocks felt additional pain Friday on yet another disappointing stimulus update. What the market wants to see is the Chinese government put cash directly in the hands of people to boost consumption.

Earnings:

If you’ve been listening to companies’ post-earnings conference calls. Manufacturing has been weak, and there’s a freight recession.

FactSet pegged third-quarter S&P 500 EPS growth at 5.3% year over year, up from 5.1% a week ago. With 91% of companies reporting, 75% have delivered a positive earnings surprise and 60% have reported a positive revenue surprise.

It’s a quieter week of earnings with only 9 companies in the S&P 500 scheduled to report. Within the portfolio, Home Depot reports before the opening bell Tuesday and Disney before the opening bell Wednesday. Other notable companies reporting are Shopify, Tyson Foods, AstraZeneca, Spotify, Occidental, Cisco, Advance Auto Parts, Applied Materials, and Alibaba. Earnings may be on the lighter side.

Monday (11/11): Monday.com Ltd. (MNDY), Zeta Global Holdings Corp. (ZETA), Assured Guaranty Ltd. (AGO)
Tuesday (11/12): Home Depot Inc. (HD), AstraZeneca (AZN), Sea Ltd. (SE), Live Nation Entertainment Inc. (LYV), Tyson Foods (TSN), On Holdings (ONON), Spotify Technology SA (SPOT), Suncor Energy, Occidental Petroleum (OXY), Cava Group (CAVA)
Wednesday (11/13): CyberArk Software Ltd. (CYBR), Cisco Systems Inc. (CSCO), Tetra Tech Inc. (TTEK), Helmerich and Payne Inc. (HP)
Thursday (11/14): Walt Disney Co. (DIS), JD.com Inc. (JD), NetEase Inc. (NTES), Applied Materials (AMAT), Post Holdings (POST)
Friday (11/15): Alibaba Group (BABA), Spectrum Brands Holdings (SPB)

Economic reports:

It’s a heavy week of economic data for inflation and consumer spending. On Wednesday there is the consumer price index (CPI) report and the next day we’ll see the producer price index (PPI) report. The October retail sales report is Friday.

Monday (11/11): No reports
Tuesday (11/12): NFIB Small Business Optimism
Wednesday (11/13): Consumer Price Index (CPI), Core CPI, EIA Crude Oil Inventories, MBA Mortgage Applications Index, Treasury Budget
Thursday (11/14): Continuing Claims, Producer Price Index (PPI), core PPI, EIA Natural Gas Inventories, Initial Claims
Friday (11/15): Business Inventories, Capacity Utilization, Export Prices, Import Prices, Industrial Production, NY Fed Empire State Manufacturing, Retail Sales

Technical analysis:

The Russell 2000 index (RUT) gapped up 5.8% to fresh two-year highs on Wednesday despite a corresponding significant jump in bond yields. Furthermore, the index has held its ground, with only some minor consolidation following that move, which is characteristically bullish price action. The only near-term flag is that the Russell’s RSI is currently sitting at a slightly (overbought) level of 72.

Market Breadth:

SPX breadth lifted to 75.15% from 69.74%, the CCMP moved up to 50.83% from 45.13%, and the RTY jumped to 66.74% from 55.43%.

Trading stocks, commodity futures and options involves a substantial risk of loss. The information here is of opinion only and do not guarantee any profits. Past performances are not necessarily indicative of future results.

Daily Levels for November 12th 2024

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Economic Reports

provided by:ForexFactory.com

All times are Eastern Time ( New York)

Good Trading!

Cannon Trading Company

12100 Wilshire Boulevard

Suite 1640

Los Angeles, CA 90025

(800) 454-9572

Visit Our Website

Weekly Newsletter: The Week Ahead in Futures Trading + Trading Levels for Nov. 11th

Posted on November 8, 2024November 8, 2024 by Ilan

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Cannon Futures Weekly Letter Issue # 1216

In this issue:

Important Notices – Veteran’s Day, CPI, PPI
Futures 102 – Trading Contest – REAL CASH Prizes
Hot Market of the Week – July-Dec. Corn Spread
Broker’s Trading System of the Week – Nikkei 225 Swing System
Trading Levels for Next Week
Trading Reports for Next Week

Important Notices – Next Week Highlights:

The Week Ahead

By John Thorpe, Senior Broker

Veterans Day Monday the Banks, Bond market and Federal officers are closed,
13 Fed Speakers Powell on Thursday!
821 earnings
CPI Wed, PPI Thursday!

Futures 101: Ask a Broker!!

Spread Trading?

Futures 102: Trading Contest – Trade Against the Pro!

Challenge Details

GET STARTED!

- Hot Market of the Week – July -Dec Corn Spread

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.

FREE TRIAL AVAILABLE

July -Dec Corn Spread

The July – Dec corn spread satisfied its second upside PriceCount objective early last month and corrected. Now, the chart is poised to resume its rally where new sustained highs would project a possible run to the 11.75 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.

DaGGoR Rider M1C NQ

PRODUCT

NQ – Mini NASDAQ

SYSTEM TYPE

Swing Trading

Recommended Cannon Trading Starting Capital

$40,000

COST

USD 150 / monthly

Get Started

Learn More

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.

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Daily Levels for November 11th, 2024

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Weekly Levels for the week of November 11th, 2024

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Trading Reports for Next Week

First Notice (FN), Last trading (LT) Days for the Week:

www.mrci.com

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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.

Why Trade Bitcoin Futures? Ask a Broker & 30 Year Treasury Bond Review

Posted on November 7, 2024November 7, 2024 by Ilan

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Elections and FOMC are in the rear view mirror.

Safe trading ahead to all!

Ask a Broker: Why Trade Bitcoin Futures?

December 30 Year Treasury Bonds

December 30 year treasury bonds have resumed their slide which has the chart approaching its low percentage fourth downside PriceCount objective. A completion of this count would suggest we have potentially satisfied this phase of the bear move. A trade below the May reactionary low would formally negate the remaining unmet counts.

Daily Levels for November 8th 2024

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Economic Reports

provided by:ForexFactory.com

All times are Eastern Time ( New York)

Good Trading!

Cannon Trading Company

12100 Wilshire Boulevard

Suite 1640

Los Angeles, CA 90025

(800) 454-9572

Visit Our Website

How Trade Oil Futures

Posted on November 7, 2024April 20, 2025 by Ilan

The oil market is one of the most significant and dynamic global markets, with crude oil futures representing one of the most actively traded commodities worldwide. For both new and experienced traders, understanding how to trade oil futures is key to gaining exposure to the oil market, which is impacted by a multitude of factors, from geopolitics to technological advancements. In this guide, we’ll explore the history of crude oil futures trading, why they are so popular, and the advantages and disadvantages for various types of traders, including retail traders, institutional traders, and hedgers. We’ll conclude with an analysis of oil price forecasts for the end of the year, addressing relevant factors that may impact these predictions.

The Origins of Oil as a Tradable Commodity

Oil, often referred to as “black gold,” has been a critical resource in the global economy since its discovery as a fuel source. The journey of oil from its early use to becoming a dominant global commodity on the futures trading market is complex. Originally, oil was traded in physical markets, where buyers and sellers would negotiate contracts for delivery. However, as global energy demand grew, especially in the 20th century, oil became an essential commodity, fueling industries, economies, and transport systems worldwide.

To facilitate oil trading and address the volatility in oil prices, crude oil futures were introduced in the 1980s, allowing for price stabilization and hedging. The New York Mercantile Exchange (NYMEX) launched the first crude oil futures contract in 1983, followed by similar offerings from the Intercontinental Exchange (ICE) and other exchanges. These contracts allowed market participants to buy or sell oil at a predetermined price on a future date, bringing a significant degree of predictability and security to the volatile oil market.

Why Crude Oil Futures are Popular

Crude oil futures are among the most popular futures contracts, and there are several reasons why traders are drawn to crude oil futures trading:

Liquidity: The oil futures market is one of the most liquid markets globally. High liquidity means that there is always a buyer or seller at any given time, making it easier for traders to enter and exit positions.
Volatility: Oil prices are highly sensitive to changes in supply, demand, geopolitical tensions, and economic shifts. This volatility presents opportunities for traders to profit from price movements, whether they are upward or downward.
Transparency: Unlike other markets, where information may not always be easily accessible, the oil market is relatively transparent, with data on supply, demand, inventory levels, and geopolitical developments widely available.
Global Significance: Oil is essential for transportation, manufacturing, and energy production, making it a critical commodity globally. Consequently, oil futures are a popular contract for speculation and risk management, given the reliance of the world economy on oil.

How Trade Oil Futures

To successfully engage in crude oil futures trading, traders should familiarize themselves with the trading process, understand market terminology, and stay informed on global events. Below are key steps for how trade oil futures:

Choosing a Brokerage: Selecting the right brokerage is the first step. Brokers that offer crude oil futures trading, such as E-Futures.com or Cannon Trading, provide platforms, tools, and guidance specifically tailored for futures traders.
Understanding Contracts: The most widely traded crude oil futures contracts are West Texas Intermediate (WTI) on the NYMEX and Brent crude oil on the ICE. These contracts specify the quantity (typically 1,000 barrels) and the quality of oil to be delivered, along with the future delivery date.
Leverage and Margin Requirements: Oil futures are leveraged products, meaning that a trader only needs to put down a fraction of the contract’s value (margin). While leverage can amplify profits, it also increases risk, as even a slight price movement against a trader’s position can result in significant losses.
Strategies: Some common trading strategies include day trading, swing trading, and position trading. Day trading involves capitalizing on intraday price fluctuations, while swing trading captures short-term trends over several days. Position trading, on the other hand, is suitable for those looking at long-term trends.
Monitoring Influences: Global events, weather patterns, and geopolitical tensions in oil-producing regions are critical to monitor, as they have direct impacts on oil supply and demand.
Risk Management: Setting stop-loss orders, understanding margin requirements, and using technical and fundamental analysis are essential risk management techniques in how trade oil futures effectively.

Advantages and Disadvantages of Trading Oil Futures

For Retail Traders

Advantages:

Access to Leverage: Retail traders can control large positions with relatively small amounts of capital due to leverage, allowing for potentially high returns.
Profit from Volatility: Retail traders often look for quick returns, and the volatility in the crude oil market can provide these opportunities.
Diverse Strategies: From day trading to holding long-term positions, retail traders can employ a variety of trading strategies to benefit from both short and long-term price movements.

Disadvantages:

High Risk: Leverage can be a double-edged sword. High volatility in oil prices, combined with leverage, can lead to significant losses.
Complex Market Factors: The oil market is influenced by numerous complex factors, including geopolitical tensions, natural disasters, and supply chain disruptions, which can be challenging for retail traders to analyze.
Margin Calls: If the market moves against a leveraged position, the trader might receive a margin call, requiring additional funds or leading to forced liquidation of the position.

For Institutional Traders

Advantages:

Risk Management: Institutional traders can hedge against other investments in energy or oil-dependent industries, allowing them to mitigate risks in their broader portfolios.
Access to Superior Data: Institutional traders have access to advanced trading platforms, market data, and analysis tools, giving them a competitive advantage in crude oil futures trading.
Liquidity and Execution: Institutional traders benefit from enhanced liquidity and can execute large trades with minimal slippage due to their established relationships with brokerages and exchanges.

Disadvantages:

High Costs: Institutional trading often involves high costs, including transaction fees, data feeds, and sophisticated trading technology.
Regulatory Scrutiny: Institutional traders are subject to regulatory requirements, which can restrict certain trading activities and require additional compliance.

For Hedgers

Advantages:

Price Stabilization: Companies in oil-dependent industries use crude oil futures to lock in prices, allowing them to stabilize costs and protect against price volatility.
Enhanced Budgeting and Planning: By locking in prices, hedgers can budget more effectively, making it easier to forecast costs and profits.
Reduced Exposure to Geopolitical Events: Oil prices are often sensitive to global political events, and hedgers can reduce their risk of exposure to such events by securing future oil prices.

Disadvantages:

Opportunity Costs: By locking in prices, hedgers may miss out on favorable price movements if the oil market shifts unexpectedly.
Initial Costs and Margins: Hedgers need to meet margin requirements, which may tie up capital that could be used elsewhere.
Complexity: Effective hedging requires a deep understanding of futures markets, as well as continuous monitoring of global oil trends.

Speculation on Oil Prices for the End of the Year

The price of crude oil futures heading into the end of the year is likely to be influenced by several critical factors, including global demand recovery, OPEC+ production decisions, and geopolitical issues.

Global Economic Recovery: As economies recover from global events, the demand for oil is expected to rise, pushing up prices. However, any setbacks, such as renewed economic slowdowns or shifts in energy policies, could temper demand.
OPEC+ Production Policies: OPEC+ decisions on production quotas will continue to be a key factor in crude oil futures trading. Tightening or loosening production levels could have an immediate impact on oil prices, as these decisions directly affect global supply.
Energy Transition Policies: The ongoing shift toward renewable energy may gradually dampen long-term oil demand, but in the short term, supply constraints and increased demand for conventional energy sources could drive prices higher.

Based on current market conditions, analysts predict that oil prices could remain relatively high through the end of the year, with potential spikes if any supply disruptions occur. Crude oil futures may see increased buying pressure, but price sensitivity to unforeseen disruptions could cause fluctuations. Retail and institutional traders, as well as hedgers, should remain vigilant, monitoring relevant indicators and adjusting their strategies accordingly. Given these factors, how to trade oil futures effectively will require a close watch on economic reports, OPEC announcements, and geopolitical developments.

Understanding how to trade oil futures requires a grasp of market mechanics, key influences, and the reasons behind the popularity of crude oil futures trading. With high liquidity, volatility, and a strong influence from global factors, oil futures present unique opportunities and risks for traders of all kinds. For retail traders, the potential for high returns is met with significant risk. Institutional traders benefit from data and scale, but face regulatory challenges, while hedgers achieve price stability at the cost of flexibility.

The outlook for crude oil futures remains complex, with oil prices predicted to face various pressures that may drive prices higher or, conversely, cause corrections. As oil remains essential to the global economy, futures trading in this sector will continue to be a focal point for market participants. For anyone engaging in crude oil futures trading, maintaining a strategic approach and staying informed of global events are essential for navigating the unpredictable and profitable world of oil futures.

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Ready to start trading futures? Call us at 1(800)454-9572 – Int’l (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 Cannon Trading Company 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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Post-Election Market Surge: Commodities, Equities Rally Ahead of FOMC Rate Decision

Posted on November 6, 2024 by Ilan

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US Elections, FOMC

By Mark O’Brien, Senior Broker

General:

On the heels of the U.S. Election Day results, commodities futures moves – up and down – have taken center stage in the financial world. Topping the charts – literally – the E-mini S&P 500 and E-mini Dow Jones vaulted to new all-time highs with 130+ and 1400+ point upward moves, respectively. Even the scrubby Russell 2000 took flight to new highs: up over 100 points, making it the stock index league leader in percentage gain at ±5.25%.

Outsize moves occurred across asset classes. Dec. gold gave up ±$80 per ounce (an $8,000 per contract move), silver lost over $1.60 per ounce (also an $8,000 per contract move) and copper shed over 20 cents per pound – a ±5% / $5,000 per contract move.

Marking the biggest one-day move in eight years – going back to the U.K. vote for Brexit in June 2016, the ICE U.S. Dollar Index jumped 1.8%, hammering other currency futures like the Euro, Japanese Yen, Swiss Franc and Mexican Peso, the latter sinking to its weakest level against the dollar this year.

In terms of percentage movement, the day’s titleholder will likely be Bitcoin futures with the December contracts – full-sized and micro contracts – increasing over 9% with a ±$7,000 move up to its own all-time high, touching 76,000 for the first time.

More General:

While the U.S. Election Day results have taken center stage, the futures markets are still keeping an eye on the rest of the upcoming potential market movers and that includes the conclusion of the most recent FOMC meeting tomorrow. The Fed is expected to reduce the benchmark policy rate by 25 basis points after it slashed its benchmark rate by 50 basis points, delivering its first rate cut since 2020 after their last meeting in September. The U.S. federal funds rate currently sits at 4.75%–5%. In September’s policy meeting, Fed policymakers anticipated the fed funds rate falling by additional 50 basis points by the end of this year, then another full percentage point through 2025, and a final half-point reduction in 2026, to end near the 2.75–3.00 per cent range.

Daily Levels for November 7th 2024

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Economic Reports

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Markets Hold Breath: Elections, Iran Tensions, and FOMC Decision Awaited

Posted on November 5, 2024November 5, 2024 by Ilan

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Equities, US Elections, Iranian Threats and FOMC week

By John Thorpe, Senior Broker

Today, Equities rallied on ultra light volume.

When “volume is light and prices are up,” it indicates a situation where a price is increasing, but with a relatively low number of contracts being traded, suggesting limited investor enthusiasm or potential weakness in the price movement, as a strong trend usually coincides with higher trading volume.

The reasons for light volume could be associated with several factors. Last week investors sold off on high volume; money still sitting on the sidelines waiting for the results of the U.S. Elections. Many FCM’s have increased their day trading margins to the exchange initial requirement for overnight positions. This restricts liquidity, today’s action smells like potentially a short covering rally, more cash on the sideline. What I expect, post election for the initial strong price movement to be a head fake, the wrong move for the longer term trend and must be faded. For Risk managers during this time, caution abounds.

Not only is the world watching the U.S. Presidential election, we can’t lose sight of which party takes control of congress, Republicans are expected to win the Senate and Democrats to win the House, These winners will play an important role determining how the winner of the presidency will likely govern.

If you hadn’t heard , The Ayatollah has issued a fatwah Crushing Isreal and the US after the U.S. election.

“The enemies, both the U.S. and the Zionist regime, should know that they will definitely receive a tooth-breaking response to what they are doing against Iran and the resistance front,” Khamenei said. The chief of Iran’s Islamic Revolutionary Guard Corps, General Hossein Salami, echoed these sentiments by stating Iran “will give an unimaginable response to the enemy.”

In addition to the above, all markets have already priced in the expected .25 decrease in the fed funds rate this coming Thursday.

If you are on the sidelines, waiting for margins to resume to normal, we appreciate your patience, Hopefully, this will be a minor disruption, as will all the above with your trading plans.

Daily Levels for November 6th 2024

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Economic Reports

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Rising VIX Amid Market Highs: Understanding Elevated Volatility in Record-Breaking Times

Posted on November 4, 2024November 4, 2024 by Ilan

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Why is the VIX so high when the markets are making new highs.

4 November 2024

By GalTrades.com

Why is the VIX so high when the markets are making new all-time high?

When the S&P made all-time high in the last 35 years the average level of the VIX was around 15, now we’re at 19-20. The week ended with a VIX @ 21.88

Earnings overall were ok, Mag 5 earnings this past week were good but profit taking led some of them to the downside. The AI narrative is continuing, The Mag 6 announced further spending in AI going into 2025, the winner should be NVDA. In 2025 the hyperscalers will need to show us results; are they growing earnings from spending on AI, investors will want to see higher ROI.

Friday the markets closed up on the day but down for the week. Yields closed on their highs. I don’t see yields closing on an all-time high for the past few months as a positive sign for the stock market in the short term.

This week we had one of the largest one-day drops for the SPX in nearly two months, driven by; a negative reaction to increased AI-related CapEx forecasts from mega-cap tech giants though the earnings reports were strong, rising bond yields, and possibly a reduction in exposure to risk ahead of the upcoming elections. British 10-year Gilts hit a 52-week high this week after the U.K. Finance Minister Rachel Reeves first budget included higher spending, inflation expectations and therefore slower rate cut expectations from the Bank of England (BOE).

Aside from Election Day on Tuesday, we’ve got a Federal Open Market Committee (FOMC) meeting on Wednesday-Thursday. Higher volatility is expected. Bloomberg probabilities are currently suggesting a 98% chance that the Federal Reserve cuts 25 basis points next Thursday, the forward guidance/tone will likely be the focus for markets. The economic data has been relatively strong and Fed officials have since communicated that easing in monetary policy may be more gradual as a result. If the Fed doesn’t provide a hawkish tone next Thursday, then the bulls may win this battle for now, the bond traders may get the last laugh because of the debt continuously growing.

The rise in bond yields is likely a reflection of the fact the Fed will cut interest rates fewer times than investors had thought, a result of inflation being above its target and a job market that has grown faster than expected. more cuts will cause inflation to reaccelerate, and that’s why the 10-year Treasury yield surged Friday after the initial dip.

When does the bond market impinge on the stock market? 60 basis points were about there.

Mid-Caps are trading at a P/E of 15 vs small cap Russell at 30, and 4 out of 10 companies are unprofitable. If we go back since 1985 mid cap has outperformed small caps.

Economic Reports:

September’s Job Openings and Labor Turnover Survey(JOLTS) showed openings of 7.443 million, the lowest in more than three years and well below the 8 million analysts had expected. The levels are not that weak to suggest a real breakdown in the job market. The overall trends in openings and quits point to a job market that is returning to normal rather than one that is deteriorating quickly.

jobs report was a big miss, the data is likely impacted by the hurricanes/Boeing union strike and will likely be subject to future revisions.

Monday (11/4): Factory Orders
Tuesday (11/5): ISM Services PMI, Trade Balance
Wednesday (11/6): EIA Crude Oil Inventories, MBA Mortgage Applications Index
Thursday (11/7): Consumer Credit, Continuing Claims, EIA Natural Gas Inventories, FOMC Rate Decision, Initial Claims, Productivity-Preliminary, Unit Labor Costs-Preliminary, Wholesale Inventories
Friday (11/8): University of Michigan Consumer Sentiment-Preliminary

Futures:

Crude oil fell below $67 per barrel at one point for WTI Crude Oil futures (/CL) as Middle East tension eased. A price to watch is the September 10 closing low of $66.31, as no front-month crude contract has closed below that level since late 2021, just before the war in Ukraine began.

Gold: The 5% increase in net demand in the third quarter of this year included 1,313 tons of the precious metal according to the World Gold Council (WGC). The precious metal has rallied 33% YTD, 13% of which happened last quarter.

Surging investor demand has been resilient central bank buying in the face of higher prices, the Federal Reserve starting a rate-cut cycle along with other central banks and buying in the over-the-counter market. Only three central banks reported lowering their gold reserves by more than a ton.

Looking at the continuous gold futures (/GC) we can see an unrelenting uptrend over the last year, although the trend has rarely seen interruptions since the 2022 low. Although the RSI is sitting at oversold levels, the metal has proven it can sustain oversold levels for long periods this year. It has closed above its 9-day moving average for the last 14 sessions. Sitting at all-time highs means there are no resistance levels to search for.

Gold is creating a large gap from its middle- and far-term moving averages that might off some support on a retracement or the previous high at 2700. It is currently trading nearly 6% and 15% above its middle- and far-term moving averages.

China: Reutersreported that China is considering the issuance of $1.4 trillion in extra debt to bolster the economy.

Technical Analysis:

By Wednesday, Technically speaking, the broader market appeared range bound, caught between technical support at the 20-day moving average for the SPX just above 5,800 and recent highs near 5,870. The last few trading sessions saw narrow moves. Investors could be waiting for this week’s data and mega-cap earnings, followed by next week’s election and Fed meeting, to take major new positions. Towards the end of the week SPX broke 20-day SMA; the 50-day SMA is now considered near-term support and the 20-day SMA is now considered near-term resistance (i.e. prior support becomes resistance, once broken).

Russell broke the short-term upward trend line but holding support at the 50-day SMA.

Holiday shopping: the season is upon us, and retail stocks may be in focus, shoppers will be looking for value; WMT, COST, AMZN, BBY, TJX.

Earnings:

Monday (11/4): Constellation Energy Corp. (CEG), Zoetis Inc. (ZTS), Marriott International Inc. (MAR), Fidelity National Information Services (FIS), BioNTech SE (BNTX), Yum China Holdings Inc. (YUMC), Vertex Pharmaceuticals Inc. (VRTX), Palantir Technologies Inc. (PLTR), NXP Semiconductors NV (NXPI), Realty Income Corp. (O)
Tuesday (11/5): Apollo Global Management Inc. (APO), Thomson Reuters Corp. (TRI), Marathon Petroleum Corp. (MPC), Cummins Inc. (CMI), Coupang Inc. (CPNG), Microchip Technology Inc. (MCHP), Devon Energy Corp. (DVN)
Wednesday (11/6): CVS Health Corp. (CVS), Sempra (SRE), American Electric Power Company (AEP), Johnson Controls International PLC (JCI), Iron Mountain Inc. (IRM), Qualcomm Inc. (QCOM), ARM Holdings PLC (ARM), Gilead Sciences Inc. (GILD), McKesson Corp. (MCK)
Thursday (11/7): Duke Energy Corp. (DUK), TransDigm Group Inc. (TDG), Air Products and Chemicals Inc. (APD), Becton Dickenson and Co. (BDX), Datadog Inc. (DDOG), Arista Networks Inc. (ANET), Airbnb Inc. (ABNB), Motorola Solutions Inc. (MSI), EOG Resources Inc. (EOG), Fortinet Inc. (FTNT), Trade Desk Inc. (TTD)
Friday (11/8): Baxter International Inc. (BAX), NRG Energy Inc. (NRG), RB Global Inc. (RBA), CNH Industries NV (CNH)

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Daily Levels for November 5th 2024

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Economic Reports

provided by:ForexFactory.com

All times are Eastern Time ( New York)

Good Trading!

Cannon Trading Company

12100 Wilshire Boulevard

Suite 1640

Los Angeles, CA 90025

(800) 454-9572

Visit Our Website

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Speculation on Oil Prices for the End of the Year

US Elections, FOMC

Equities, US Elections, Iranian Threats and FOMC week

Why is the VIX so high when the markets are making new highs.