Market Movers This Week: Options on Futures, Grains, Hedging, Powell Testimony, CPI & PPI, WASDE, and Earnings Reports

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Cannon Futures Weekly Letter

In Today’s Issue #1229

  • 1099’s Are Available
  • The Week Ahead –
  • Futures 102 – Hedging With grains, Options on Futures
  • Hot Market of the Week – April Hogs
  • Broker’s Trading System of the Week – ES intraday System
  • Trading Levels for Next Week
  • Trading Reports for Next Week

1099’s:

1099 forms will be generated for all futures trading accounts held by US clients that placed any trades during the 2024 calendar year. Traders should expect to receive their 1099 forms via mail, email or through their portal in early February.

 

·    1099 forms will be provided directly from the FCM to the client.

·    To login and retrieve your 1099 for your Cannon account via StoneX click here

·    To login and retrieve your 1099 for your Cannon account via Ironbeam click here

·    To login and retrieve your 1099 for your Cannon account via Dorman click here

For any other FCM’s please contact your broker directly.

Important Notices: The Week Ahead

By John Thorpe, Senior Broker

 

Humphrey Hawkins Testimony week, Fed Chair Powell gives testimony to the Senate Banking Committee beginning @ 9:00 am CST Tuesday the 11th, Wednesday he walks over to the House Financial Committee and answers questions for the congressional body. CPI,PPI! WASDE week! + 5Fed Speakers, 1000’s of midcaps reporting past earnings and future guidance.

Economic releases are relatively light this week with one exception: Consumer Price Index (CPI) pre-market Friday. The Fed Speakers will be at the podium for the foreseeable future as we don’t have another Fed rate decision until late March.

 

Earnings Next Week:

  • Mon. McDonalds
  • Tue. Coca-Cola, Softbank
  • Wed. Cisco
  • Thu.  Applied materials
  • Fri. Quiet

 

 

FED SPEECHES:

  • Mon Quiet
  • Tues. Hammock 7:50 CST, Chair Powell Testimony 9amCST, Bowman and Williams 2:30pmCST
  • Wed. Chair Powell Testimony 9am CST, Bostic 11:00 am CST, Waller 4:05PM,
  • Thu. Quiet
  • Fri. Quiet

Economic Data week:

  • Mon. Consumer inflation expectations
  • Tue. WASDE Ag Numbers 9amCST, NIFB Optimism index
  • Wed. CPI
  • Thur. Initial Jobless Claims, PPI
  • Fri. Retail Sales, Capacity Utilization, Business Inventories

Futures 102: Hedging Grains with Options on Futures

Course Overview

Gain an understanding of how buyers and sellers of grains and oilseeds utilize futures and options to hedge their position to manage price risk.  This course will enhance the hedger’s understanding of the different strategies available as well as how the basis affects prices.

Start Now

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Hot Market of the Week

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 and options on futures needs.

Free Trial Available

December 25 Corn

April Hogs satisfied a second upside PriceCount  objective before turning sideways with a range bound trade. At this point, IF the chart can resume its rally with new sustained highs, the third count would project a potential run to the 100.96 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.

Brokers 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.

ES NZL

PRODUCT

Mini SP500

 

SYSTEM TYPE

Day Trading

 

Recommended Cannon Trading Starting Capital

$36,000

 

COST

USD 199 / monthly

 

Get Started

 

Learn More

 

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Trading Levels for Next Week

Daily Levels for February 10, 2025

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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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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.

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Market Watch: Record Highs in Gold & Coffee, Oil Retreats Amid Trade Concerns

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New all-time highs in Gold!

Futures Markets Highlights by Mark O’Brien, Senior Broker

General:

The big one!  It’s that time of the month again: we’re a couple of days from when the Labor Dept. releases its monthly Non-farm payrolls report.  It’s widely considered to be one of the most important and influential measures of the U.S. economy and the report is released at 7:30 A.M., Central Time on the first Friday of the month.

Softs

New all-time highs in coffee!  The relentless coffee price rally continued today as the March futures contract on the ICE exchange hit a new intra-day record above $4.00 per pound on extremely tight supplies and fears over the outlook for the coming crop.  High: $401.10, settle: $397.75

The ICE coffee futures contract is considered the benchmark to price deals around the world and has moved up more than 15% this year.

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Energy:

Crude oil futures were in retreat on broader demand concerns, tit-for-tat import taxes between the U.S. and China and the prospect of an extended trade war with China, Mexico, Canada and more broadly. Prices already were on the defensive after the EIA revealed U.S. commercial crude oil inventories soared by 8.7 million barrels from the previous week.

Closing at $71.03 per barrel today, the March contract is down over $7.00 per barrel ±10% in two weeks

Not “plugged in” to crude oil? There are three different futures contracts to trade West Texas Intermediate crude oil Traded on the CME Group’s NYMEX, the WTI crude futures contract is the largest energy futures contract in the world by volume.

 

Metals:

New all-time highs in gold! April gold futures – the most-active futures contract – hit a new all-time high – breaching $2,900 per ounce intraday as the dollar pushed lower. The ongoing sentiment among traders: concerns over the new U.S. administration’s tariff measures. Investors are increasingly turning to gold as a store of value amid fears of potential economic slowdowns, inflationary pressures, and trade disruptions. April gold settled up 2.7% at $2,893.00 per ounce, marking a 2.7% gain for the day and reinforcing gold’s strong upward momentum in the face of ongoing market volatility.

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Daily Levels for February 6th, 2025

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Economic Reports

provided by: ForexFactory.com

All times are Eastern Time (New York)

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Find us on Trustpilot

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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.

Call Now

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or wherever you listen to podcasts!

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First and Last Commodity Trading Days February 2025

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First Notice & last trading Days for February

Please see below First Notice and Last Commodity Trading days for February! Make it a disciplined trading month.

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Daily Levels for February 4, 2025

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Economic Reports

provided by: ForexFactory.com

All times are Eastern Time ( New York)

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Find us on Trustpilot

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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.

Call Now

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Listen to our podcast: Subscribe on AppleSpotify, Amazon

or wherever you listen to podcasts!

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April Gold Futures Hit Record High Amid Tariff Concerns and Weaker Dollar

Pass the Knowledge – Feel Free to Forward to a Friend!

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Gold Futures Trading at All Time Highs!

April gold futures – the most-active futures contract – hit a new all-time high as the dollar pushed lower and traders sought safety amid concerns over the new U.S. administration’s tariff measures. April gold settled up 2.7% at $2,845.20 per ounce, after hitting a record intraday high of $2,853.20 earlier in the day. The prior record of $2,800.80 was set in late October.

 Gold Weekly Chart with Possible targets for your Review Below:

Trade gold futures and select from three different contract sizes – 100-oz., 50-oz. and 10-oz. – with a FREE, top-of-the-line trading platform that includes built-in charts, hundreds of indicators, a great DOM and super low day trading margins.

Don’t have time to do it yourself? Work with an experienced broker!

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Daily Levels for January 31st, 2024

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Economic Reports

provided by: ForexFactory.com
All times are Eastern Time ( New York)
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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.

Gold Investment Guide: Choosing Between Gold Futures and Gold ETFs

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Price Gold Futures

Discover the right gold investment for you

US stocks gapped lower after Chinese AI competitor DeepSeek rose to the top spot on US app stores over the weekend, supplanting OpenAI. The NASDAQ plunged ~4% before the opening bell. Nvidia shares were routed, loosing some $500B in market cap falling below its 200-day moving average for the first time since fall 2023. The entire AI stack including semiconductors, nearly all things related to data centers, and electrical power generation saw whipsaw pullbacks on worries that a significantly cheaper, opensourced AI model could upend the boom in spending seen around US LLMs. Defensive flows into staples, healthcare, and some small caps could not offset the selling seen across the AI ecosystem, but breadth was much more positive relative to the declines seen in the S&P and NASDAQ. US Treasury markets saw prices surge too, and rates fell ahead of the FOMC meeting. The US 10-year yield fell back to 4.5% before bouncing. The US dollar index remained heavy. Crude and natural gas prices fell. 

If you’re considering investing in gold, you might be wondering whether Gold futures or gold ETFs are the better fit for your portfolio. Our latest article delves into the key differences between these two investment options, helping you make an informed decision.

In this article, we explore:

  • The significant differences in the liquidity, exposure and costs between Gold futures and gold ETFs.
  • How individual investors can participate in the performance of gold.
  • The opportunities for maximizing returns and potential tax advantages of Gold futures.

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Daily Levels for January 28th, 2024

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Economic Reports

provided by: ForexFactory.com
All times are Eastern Time ( New York)
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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.

Futures Trading Insights for Jan. 23rd: Equity Gains, Energy Dips, and Gold Surges

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What you need to know before trading futures on Jan. 23rd:

By Mark O’Brien, Senior Broker

 

Stock Indexes:  

Equity index futures rose today, powered by a rise in technology stocks after the new administration announced mammoth spending plans for artificial intelligence infrastructure, while the U.S. Dollar Index traded to a two-week low as tariffs were delayed.

Late on Tuesday, Pres. Trump announced that OpenAI, Japan’s SoftBank and Oracle will form a joint venture and invest up to $500 billion to build data AI centers.  Shares of SoftBank surged 10.6% in Tokyo, Oracle gained 7.6% on Wall Street, adding to Tuesday’s 7.2% jump.  The March E-mini Nasdaq lead U.S. stock index futures with a ±1.45% / ±300-point ascent, while the March E-mini S&P 500 gained ±.7% / ±40 points.  The March E-mini Dow lagged somewhat with a ±.25% / 120-poing upswing.

Energy:   

Oil prices eased to a fresh one-week low today as the market considers how the new administration’s proposed tariffs could affect global economic growth and demand for energy.

March West Texas Intermediate crude (WTI) traded 39 cents, or 0.5%, lower to settle at $75.44.

That puts WTI down for a fourth day in a row for the first time since November. Both crude benchmarks – WTI and Brent – closed at their lowest since Jan. 9 for a second day in a row.

Crude Oil numbers will be out tomorrow due to MLK holiday this past Monday.

Metals: 

Gold futures (Feb.) prices traded to near three-month highs Tuesday, fueled in part by the weaker dollar and a seemingly lack of clarity around the new administration’s policy plans, which investors fear could trigger trade wars and elevate market volatility.

Feb. Gold added ±$7 to $2,766 per ounce as of this typing. Prices were at their highest since Nov. 5 when they hit their intraday high of $2,782.8.

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Daily Levels for January 23rd, 2024

 

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Economic Reports

provided by: ForexFactory.com
All times are Eastern Time ( New York)
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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.

AI Futures

The rise of artificial intelligence (AI) has significantly transformed various industries, and futures trading is no exception. From the earliest days of manually shouting orders on bustling trading floors to today’s sophisticated, algorithm-driven systems, the futures markets have undergone a seismic shift. Understanding this evolution sheds light on the advantages and disadvantages of automated and manual trading, while also highlighting why institutions like Cannon Trading Company remain pivotal for traders navigating these dynamic landscapes.

The Early Days of Futures Trading

Before the advent of AI, futures trading relied heavily on manual processes. Traders on the floor of exchanges like the Chicago Mercantile Exchange (CME) or the New York Mercantile Exchange (NYMEX) engaged in open outcry trading. Brokers shouted and used hand signals to execute trades in pits, creating a high-energy environment driven by human intuition, relationships, and rapid decision-making.

Manual trading in this era required a deep understanding of market fundamentals, technical analysis, and quick reflexes. For example, during the 1980s, crude oil futures saw dramatic price fluctuations driven by geopolitical tensions. Brokers had to assess global news, client positions, and technical charts almost instantaneously to execute profitable trades. The experience of a seasoned futures trader often made the difference between substantial gains and significant losses.

However, the manual system had its drawbacks. Human error, emotional decision-making, and inefficiencies in communication often resulted in missed opportunities or costly mistakes. As technology advanced, these limitations became apparent, paving the way for more sophisticated methods.

The Advent of Automated Futures Trading

The introduction of computers in the late 20th century marked the beginning of a new era for futures trading. Algorithms capable of processing vast amounts of data at incredible speeds began to replace manual processes. This evolution took a giant leap forward with the advent of AI and machine learning in the 21st century.

AI-driven futures trading systems leverage historical data, real-time market information, and predictive analytics to make split-second decisions. For example, in 2010, high-frequency trading (HFT) accounted for over 60% of all U.S. equity trading volume. These AI algorithms identify patterns and execute trades faster than any human trader could manage.

One notable anecdote involves the 2010 “Flash Crash,” where the Dow Jones Industrial Average plummeted nearly 1,000 points in minutes before quickly rebounding. AI algorithms played a significant role in this event. While their speed and efficiency can create liquidity, their interactions can also exacerbate market volatility. This dual-edged nature of AI trading underscores the importance of regulatory oversight and robust system design.

Advantages of AI in Futures Trading

AI futures trading offers numerous benefits:

  • Speed and Efficiency: AI algorithms process data and execute trades in milliseconds, providing a competitive edge in fast-moving markets. For instance, a futures trader using AI can capitalize on microsecond price discrepancies in commodities like gold or crude oil.
  • Data-Driven Decisions: AI systems analyze vast datasets, identifying trends and patterns that might be invisible to human traders. This ability allows for more informed decision-making.
  • Emotion-Free Trading: Unlike human traders, AI systems are immune to fear, greed, or panic, ensuring objective decisions even during volatile market conditions.
  • Scalability: AI can monitor and execute trades across multiple markets and instruments simultaneously, something no human can achieve.

Case Study: Renaissance Technologies, a hedge fund founded by mathematician James Simons, has consistently delivered high returns using AI-driven strategies. Their Medallion Fund, which employs machine learning algorithms, is one of the most successful trading funds in history, generating average annual returns of 39% before fees.

Disadvantages of Automated Trading

Despite its advantages, AI futures trading has its challenges:

  • Over-Reliance on Technology: Traders relying solely on AI risk significant losses if systems fail or encounter unforeseen market conditions.
  • Black Box Problem: Many AI algorithms operate as “black boxes,” meaning their decision-making processes are opaque. This lack of transparency can be problematic, especially during unexpected market events.
  • Market Volatility: The speed and volume of AI-driven trades can amplify market fluctuations, as evidenced by events like the “Flash Crash.”
  • High Development Costs: Building and maintaining AI systems require substantial investment in technology, data, and expertise.

Hypothetical Scenario: Imagine an AI system designed to trade soybean futures based on weather data. A sudden, unprecedented weather anomaly—not included in the training data—leads to erroneous predictions and significant losses. This scenario highlights the importance of continuous monitoring and improvement of AI systems.

Manual Trading: Strengths and Weaknesses

While AI dominates modern futures trading, manual trading still has its place. Human traders bring intuition, experience, and the ability to adapt to unique market conditions. For example, during the COVID-19 pandemic, some experienced futures brokers successfully navigated unprecedented market turmoil by relying on their deep understanding of fundamentals and client needs.

Advantages of manual trading include:

  • Flexibility: Human traders can quickly adapt strategies based on evolving market conditions or unexpected events.
  • Relationship Building: Successful futures brokers often cultivate strong relationships with clients, providing personalized advice and support.
  • Intuitive Decision-Making: Experienced traders can make judgment calls that AI systems might miss.

However, manual trading also has drawbacks:

  • Emotional Bias: Fear, greed, and other emotions can cloud judgment, leading to poor decisions.
  • Slower Execution: Human traders cannot match the speed of AI systems, particularly in high-frequency trading environments.
  • Limited Scalability: Managing multiple markets and instruments simultaneously is challenging for even the most skilled traders.

Why Cannon Trading Company Excels in Futures Trading

For traders seeking the best of both worlds, Cannon Trading Company stands out as an ideal partner. Here’s why:

  • Wide Selection of Platforms: Cannon offers access to top-performing trading platforms, catering to both manual and automated trading preferences. Their platforms support advanced charting, algorithm integration, and real-time market data.
  • Trust and Reputation: With a 5-star rating on TrustPilot and decades of experience, Cannon Trading Company has earned the trust of its clients. Their exemplary reputation with regulatory bodies ensures that traders can operate with confidence.
  • Expertise Across Experience Levels: Whether you’re a seasoned futures trader or a novice exploring the markets, Cannon’s team of experienced futures brokers provides personalized guidance and support.
  • Regulatory Compliance: Cannon adheres to stringent National Futures Association (NFA) guidelines, ensuring transparency and ethical practices in futures contract trading.

Case Study: A client of Cannon Trading Company reported transitioning from manual trading to a hybrid approach using AI-driven platforms. With Cannon’s support, they successfully implemented an algorithm to trade E-mini S&P 500 futures, achieving consistent returns while retaining the ability to override trades based on market insights.

The Future of AI in Futures Trading

Looking ahead, the integration of AI in futures trading will only deepen. Innovations like natural language processing (NLP) and reinforcement learning will enable systems to interpret news articles, social media sentiment, and even geopolitical developments to inform trading decisions.

For instance, an AI system analyzing weather patterns and crop reports might predict a supply shortage in wheat, prompting traders to enter long futures contracts. Alternatively, advances in quantum computing could revolutionize the speed and accuracy of predictive models, giving traders an unprecedented edge.

However, as AI continues to evolve, ethical and regulatory considerations will remain critical. Ensuring fairness, transparency, and accountability in AI-driven markets will be paramount to maintaining trust and stability.

The evolution of AI futures trading has revolutionized the industry, offering unparalleled speed, efficiency, and data-driven insights. While automated systems have their advantages, the human touch remains invaluable, particularly in navigating complex or unprecedented market scenarios.

For traders of all experience levels, choosing the right partner is essential. Cannon Trading Company’s combination of advanced platforms, stellar reputation, and personalized support makes it an ideal choice for anyone engaged in futures trading. Whether you’re leveraging cutting-edge AI or relying on the expertise of seasoned futures brokers, Cannon provides the tools and guidance needed to succeed in today’s dynamic markets.

For more information, click here.

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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Record-Breaking Moves: Bitcoin Soars, Gold Climbs, and Natural Gas Heats Up

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Bullet Points, Highlights, Announcements

 

Crypto: 

 

Ahead of the underlying asset, December Bitcoin futures rose above the benchmark $100,000 level – new record highs – this afternoon. Traders attributed this latest milestone to the Securities and Exchange Commission’s announcement that Chair Gary Gensler will step down effective Jan. 20, Inauguration Day. Bitcoin futures have more than doubled in value this year and since Election Day, November 5, Bitcoin futures have soared roughly 40%. The incoming administration has committed itself to explore crypto-friendly initiatives, including the creation of a bitcoin national stockpile and the replacement of the SEC’s Commissioner.

 

Metals: 

 

December Gold futures prices extended gains for a fourth straight day today to its highest level in ten days, fueled by a surge in safe-haven demand as geopolitical tensions intensify, particularly the ongoing Russia-Ukraine conflict. The mutual escalation on the Russia-Ukraine, including recent Ukrainian U.S.-made and British-made missile strikes on Russian territory, has sparked fears the war may be entering a new, more destructive phase. Since last Thursday’s intraday low of $2,541.50 per ounce, Dec. gold has moved up over $100 per ounce (a $10,000 per contract move) to trade above $2,570 into today’s close of trading. This bodes well for higher prices, even amidst growing pessimism about the possibility of more and more frequent cuts to U.S. interest rates early next year.

 

Energy: 

 

Natural gas futures have also shown to be more sensitive to geopolitical risks and are in the middle of an impressive rally, climbing by 18% this week so far, reaching over $3.40 per million British thermal units today, after trading intraday below $2.52 on Nov. 4, an ($8,800 per contract move). Typically the driving catalyst for higher natural gas prices, plummeting temperatures and an intensifying need for heating have now added to the futures’ momentum. The National Oceanic and Atmospheric Administration warned today of the season’s first significant snowfall in the central and northern Appalachians, with heavy accumulation expected through Friday.

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Daily Levels for November 22nd 2024

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Economic Reports
provided by:ForexFactory.com
All times are Eastern Time ( New York)
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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.
Contact
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Cannon Trading Company
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(800) 454-9572
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Futures Trader

A futures trader is a professional who buys and sells futures contracts on commodities, financial instruments, and other assets in order to profit from fluctuations in their price. Engaging in futures trading involves significant risk and complexity, but when done right, it can yield considerable rewards. However, to maintain a long-term career in futures trading, a trader must adhere to a set of core principles that promote sustainable growth and risk management. Key principles for longevity in this field include emotional control, adherence to trading plans, disciplined risk management, and an understanding of how to balance opportunity with caution. Futures trading is a demanding profession, and those who approach it without a structured approach often find themselves struggling to maintain consistency.

Emotional Control: The Backbone of Successful Futures Trading

One of the most critical principles for any futures trader is emotional control. The fast-paced nature of trading futures, coupled with the significant leverage available, can make it easy to fall into the traps of fear and greed. Emotional control allows traders to respond to market movements calmly rather than react impulsively, which is essential in avoiding irrational decisions that can lead to losses.

For instance, a futures trader may be tempted to double down on a losing position out of frustration or stubbornness, hoping to recoup losses. However, experienced traders know that emotional decisions are rarely profitable in the long term. Instead, successful futures traders have the discipline to cut losses when needed and avoid revenge trading — the tendency to try and “win back” losses through risky moves. Achieving emotional control is often about creating a mindset that recognizes that losses are a natural part of trading in futures and can be managed with a clear strategy.

While emotional control is vital, it can also conflict with the excitement of seizing opportunities. The futures market often presents fast-moving opportunities, and a futures trader may feel an impulse to “catch the wave” of a sudden price move. However, seasoned traders understand that making emotionally driven decisions rarely yields consistent profits. They approach each opportunity with a clear mind and refrain from overtrading, no matter how tempting it may feel in the moment.

The Role of a Trading Plan: Consistency and Structure

A trading plan is a carefully crafted roadmap that outlines a trader’s strategy, including entry and exit points, stop-loss levels, position sizes, and risk tolerance. For a futures trader, adhering to a trading plan is crucial for maintaining consistency in an environment known for its volatility. A trading plan helps remove the emotional component from decision-making, as it provides clear guidelines on how to react under different market conditions.

One of the most significant challenges that futures traders face is resisting the urge to deviate from their trading plans in pursuit of short-term gains. Trading in futures can sometimes feel unpredictable, and an unexpected market shift may lead traders to stray from their plan to try to capitalize on a sudden price movement. While the allure of quick profits can be strong, a successful futures trader recognizes the importance of sticking to the plan and avoiding impulsive trades that do not align with their long-term objectives.

For example, let’s say a futures trader sees an unexpected market rally that they did not anticipate in their plan. Jumping in impulsively could expose them to excessive risk and result in a significant loss if the market reverses. Instead, a disciplined futures trader will assess the situation and determine if the opportunity aligns with their trading criteria. If not, they will patiently wait for a setup that fits their plan. This adherence to a structured approach not only minimizes unnecessary risks but also helps in building a consistent track record over time.

Risk Management: Avoiding Overleveraging in Futures Trading

Risk management is arguably one of the most important principles for anyone involved in futures trading. Unlike other forms of trading, futures contracts are highly leveraged, allowing a futures trader to control large positions with a relatively small amount of capital. While this leverage can magnify profits, it also significantly increases the potential for losses. Proper risk management involves understanding the potential downside of each trade and implementing safeguards to protect capital.

One of the main ways to manage risk is by avoiding overleveraging. Overleveraging occurs when a trader takes on too large a position relative to their account size, which can lead to substantial losses if the market moves unfavorably. Many futures traders are tempted to overleverage in an attempt to maximize profits, but this approach often leads to a quick depletion of their capital. Instead, experienced traders limit their leverage to a level that allows them to weather market volatility without risking catastrophic losses.

Resisting overleveraging is critical, but it sometimes conflicts with a trader’s desire to take advantage of an attractive opportunity. For instance, if a futures trader identifies what they perceive as a high-probability trade, they may feel compelled to increase their leverage to maximize their gains. However, seasoned traders understand that any single trade carries risk, and overextending oneself on one trade can lead to financial trouble. The most successful futures traders balance their enthusiasm for opportunity with a disciplined approach to leverage, ensuring that they have enough capital to remain in the market for the long haul.

Choosing the Right Broker: The Value of Support and Expertise

While discipline and skill are essential, selecting a reliable futures broker is also a crucial decision for any futures trader. The right broker provides a foundation of support, from trade execution to customer service and technical troubleshooting. Cannon Trading Company, for instance, is known for its decades of experience in the futures markets, and with a 5 out of 5-star rating on TrustPilot, it has established a reputation for reliability and client satisfaction.

Working with a broker like Cannon Trading offers multiple advantages for futures traders trading futures. First, their extensive experience in the futures markets means they understand the nuances and challenges traders face daily. This insight allows them to provide valuable guidance and support, which can be especially beneficial for newer traders who are still learning the complexities of trading futures. Additionally, their high customer service ratings indicate a strong commitment to assisting clients promptly, which can be essential in the fast-paced world of futures trading where platform issues or trade execution delays can have financial consequences.

Cannon Trading’s dedication to customer service and troubleshooting helps traders focus on their strategies without the added stress of technical issues. In futures trading, having a broker who can resolve issues efficiently and provide ongoing support can be the difference between a successful trade and a missed opportunity. Cannon Trading’s ratings reflect their reliability in providing broker assistance, which is invaluable for futures traders who rely on quick access to information and a seamless trading experience.

Continuous Learning and Adaptability in Futures Trading

The futures markets are constantly evolving, with new technologies, strategies, and market conditions emerging regularly. For a futures trader to succeed over the long term, a commitment to continuous learning is essential. This could involve studying market trends, understanding new regulations, or refining trading strategies based on past experiences. A willingness to adapt and evolve as a trader ensures that one remains competitive and avoids becoming complacent.

Additionally, the support of a knowledgeable broker like Cannon Trading Company can aid in this learning process. With their years of experience, they can offer educational resources, insights, and market analysis that are beneficial to traders at all skill levels. Leveraging the resources provided by an experienced broker can help traders stay informed and make more educated decisions.

Balancing Discipline and Opportunity in Futures Trading

The life of a futures trader is a delicate balance between seizing opportunities and maintaining discipline. The desire to capitalize on favorable market conditions is natural, but without the guiding principles of emotional control, adherence to a trading plan, and disciplined risk management, traders may fall into habits that undermine their long-term success. Resisting the temptation to overleverage and choosing a trustworthy broker like Cannon Trading Company can further support a sustainable approach.

Futures trading is not a career suited to impulsive decision-making or excessive risk-taking. Traders who respect the markets, remain vigilant, and continuously refine their strategies have the best chances of success. The journey of a futures trader is marked by patience, adaptability, and a focus on consistent, incremental gains rather than high-stakes risks. By adhering to these core principles and leveraging the support of an experienced broker, traders can pursue a rewarding and sustainable career in the dynamic world of futures trading.

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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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All Eyes on NFP: U.S. Growth and Gold Rally Amid Key Jobs Data Release This Friday

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Gold T

 

All Roads lead to NFP This Friday

By Mark O’Brien, Senior Broker

General:  

 

The U.S. economy continued its recent strong stretch of growth this summer, bolstered by strong consumer and government spending.  The Commerce Department reported this morning that the nation’s Gross domestic product increased at a 2.8% annual rate in the third quarter, adjusted for seasonality and inflation.

Despite the report showing a slight slowdown from the second quarter’s 3% rate, and coming in below economists’ expectations for a 3.1% pace, and even in the face of the historically high borrowing costs that carried into the period, the July-to-September quarter marked a continuation of a roughly two-year streak of strong growth for the U.S. economy.

 

Indeed, the economy has outperformed expectations over the past couple of years.  A much-anticipated recession has yet to materialize, even though the Federal Reserve raised interest rates aggressively to curb inflation in recent years. Wednesday’s report points to an economy that is still humming, with strong consumer spending supported by a robust labor market, and business investment that remains solid.

 

Metals:  

 

We’re blogging like a broken record when it comes to covering gold futures.  The price of the front month December contract touched another all-time record high last night, trading briefly over $2,800 per ounce and it’s looking like it’ll post a close above there based on its old 10:30 A.M., Central Time pit session close today.

 

Much of the credit for the increased demand can be tied to simmering tensions in the Middle East and the uncertainty over the upcoming presidential election in the U.S., now just six days away.

 

Kudos to analysts at Citi who raised their three-month forecast for gold prices to $2,800 per ounce earlier this month.  They’re still looking for a move to $3,000 over the next 6–12 months.

 

Soy Complex: 

 

January soybeans, which is now the most actively traded contract, closed at $9.79 per bushel on Monday.  That put prices within striking distance of that futures contract’s intraday life-of-contract low at 973½ posted on August 14th.

 

Heads up: 

 

It’s that time of the month again: we’re a couple of days from when the Labor Dept. releases its monthly Non-farm payrolls report.  It’s widely considered to be one of the most important and influential measures of the U.S. economy and the report is released at 7:30 A.M., Central Time on the first Friday of the month.

 

To review, the Labor Dept.’s Bureau of Labor Statistics surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual work sites.  The report excludes farm workers, private household employees, domestic household workers and non-profit organization employees.  The report also includes other detailed industry data including the overall unemployment rate as a percentage of the total labor force that is unemployed but actively seeking work, wages, wage growth and average workday hours.

 

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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.
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Cannon Trading Company
12100 Wilshire Boulevard
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Los Angeles, CA 90025
(800) 454-9572
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