Commodity Futures Trading


Futures Trading Risk Management: The Advantages of Futures Trading

March 23rd, 2022 Filed under Day Trading, Future Trading News, Futures Trading, futures trading education | Comment (0)

Futures Trading Risk Management

Futures Trading Risks and Advantages

Understanding the nature of risk as a futures trader is a critical element to success. While a risky environment, the advantages of the futures market are obvious to an educated trader. Leverage, long trading hours, hasty order executions, and powerful platforms are all worth mentioning. The best trading environments also attract stiff competition. The words trader and risk management become synonymous with one another. What risks need to be managed exactly?

First and foremost, the risk of capital loss or “losing money.” Capital is the lifeblood of a trading business. It may seem trivial or obvious, but the emotional and mental tax that comes from spending time to lose money can be significant. Small problems and habits quickly compound which amplifies the risks associated with trading derivatives or leveraged positions. Leverage amplifies mistakes which may cause persistent challenges with psychology and mental fortitude. This cycle can exist perpetually so long as a trader continues to allow it.

All Traders Face Loss

All traders face risk of loss, it’s the nature of the industry. What differs among each trader is the collective experiences that make up how they manage the reaction to the losses. This is true of all trading, but particularly important when using leverage. Sometimes overprotecting a trade or being afraid to lose can add risk to a system. Smothering multiple trades with stop losses may have a similar effect as letting a bad trade run.

Risk management is multi-dimensional. The proper location for a stop loss might be relative to several factors in the risk management system. It’s a dynamic environment with multiple inputs. Occasionally, risk can be created from outside factors such as weather interrupting power or an internet service provider outage. Risk comes in many shapes, but the trader that actively mitigates and manages ALL types of risk should have an increased chance for success.

What are the “Alternative Risks” that can effect trading?

Here is a list of “alternative risks” that may go unnoticed at first. These risks may correlate directly to trading results by hindering a trader’s mental, emotional, or physical performance.

  • Stress or adversity caused from a personal situation outside of trading
  • Lack of hydration or healthy diet
  • Distractions by phone, social media, etc.
  • Resulting – or weighing the validity of a strategy on the immediate or short-term result, rather than testing it over time.

This list communicates just a few of the risks that exist outside of the trade itself. These variables can impact how a trader follows rules, rationalizes, and behaves.

The Advantages of Trading

Though risky, the futures market may prove advantageous to the savvy trader. Capital efficiency and liquidity provide the opportunity to scale, and short-term gains on futures are taxed more favorably than stocks (Always check with a CPA before trading.) The futures provide a way for traders to actively hedge investments outside of what could be considered “regular business hours.” Many markets trade overnight which allows access to hedge nearly round the clock. The advantages of commodity futures are unparalleled when used in the proper context. Commodity businesses across the world can use the futures market to aid in pricing forward their products, and preparing for the future.

Another notable benefit of the futures market is the availability of futures options. A great example is how agricultural options provide a way to gradually manage the risk of their commodities. A farmer may use a protective put as a means to hedge corn prices before the harvest. These are just a few examples of the advantages of trading futures and futures options. As always, consult with a broker to learn more about the risks associated with trading or trading strategies. Being educated before diving into a challenging atmosphere is a true demonstration of discipline and risk management.

You can download one of our trading platforms with live data and the options board here

E-Futures International | Futures Trading Platform & Broker Demo Account (cannontrading.com).

We will be happy to screen share with you and answer any questions you may have about futures related inquiries.

Author: Josh Meyers, Broker at Cannon Trading Company

Important: Trading commodity futures and options involves a substantial risk of loss. Therefore, recommendations contained in this letter are of opinion only and do not guarantee any profits. There is not an actual account trading these recommendations and past performances are not necessarily indicative of future results.

 

 

 


Trading Wisdom and Support & Resistance Levels 11.02.2021

November 1st, 2021 Filed under Future Trading News, Futures Broker, Futures Trading | Comment (0)

Dear Futures Trader,

 

My colleague John Thorpe, Senior Futures Broker, wanted to share the following with everyone:
I would venture to guess that any futures trader who drills down into the nuts and bolts of fundamentals, technicals, astronomy, astrology, quantum mechanics, or any other academic pursuit associated with trading has a Library of books from well-silvered authors. One of my favorites, who has put out quite a bit of work over the past 50 years, is Jack D. Schwager. I’ll share one of his time honored quotes with you today.
“One of my favorite patterns is the tendency for the markets to move from relative lows to relative highs and vice versa every two to four days. This pattern is a function of human behavior. It takes several days of a market rallying before it looks really good. That’s when everyone wants to buy it, and that’s the time when the professionals, like myself, are selling. Conversely, when the market has been down for a few days, and everyone is bearish, that’s the time I like to be buying.”
If you are looking for other reference material please contact your Cannon Broker for lists of solid, informative and helpful trading tomes for a futures trader.
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Good 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 when it comes to Futures Trading.

 

Futures Trading Levels

11-02-2021

Support & Resistance Levels 11-02-2021

 


Economic Reports, source: 

https://bettertrader.co/ 

Better Trader Report 11-02-2021

 

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.


10 Key Questions on Measuring Your Trading Progress, Success & Support and Resistance Levels 10.21.2021

October 20th, 2021 Filed under futures trading education | Comment (0)

Dear Traders,

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10 Key Questions on Measuring Your Trading Progress, Success

At some point in nearly everyone’s trading timelines, they wonder how their trading successes (or failures) compare with those of other traders. Wondering just how well you stack up to other traders in the industry is a natural curiosity and a human psychological tendency. However, actually knowing the success or failure rates of others doesn’t do a lot to move you farther down the road of where you want to be regarding trading success. Futures Commodities Brokers can help you succeed.
Most traders also wonder about the success rates of the “professional” traders—the ones who make their living solely by the profits they generate from trading. I will provide you with an answer to this question at the end of this feature.
Below are 10 questions regarding measuring your own trading progress and success. These questions should help you determine where you stand in this challenging field of endeavor.
1. What is trading “success?” This is a most basic question. Most would agree that ultimate trading success is defined as being profitable at trading—making more money than you lose. There are other secondary factors that also define success in trading, such as finding a “balance” between trading and other life activities. But it’s being profitable at trading that is the benchmark of defining success.
2. What is trading “progress?” Beginning traders should not expect to have immediate and ultimate success trading futures, stocks or FOREX markets. What they can expect in the early going is to make steady progress through gaining knowledge and experience. Even veteran successful traders continue to make trading progress. Achieving and maintaining trading success requires continual progress—namely continuing to seek out trading and market knowledge. Traders who truly enjoy the “progress” and process of trading do have a significant trading edge over those who do not enjoy learning and gaining experience.
3. At what point in my trading timeline should I expect trading “success?” Trading success (winning trades) can come right away—even for the beginning traders. What is less likely for the inexperienced traders is sustained trading success. Beginners can even run into a “hot streak” that skews the overall reality of trading. Immediate (and likely fleeting) success for a beginning futures trader can do longer-term psychological harm—if he or she does not fully recognize and understand the hard work and perseverance required on the road to trading success. Many times I get questions from less-experienced traders that go something like this: “I’ve been trading two years and I’ve only been able to about break even.” My reply to them is, “Hey, you should not be too discouraged with those results. Many traders don’t have that kind of success in the early going.”
4. How long will it take to go from being a less-experienced trader to an experienced and hopefully successful trader? Determining a precise timeline at which trading success will arrive will vary greatly among traders. Some beginning traders will spend nearly full time coming up to speed. Others may spend an hour or two a week on the subject. There is no right answer on how much time to spend studying trading and markets. I have many readers who are taking up trading in retirement. I have a few that have taken up trading over the age of 80 years. One is never too young or too old to learn about markets and trading. A general rule would be for a beginning trader not to expect sustained trading success within a few months. More likely is a timeframe of a few years to achieve sustained trading success. Now you see why money management is so important in futures trading. You have to survive before you can succeed!
5. When should I “throw in the towel” and admit that trading is not for me? There is no one right answer to this question. If trading is making you miserable and creating other bad habits (kicking the dog), then it’s time to quit—or at least take an extended break. If you do not have the financial resources to trade futures, then you should not participate. Futures trading should be conducted only with money a trader can stand to lose, without impacting other more important obligations, such as grocery and rent money. It is important to point out that the beginning futures traders who “flame out” first are usually the ones who did not have the financial resources to trade futures in the first place.
6. Am I still hungry for trading and market knowledge? One should never stop endeavoring to gain more knowledge about markets and trading. Even the successful veterans who’ve been in the business for many, many years will say that they are still learning on a daily basis. If you are still striving to learn more about this business–and are enjoying doing it–then that’s a positive signal.
7. How many trading losers should I absorb before I change my trading plan of action? This is a real tough one to answer. Again, there is no single right answer. However, if you believe you have a well-founded and thoroughly researched trading plan of action, don’t abandon it just because you are on a losing streak. All traders have winning and losing streaks. That’s a part of trading. Traders enjoy the winning streaks and do not enjoy the losing streaks. But during the losing streaks they forge ahead, knowing that their plan of action is still solid. Trading plans can certainly be tweaked, such as trading fewer contracts or trading less frequently during a losing streak. For most traders, a complete overhaul of one’s trading plan is probably a last resort that merits much consideration. Futures Commodities Brokers has seen it happen before.
8. How can I keep myself motivated on the winding road to trading success? Traders who enjoy the entire process of trading don’t really need a lot of motivational help because they are already fascinated by what they are reading and learning. But during a losing streak or some other “dry spell” in trading—when morale can slip—it is prudent to read some trading books that are based less on specific methodologies and more on trading psychology. Attending trading seminars is a great way for a trader to become reinvigorated. (And it’s also a great value to those already invigorated!) You not only will gain fresh trading and market knowledge, but you also will get to see and speak with the seminar lecturers as well as traders who are in the same position as you.
9. How much should I listen to other traders when trying to evaluate my own trading progress or my own trading plan? It is good to have a trading partner or “buddies” with whom to share your ideas and to discuss markets and trading. The learning curve improves when a trader has another trader or traders with similar experience with whom to share ideas. It is also beneficial to have an experienced mentor to help guide you through the “rough waters” that all traders experience at times. But at some point, most traders do want to be more or less autonomous in their decision-making. As many traders gain more experience, knowledge and confidence, they will use outside influences as “second opinions” to reinforce or provide another angle to their own sound opinions. Many traders also have full-time “day jobs” and need outside sources to help save them time and to keep track of what’s going on in all the markets.
10. What is the average success rate of the “professional” trader? I have not seen any “official” studies of the percentage of winning trades of the average professional trader. However, it is generally agreed upon by many in our industry that the better professional traders have a winning percentage of around 4 out of every10 trades—or a 40% winning percentage. Breaking this down even further, it is estimated that half of the winning trades are only small winners and not much better than break-even. Thus, it can be loosely extrapolated that most of the professional futures traders make most of their money on one or two trades out of every 10. This only underscores the importance of sound money management in futures trading—namely cutting losses short and letting winners run. Understanding the future of the trading industry is easy when you learn with Futures Commodities Brokers.
That’s it for now. Next time, we’ll examine another important issue on your road to trading success.
Jim Wyckoff is the proprietor of the analytical, educational and trading advisory service, “Jim Wyckoff on the Markets.” He has a website at www.jimwyckoff.com

Good 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 when it comes to Futures Trading.

 

Futures Trading Levels

10-20-2020

 


Economic Reports, source: 

https://bettertrader.co/ 

This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc aka Futures Commodities Brokers. 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. Get educated with Futures Commodities Brokers.


Futures Trading Levels for April 22nd, 2021

April 21st, 2021 Filed under Day Trading, Future Trading News, Index Futures, S&P 500 | Comment (0)

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Dear Traders,
Today’s action in Silver, gold, SP and NQ lead me to write the quick piece below.
Few words on BREAKOUT trading.
The concept is one of many different traders use.
Some like to use COUNTRER TREND trading.
others look at ORDER FLOW, some will use support and resistance mainly and hopefully more traders will master a few different techniques and use the appropriate one depending on the type of trading day that is developing in front of their eyes.
The concept of break out trading looks for the market to “snap out” of a certain trading range and continue moving in that direction. The toughest part is to filter out the “fake breakouts” and recognize early enough which breakouts have the potential to be a powerful one.
A few tips to explore:
Look for a breakout on a smaller time frame that will coincide with a longer time frame CURRENT trend. So you may look at a daily trend and look for a breakout on the hourly chart?
You may trade smaller time frames and look for breakouts that will coincide with the 30 minute chart time frame.
Last but not least ( for today only of course as I am sure there are MUCH more than the short few pointers I am sharing….) try utilizing different type of charts and do your homework in regards to which breakouts seem to work better than others. Look at RANGE BAR charts, explore VOLUME charts, maybe even take a look at Renko bars and other types as well.
30 MINUTES chart of ES below with 4 different pointers to look at, marked A through D. CLICK for larger IMAGE. ALWAYS much easier to look back in hindsight and explain what happened….I wish it was that easier when trading live….Click on the chart so you are able to read the pointers along with some insight for educational purposes.
To access a free trial to the ALGOS shown in the chart along with other tools? (Slanted arrows possible buy, diamonds = possible exit/ tighten stops) visit and sign up for a free trial for 21 days with real-time data.

Good 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 when it comes to Futures Trading.

 

Futures Trading Levels

4-22-2021

Economic Reports, source: 

 www.BetterTrader.co

 

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.


Futures Trading Levels & Economic Report 8.20.2015

August 19th, 2015 Filed under Commodity Trading, Future Trading News, Futures Trading | Comment (0)

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5. Futures Economic Reports for Wednesday August 19, 2015

Hello Traders,

For 2015 I would like to wish all of you discipline and patience in your trading!

Jim Wyckoff Discusses Entry & Exit Strategies

From our friend Jim Wyckoff
I have received several email messages from my readers asking about how to best determine entry and exit strategies when trading markets. Here are just a few of their quotes:
  • “Though my success rate has been high, I am only breaking even financially, due to getting out too early in profit and letting my losses run too far.”
  • “Many articles are written showing when and where to enter trades… but how many articles are written about “running” positions? Where to exit surely has to be the biggest key to trading success!”
  • “I would appreciate some advice or tips on how to and when to enter a market and when to exit.”
Of course, if a trader knew exactly when to get into a market and when to get out, wouldn’t trading be easy! But even the most successful traders in the world can’t do that. The best they can strive for is to catch a bigger part of any move (trend) in the market, and then get out with a good profit before the market turns against them.
I’ve written past articles on trading with the trend and not against it, on the perils of trying to pick tops and bottoms, on support and resistance, and on letting profits run and cutting losses short, as well as trading the “breakouts.” I won’t repeat all those trading tenets here, but if you’ve missed some of my articles, drop me an email and I can attach some of them in an email to you.
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