Trading Futures Spreads


Are Inter Commodity Spreads Right for You? & Support and Resistance Levels 9.28.2021

September 27th, 2021 Filed under Future Trading News | Comment (0)

Dear Traders,

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Are Inter Commodity Spreads Right for you?

By John Thorpe, Senior broker
Used alone as a strategy or as a hedge over the weekend or longer..
You can still hold volatile positions at reduced margins by employing exchange recognized spreads.
You can trade similar products but from different sides of the ledger, long vs short
Example, Corn vs Wheat ratio 2:1
Notes vs Bonds, Ratio 2:1
Index futures vs each other 1:1
Some traders use these as stand alone strategies, others use them as hedges to straddle a time period, perhaps you don’t want full exposure during an important report but still like your entry price on one leg.
If this is the case you may offset a part of the risk with a different but similar product and receive a margin break for reducing your overall risk.
 Inter Spreads are calculated as a percentage of Credit off the top of the full outright margin of the products that make up the legs of the spread.
NQ Mini Nasdaq 100 vs. YM Mini Dow with a ratio of 1:1 – 55% Inter rate
Outright rates
NQ 17,000    YM 9,000
17,000+9.000= 26,000 outright margin before SPAN inter spread credit is applied
With the inter spread credit applied to each leg of the spread, there is a savings of $11,750
 ( 17,000 x .55) = 9350 + (9000 x .55) = 4950 = 14,300
Of course, you can apply the same logic to the micro contract at 1/10th the size.
MNQ vs MYM = overnight requirement of $1430.00 rather than 1700.00 for the outright MNQ
There are hundreds if not thousands of combination based on correlated relationships that are recognized by the exchange. Please call your Broker or ,if you don’t have an account yet and would like to know more, call Cannon +1 310 859 9572 and we will be happy to spend time with you about this different way to manage your trading risk.

 

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

9-28-2021

Support and Resistance Levels 9.28.2021

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 as well as options on futures.


Trading Futures Spreads & Options, Reports & Levels 8.22.2014

August 21st, 2014 Filed under Commodity Brokers, Day Trading, Options Trading, Trading Guide | Comment (0)

Hello Traders,

For 2014 I would like to wish all of you discipline and patience in your trading!

 

 

Most of the time I write about day trading, psychology of day trading, techniques etc. but I must say that day-trading is only one way of trading futures.

Over the years I have been exposed and used the following techniques / methods in trading:
buying options
selling options
using options spreads
swing trading using futures
position trading using futures and options
break out trading
and of course day-trading….

All methods can lose money, make money and in between. Some carry higher degree of risk than others, some have better probability of success but losses can be significant….The bottom line is each trader is different and may find a method that he/she feels more comfortable with. I actually wrote an article for SFO magazine a few years back about this subject, called “trading for your blood type” ( email me for a copy if you like).

One method I like for trading futures that can be applied both for day-trading but usually more common for swing/longer term trading is futures spreads. My colleague here at Cannon, Mark O’Brien wrote a good article about it last year which you can access at:

 

Read the rest of this entry »


Future Spreads & Futures Levels & Economic Reports 11.20.2013

November 19th, 2013 Filed under Commodity Trading, Future Trading News, Futures Trading | Comments Off on Future Spreads & Futures Levels & Economic Reports 11.20.2013

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1. Market Commentary
2. Futures Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Commodities Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Commodities Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Futures Economic Reports for Wednesday November 20, 2013

Hello Traders,

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

Trading Futures Spreads

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

By: Mark O’Brien, Cannon Trading Commodities Broker

 

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

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

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

READ THE FULL ARTICLE

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