Futures Broker

Category Archives: Futures Broker

The futures market comprises mainly of two players, namely, the hedgers and the speculators. While the former use futures as a safety or protection blanket, the latter is a group of traders who handle the trading accounts of those investing in the futures.

Futures trading can be arisky business that can require guidance and consultancy. Whether you are an individual or a firm, you need to be well-versed with the rules of the game. Futures brokers are always there to help you with advice and help you in matters related to futures trading. A rule of futures trading is that one canonly use those funds that have been termed as risk capital.

We at Cannon Trading help your understanding of the big and small things about futures brokers and trading. Apart from that, we also aid you in making the most out of the market; and, no matter how volatile and risky it is we offer the best advice we possibly can on trading. Under this category of futures broker, we write about the latest and informative articles that you should read to get equipped on the recent events in the futures markets.


30 Year Treasury Notes (ZB) 120min Chart & Futures Levels 12.03.2020

December 2nd, 2020 Filed under Future Trading News, Futures Broker | Comment (0)

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Each market has a different personality, different behavior along with different times of the day when it is most active. If you are finding that the ES (mini SP) is not giving you enough risk/opportunities then start monitoring a couple of other markets and perhaps explore them in demo / simulated mode.
I think that there are more than a few markets that are suitable for day-trading. Below you will find some observations, tips along with what are unique about these markets, personality and most active trading hours (interest rates, mostly the ten year and 30 year).
In most platforms, the symbols are ZB for 30 year bonds and ZN for 10 year notes.
Product Symbol
ZB
Contract Size
The unit of trading shall be U.S. Treasury Bonds having a face value at maturity of one hundred thousand dollars ($100,000) or multiples thereof
Price Quotation
Points ($1,000) and 1/32 of a point. For example, 134-16 represents 134 16/32. Par is on the basis of 100 points.
Product Symbol
ZN
Underlying Unit
One U.S. Treasury note having a face value at maturity of $100,000.
Deliverable Grades
U.S. Treasury notes with a remaining term to maturity of at least six and a half years, but not more than 10 years, from the first day of the delivery month. The invoice price equals the futures settlement price times a conversion factor, plus accrued interest. The conversion factor is the price of the delivered note ($1 par value) to yield 6 percent.
Price Quote
Points ($1,000) and halves of 1/32 of a point. For example, 126-16 represents 126 16/32 and 126-165 represents 126 16.5/32. Par is on the basis of 100 points.
Tick Size
(minimum fluctuation)
One-half of one thirty-second (1/32) of one point ($15.625, rounded up to the nearest cent per contract), except for intermonth spreads, where the minimum price fluctuation shall be one-quarter of one thirty-second of one point ($7.8125 per contract).
Contract Months
The first five consecutive contracts in the March, June, September, and December quarterly cycle.
These contracts are often affected by many of the economic reports that come out at 8:30 AM Eastern and there is very active volume between the hours of 8 AM EST and 3 PM EST
Volume on both contracts is very good. Ten years will often have 1 million contracts traded per day (might be the second most active US futures market after the mini SP 500) and the bonds will avg. around 300,000 contracts.
These markets can experience very volatile movements during and right after different reports but then will often trade smooth or in an intraday trend the rest of the day.
Spread traders may find some interesting strategies trading the ZB/ZN spread or what I refer to as the 30/10 and some call NOB spread ( notes over bonds).
120 minute chart of the ZB or 30 yr bonds for observation below.

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

12-03-2020

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.


COVID-19 Impact on Futures Trading

November 11th, 2020 Filed under Futures Broker, Futures Trading | Comment (0)

Futures Trading

 

The sweep of the coronavirus around the world ranks as one of the most impactful events in decades. Due in large part to sweeping lockdowns of businesses, travel and social activities, global markets, particularly commodity markets, have experienced price disruptions on an unprecedented scale. Recall earlier this year, the front month crude oil futures contract (May) traded at a value below $0.00 per barrel and at the close of trading one day, its price settled at a negative value. Conversely, gold’s December futures contract recently reached an all-time high above $2,000 per ounce. These price moves and similar ones – in silver, copper, stock indexes like the S&P 500, Nasdaq & Dow Jones, lumber and others – can be at least partly attributed to abrupt changes in supply & demand patterns during this international health crisis and its effects on producers’ and consumers’ behavior.

In this environment, the case could be made to review trading strategies and make adjustments – in market selection (think “full-sized” vs. mini- or micro- contracts), risk parameters – both in terms of dollar value and price toleration – market selection/allocation, trade frequency and for automated systems, adjustments to algorithms. All this would be to expect a continuation of the last several months’ market movement/volatility.

As part of a strategy review, it would be a good idea to also be aware of any price limits or circuit breakers in place for the markets you’re trading. A price limit is the maximum price range allowed for a futures contract for a trading session. At those price limits, trading may halt for a period of time and an expanded price limit is set, or it may be stopped for the day. Circuit breakers are price limits that when hit, set a timer within which the market is restricted from moving beyond the price limit. In some markets, price limits and circuit breakers are based on percentage moves from the prior day’s closing price and thus are recalculated each day.

Grains and livestock futures contracts, for example, have daily price limits that remain in place for an entire trading session. Stock indexes have both price limits that remain in place for an entire trading session and several circuit breakers: ones that are in place overnight and others that work only during the day. During high volatility periods of time, if markets trade to circuit breakers or price limits, orders placed during at that time can be rejected by the exchange. In summary, knowing these price parameters is especially important.

For more information on how CME Group price limits and circuit breakers work, visit this link.

For specific CME Group price limits and circuit breakers, visit this link.

During this time, it’s more important than ever to be informed, aware and prepared. One of the best means available to help you is access to an experienced, knowledgeable broker. Not only do they have answers to questions regarding the items discussed above, they can look at your situation specifically and offer strategy guidance as well as educational material and information sources you may have overlooked, couldn’t find, or were unaware even existed. Contact Cannon Trading Company.

COVID-19 Impact on Futures Trading

  • Increased volatility and risk
  • New traders needed to understand limit down/ limit up
  • Wild overnight swings
  • Wild moves both ways
  • MICROS are a valid tool
  • Twitter is now a factor
  • More than ever an experienced broker is an asset

Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. 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.

 


Interest Rate Futures, Real Estate and Mortgage Rates

July 17th, 2019 Filed under Economic Trading, Financial Futures, Futures Broker, Futures Trading | Comment (0)

By John Thorpe, Senior Broker

 

Over the course of the last 45 years, whether you own a small monopoly of commercial buildings or a condo on Oak street U.S.A. your investments are subjected to the actions of the Federal Reserve Bank.

 

The Federal Reserve Bank seeks to provide stability in the largest world economy through interest rate regulation. Its mandate is to use financial tools to satisfy two congressional mandates, 1: Full Employment and 2: Moderate Inflation to a 2% annualized rate; Move too far too fast in any direction with policy shifts and financial perils for all! may be in the offing. The economy could move too fast in the wrong direction or too fast in the right direction which can lead to an overheating and a bursting of an economic bubble. Look no further than Savings and Loan crisis in the 1980’s and 90’s, the Japanese housing market collapse in 1989 (Japan is currently still struggling with a zero interest rate environment 30 years later) the Dot Com bubble after Y2K and most recently , the housing market collapse, which began with the bankruptcy of Iceland, no one paid attention, then the bankruptcy of Ireland, again, no one paid attention, then the bankruptcy of Bear Stearns,  some paid attention  (what did any of these entities have to do with the value of our homes, we thought) then Lehman brothers collapsed in September of 2008 and everyone paid attention as our home prices collapsed.

Use Google, DuckDuckGo, Bing or any of your favorite search engines and type in

10 yr. correlation with mortgage rates

 

You will find search pages full of information about the importance of interest rate policy and its effect on mortgage rates, specifically the Fedfunds rate.

 

 

Whether you have a 30 yr fixed, a 15 yr fixed or a 5/1 ARM  (usually capped after 5 years) you need to protect your largest investments by first understanding the tools available to the public to monitor these markets and second, knowing you can contact a professional to discuss the myriad of ways to hedge your real estate portfolio and be ready when you need to by utilizing the futures markets to protect your investments.

 

The hypothesis:  Generally speakingand largely from region to region diversity, when interest rates go lower, home prices go higher. Lower interest rates lead to increases in the value of real assets. Mortgage rates are sensitive to changes in Fed Policy, the 10yr note being the reference financial instrument moves in response to market reactions to Fed policy shifts.

 

When interest rates go higher, a definite time lag exists in the long run may make  home prices move lowerand real asset prices lower.

 

 

Watch futures market prices in the interest rate futures. Get comfortable watching the interest rate futures contracts.

 

I am by no means offering a pure hedge or even a short-term hedge in my analysis.

I believe what you will see and get a sense of the ebbs and flows of these markets from a visual perspective  while you are learning about the base currency (US Dollar) valuation of real assets changing and thereby affecting not only the value of the real assets you hold but also the cost to maintain those assets. The interest rate futures markets give you the clearest picture of how policy equates to real rates for you, the mortgage holder. 10yr Note Futures prices and chart

 

Major trends that are a serious harbinger of future housing price changes are important to understand so you may act to preserve, maintain and profit from potential shifts in policy.

 

 

FRED

 

Between 2008 and 2012 during the last recession, a major fed policy tool used was a series of fed fund rate reductions (net effect is the cost of money becomes cheaper relative to real asset prices), these calculated moves lowered the interest rate on longer term debt obligations  10Yr. Note Futures Prices and Chart as well as all dollar denominated Treasuries.

 

As you can see, Mortgage rates, I mean the 10yr Treasury Note rates (Freudian slip, sorry), are still at or near all-time lows.

In Summary, Familiarizing yourself with the interrelationships among Mortgage rates, 10 year treasuries and fed fund policy shifts are an important starting point for a conversation with a professional about protecting your family’s biggest investment.

 

A Cannon Trading professional is available between 8:30am to 5:00pm Eastern to answer your questions Call Now

 

Disclaimer – Trading Futures, Options on Futuresand retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledgeand financial resources. You may lose all or more of your initial investment. Opinions, market dataand recommendations are subject to change at any time.

 


Selling Future Options Premium

June 26th, 2019 Filed under Commodity Brokers, Commodity Trading, Day Trading, Economic Trading, Financial Futures, Future Trading News, Future Trading Platform, Futures Broker, Futures Exchange, Futures Trading, Options Trading, Trading Guide | Comment (0)

Futures Options Writing

 

Have you ever wondered who sells the futures options that most people buy? These people are known as the option writers/sellers. Their sole objective is to collect the premium paid by the option buyer. Option writing can also be used for hedging purposes and reducing risk. An option writer has the exact opposite to gain as the option buyer. The writer has unlimited risk and a limited profit potential, which is the premium of the option minus commissions. When writing naked futures options your risk is unlimited, without the use of stops. This is why we recommend exiting positions once a market trades through an area you perceived as strong support or resistance. So why would anyone want to write an option? Here are a few reasons:

  1. Most futures options expire worthless and out of the money. Therefore, the option writer is collecting the premium the option buyer paid.

 

  1. There are three things that happen to the underlying price of the option: Price goes up, goes down or stays the same. If when the option expires, the market price was at or below your strike price you collect all the premium if two of those things happen Time decay is the option writer’s friend.

 

  1. The writer believes the futures contract will not reach a certain strike price by the expiration date of the option. This is known as naked option selling.

 

  • To hedge against a futures position. For example: someone who goes long cocoa at 850 can write a 900 strike price call option with about one month of time until option expiration. This allows you to collect the premium of the call option if cocoa settles below 900, based on option expiration. It also allows you to make a profit on the actual futures contract between 851 and 900. This strategy also lowers your margin on the trade, and should cocoa continue lower to 800, you at least collect some premium on the option you wrote. Risk lies if cocoa continues to decline, because you only collect a certain amount of premium and the futures contract has unlimited risk the lower it goes. So you should trade with a stop on the futures contract. You can read on different strategies using options on futures here:

 

https://www.cannontrading.com/tools/education-futures-options-trading-101

 

Cannon offers SPAN margins for options sellers.

Many brokers will restrict or increase the margins required for options sellers, or traders who like to “collect premium”, but here at Cannon we can find you the best set up utilizing the multiple clearing arrangements we have with more than a few FCMs.

How much margin is required to sell a futures option?

That is a question we get asked often. The exact number is an output of SPAN margins. SPAN deserves a post on its own, but what it stands for is: Standard Portfolio Analysis of Risk. The formula takes into consideration volatility, time value, distance of strike price from current underlying future, and more.

Outright options may be easier to “guesstimate” margin than more complex strategies and spreads, but our free platform, E-Futures Int’l (https://www.cannontrading.com/software/e-futures-international )has a margin calculator built in so you can calculate the margin you will need for different strategies.

Commission for selling options on futures?

Commissions will vary based on the following:

Are you trading online or with a broker?

Trading volume

Account size

Risk responsibility.

The rates for selling options will vary from as low as $0.25 per side + fees for HIGH VOLUME, institutional accounts to $30 per side + fees for retail, broker assisted accounts.

 

Selling options is NOT for newcomers as it involves higher risk than buying options.

However, selling options and trading option spreads may offer an edge if done with proper risk management. No guarantees are made here.

Our strength at Cannon is our ability to offer CUSTOMIZED trading solutions, so contact a broker at:

https://www.cannontrading.com/company/contact

and learn more about risks and opportunities in futures trading (https://www.cannontrading.com/riskopportunity), what software you can use, consult with a broker on margin, commissions and strategy questions and much more!

 

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.


Rollover Notice for Stock Index Futures & Futures Levels 6.13.2019

June 12th, 2019 Filed under Commodity Brokers, Commodity Trading, Day Trading, Futures Broker, Futures Trading, futures trading education, Indices | Comment (0)

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Dear Traders,

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Rollover Notice for Stock Index Futures
Important notice: For those of you trading any stock index futures contracts, i.e., the E-mini S&P, E-mini NASDAQ, E-mini Dow Jones etc., it is extremely important to remember that we are now rolling over and trading the September 2019 contract.
Starting June 13th, the September 2019 futures contracts will be the front month contracts. It is recommended that all new positions be placed in the September 2019 contract as of June 13th.
Volume in the June 2019 contracts will begin to drop off until its expiration on Friday June 21st.
The month code for September is U19
In between, 30 min chart of the mini NASDAQ for your review below, on the short term, market can decline some more if we stay below the 7500 level.

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.

 

Futures Trading Levels

06-13-2019

 


Economic Reports, source: 

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.

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