Futures Trading

Category Archives: Futures Trading

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

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


How Discount Futures Brokers Saves Your Time and Money

June 14th, 2018 Filed under Futures Broker, Futures Trading | Comment (0)

You’ve just decided that it’s time to open a trading account. Maybe you’ve already spent time studying the markets and mapping out your trade strategy – or you’ve put it on your to-do list.

However much time you plan on devoting to this task, or how intently you plan on concentrating on it, you’ll also have another important thing to consider – seriously: who to use as your futures broker. At the most basic level, trading is putting your money at risk – in the hands of a brokerage house responsible for handling your funds and executing/clearing your trades. Those trades will incur commissions and require margin to hold in your account – and all these components call for their own analysis.

If you’ve decided to open an account with a discount broker, it’s presumed you’ll be selecting a trading platform with which you’ll place your own trades, unassisted. As the name implies, commissions for trades placed through a discount broker are less – often meaningfully – than full-service brokers. Commissions are that main fixed cost of trading, so the more trades you make, the higher your fixed costs, the greater the impact on your account’s bottom line. So, certainly you want to be mindful of this aspect of your trading. And to that end, make sure you understand how commissions are quoted, the several elements of a commission and how they’re presented to you overall.

Futures commissions are almost always charged on a per-trade basis and are quoted as “per side.” Two sides – a buy and a sell (in either order) constitute a “round turn. ”The elements of a commission include the exchange fee, the National Futures Association (NFA) fee, the brokerage fee and possibly other fees (routing fees, platform fees, etc.) The bottom line when you’re doing your shopping: understand the total per side / per round turn commission – not leaving out any of its elements – so that you have an accurate assessment of this cost to your trading, so you can compare among those firms with which you’re considering opening your account.

To quote Warren Buffet, “Price is what you pay; value is what you get.” When opening a futures trading account, this translates to: know what you want/need to be the trader you want to be: the features of your trading platform, the availability of your broker, the support the clearing firm provides, the clearing firm’s day-trading margins, whether the clearing firm is staffed with an overnight desk, etc. Find what you want, become comfortable with its costs, open your account, plan your trade and trade your plan.

One last word regarding trading platforms: there’s no argument that placing trades via an online trading platform with instantaneous access to the futures markets is by far the most efficient means of trade execution – compared to dialing up a futures broker, providing verbal trade instructions that the broker needs to listen to, repeat back to you to make sure the order is understood and then place the trade on your behalf. So, look for a trading platform you’re comfortable using. There is a fairly wide range of choices available for you to single out for yourself. Almost all FCM’s offer their own proprietary platforms and they support the many third-party ones available as well.


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.


Trading Crude Oil Futures

June 13th, 2018 Filed under Commodity Brokers, Commodity Trading, Crude Oil, Day Trading, Energy Futures, Futures Broker, Futures Trading, futures trading education, Options Trading, Trading Guide | Comment (0)

Tips for day trading NYMEX crude oil futures

By Ilan Levy-Mayer, VP Cannon Trading Co, Inc.

When it comes to day trading futures contracts, crude oil futures are assumed one of the leading positions as far as trading volume.

 

During the month of May 2018,  crude oil futures averaged around 1 Million contracts traded per day! That actually surpasses contracts like the ten-year notes, mini SP, mini Nasdaq and others who have traditionally been leaders’ in terms of volume.

 

Part of the growth in crude oil futures is attributed to day trader participation. Day traders, by definition, will enter and exit their positions during the same trading day. This adds volume to the market traded.

 

Some of the tips I am sharing below can be applied to most futures contracts as well as other financial products that are traded like stocks, forex, bonds and others. Some of the advice I am sharing is very specific to the crude oil futures trading field.

 

  1. Know the product you are trading:

 

  1. Just like a trader who trades a stock like Facebook knows what Facebook does, when its earning reports are due and other factors, so does a crude oil futures day trader needs to know a few facts about crude oil:

 

  • Contract Size: Crude Oil Futures consist of 1,000 barrels. For the trader this means that each full $1 move in crude futures = $1,000 against you or in your favor.

 

For example:  A move from 72.10 to 73.10 = $1,000 and a move from 72.10 to 72.11 = $10 (the minimum fluctuation size or the tick size). Be aware that the CME also offers the mini crude contract,  which is half the size.

 

  • Trading Hours: Crude oil futures trade on the Globex terminal between the hours of 5:00 PM CST the DAY BEFORE to 4:00 PM CST the following day. Which means 23 hours of straight trading. It is important to know that most of the volume will trade between the hours of 8:00 AM CST and 1:30 PM CST, as these hours correspond to the “pit session” of the old trading floor.

 

Another key aspect to remember is that crude oil is a deliverable commodity and the “front month” will change every 30 days or so. For example: since May 22nd 2018 we have been trading July crude oil.

 

  • Reports: There are more than a few reports that will affect crude oil future prices indirectly. These include monthly unemployment, the FOMC rate decision, and a few others.

 

However, there are two major reports that move crude oil futures and its by-products (unleaded gasoline and heating oil) sharply: The API report, which comes out at 3:30 PM CST every Tuesday, and the DOE (Dept. of Energy) inventory numbers, which come out almost every Wednesday at 9:30AM CST.

 

Take a look at this one-minute chart from Wednesday, May 16th right around the report time below to understand the volatility involved.

As you can see above, the market made a move of $700 per ONE contract in a matter of minutes, perhaps even seconds! That type of risk and opportunity is one of the factors attracting day-traders into the crude oil market.

 

  • Geo Political Events: Middle East tensions, the Iran nuclear deal, tensions between Iraq and its neighbors…these are all examples of events that affect crude oil prices. Not to mention OPEC meetings!

 

 

  1. Trading Personality:

 

In my opinion crude oil (like many other markets) will have one of the following 3 modes: trending, two-sided volatility, or Choppy/quiet/range bound trading.

 

My experience is that crude will more often fall into the first 2 categories:  strong trend or two-sided volatility.  This leads me to my next point below, different trading set-ups.

 

  1. Trading Set-Ups:

 

My preferred methods for trading crude are either breakout concept in an attempt to catch a strong move up or down once the market broke some key support or resistance levels, AND/OR counter trend methods to take advantage of when the market is oversold or overbought. Crude does seem to bring more fear and greed out of traders. So looking at RSI levels, for example, and using moving averages ON the RSI to try and get a feel for market reversals are methods worth exploring.

 

  1. Keep a journal:

 

Like with any other trading, keep a journal. Take notes on how the market reacted to certain reports, how the markets traded during certain times of the day, and action you took and emotions you had that either helped or hurt you while trading. These notes will help you going forward.

 

In summary, crude oil futures volume has increased significantly these past few years. The crude oil futures offer traders certain dynamics that other markets may not at certain times. Volatility, fear and greed are key traits for this market. Remember that trading crude oil futures specifically and futures and options in general carries a large degree of risk and is not suitable for all investors. Make sure you consult with a series 3 broker if you never traded this market before. As always, I wish you Good Trading!

 

Important: Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this letter are of opinion only and do not guarantee any profits.

There is not an actual account trading these recommendations.

Past performances are not necessarily indicative of future results.


Trade Systems Results 5.09.2018

May 8th, 2018 Filed under Future Trading News, Futures Trading | Comment (0)

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Voted #1 Blog and #1 Brokerage Services on  TraderPlanet   for 2016!!

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Dear Traders,
The Iran nuclear agreement “event” caused quite a bit of intraday volatility in the markets, mostly in crude oil and related energies but also in equities and gold.
As a trader, you must know which reports, events are scheduled and the possible effects they may have on the markets you trade.
keeping a trade journal WILL help.
On a different note:
Browse and view ACTUAL trading results from different trading systems offered at Cannon Trading Co, Inc.
If you like to set up a time and chat/ evaluate any system with a licensed series 3 broker, please contact us.

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List of First Notice and Last Trading Days for May 5.08.2018

May 7th, 2018 Filed under Future Trading News, Futures Trading | Comment (0)

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Voted #1 Blog and #1 Brokerage Services on  TraderPlanet   for 2016!!

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Dear Traders,
Heads up with upcoming first notice and last trading days for various commodities below. Please contact us with any questions:
 
First Notice Day
Contract Month
Contract
1-May
May
ICE Sugar
1-May
May
Orange Juice
1-May
May
London Coffee
30-May
June
Long Gilt (Liffe)
31-May
June
2-Yr. & 5-Yr. Notes
31-May
June
10-Yr. Notes & 30-Yr. Bonds
31-May
June
COMEX & ICE Metals
Last Trading Day
Contract Month
Contract
1-May-18
April
Milk III & Butter
8-May-18
May
Cotton
10-May-18
May
Orange Juice
14-May-18
May
CME Eurodollar
14-May-18
May
Wheat (CBOT, KC, MN)
14-May-18
May
CBOT Corn & Oats
14-May-18
May
Lean Hogs
14-May-18
May
CBOT Soybeans
14-May-18
May
CBOT Soybean Meal & Oil
14-May-18
May
CBOT Rice
14-May-18
May
Canola
15-May-18
May
ICE Cocoa
15-May-18
May
Lumber
15-May-18
May
London Cocoa
18-May-18
May
ICE Coffee
22-May-18
June
NYMEX Crude Oil
24-May-18
May
Feeder Cattle
29-May-18
May
COMEX & ICE Metals
29-May-18
June
NYMEX Natural Gas
29-May-18
June
Live Cattle
30-May-18
May
Milk III & Butter
31-May-18
May
30-Day Fed Funds
31-May-18
June
NYMEX RBOB & Heating Oil
31-May-18
July
ICE Brent Crude Oil
31-May-18
May
London Coffee

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Trading Levels for May 1st, 2018

April 30th, 2018 Filed under Future Trading News, Futures Trading | Comment (0)

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Voted #1 Blog and #1 Brokerage Services on  TraderPlanet   for 2016!!

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Dear Traders,

There will be no trading commentary today.

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