Support & Resistance Levels

This Blog provides futures market outlook for different commodities and futures trading markets, mostly stock index futures, as well as support and resistance levels for Crude Oil futures, Gold futures, Euro currency and others. At times the daily trading blog will include educational information about different aspects of commodity and futures trading.

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Trading Levels for Tomorrow + Trading contest: Demo account, real cash prizes!

Posted on by Ilan
Get Real Time updates and more on our private FB group!

Highlights, Announcements  by Mark O’Brien, Senior Broker

 

General: 

 

Forecasts for the U.S. economy continue to reduce the chances of recession – or if one arrives its lower severity – as readings for reports like the Consumer & Producer Price Indexes and Personal Consumption continue to show inflation is coming under control.  At the same time, fear has dissipated that the Federal Reserve’s interest rate policies will destabilize the business climate, particularly as it related to employment and hiring, albeit having cooled somewhat last month.  Signs indeed point to the FOMC taking more of a wait-and-see stance in its upcoming meetings than the sense of tenacity it shown in raising rates eleven consecutive times ending in May.  In the background, the U.S. dollar has drifted south giving exports a boost.

 

Agricultural: 

 

Orange Juice futures (basis Sept.) traded to new all-time highs this week on the heels of Tuesday’s USDA crop report showing the U.S. orange crop’s 23% decline from last year and the smallest since 1937.  As of this typing prices touched $2.9155 per pound intraday (contract size: 15,000 pounds).  This is a substantial 90-cent price increase for the year, including a ±40-cent/$6,000 per contract move up in price this month alone.

 

 

The extreme heat across parts of the U.S., including low triple-digit temperatures forecast in key soybean and corn production areas next week have further threatened this year’s already stressed crops.  In addition, grain supply disruptions related to the war in Ukraine are adding pressure on global grain supplies.  Soybean futures (basis August) remain near their contract highs close to $15.00 per bushel and corn futures (basis September) have climbed back above $5.50 per bushel intraday today and yesterday, half-way back to its mid-June highs near $6.25 per bushel.

 

Financial: 

 

What a run for stock index futures the last two weeks.  Prior to what looks like a meaningful down day today, the Dow Jones cash market had risen seven consecutive days – since Mon. July 10 – its longest winning streak since March 2021.  The Sept. YM futures contract made a similar move: up ±1450 points from its closing price of Friday July 7 to Wednesday’s intraday high.  That’s a $7,250 per contract move.  The ES made a similar ±8,500 per contract move and the NQ made an impressive ±$17,100 move.

 

 

Plan your trade and trade your plan.

 

Trading Contest – Win Real Cash Trading Simulated Account!

Currency Futures Trading Challenge

Sign up for the Cannon Trading via  CME Group FX Futures Trading Challenge for your chance to sizzle the competition this summer – Trade futures currencies like the euro, Canadian dollar, Yen, British pound and other contracts in a risk-free environment while competing with fe11ow traders for a cash prize•.

Duration

Starts:

Sunday, July 23 at 5:00 p.m. CT / 22:00 UTC

Ends:

Friday, July 28 at 12:00 p.m. CT / 17:00 UTC

Prizes

 Prize Details

Overall Leaderboard

First Place Prize: $2,500

Second Place Prize: $1,500

Third Place Prize: $850

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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 when it comes to Futures Trading.

Futures Trading Levels

for 07-21-2023

#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG

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Economic Reports, Source: 

Forexfactory.com

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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.

Trading Levels for July 20th – Range Bar Charts for Day Trading

Posted on by Ilan
Get Real Time updates and more on our private FB group!

Watch the video below for ideas if using VOLUME and/or RANGE bar charts while day trading can help you filter out the noise and get signals FASTER when volume and price action are active?
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Plan your trade and trade your plan.

 

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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 when it comes to Futures Trading.

Futures Trading Levels

for 07-20-2023

#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG

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Economic Reports, Source: 

Forexfactory.com

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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.

Trading Levels for July 18th – Earnings Season in Full Effect

Posted on by Ilan
Get Real Time updates and more on our private FB group!

The Week Ahead by John Thorpe, Senior Broker:

Govt Reports, Earnings and the Fed Blackout period.

On the close of Business June 16th the S&P was at 4453.00, today we have a hi as of this writing, with 3.5 more hours to go in the session, of 4553.50 Up 100 points and of course, not in a straight line.

This does illustrate a continued bullish undertone. S&P + .022%, The NQ is up .035% and the broadest market index, the Russell index, the winner over this time period, up .041% .

This brings us to a number of questions: can the rally that begin in March continue through the summer? What factors is the market watching for clues and direction?

This week the most meaningful economic numbers to be released should be the June data on retail and food services sales at 7:30am CT on Tuesday. Inflation expectations are overall well-anchored, if at levels a bit above where they were before the current episode began in 2021.

Earnings season has arrived. Last week the JPM and C released their numbers,  This week the Regional Banks will start reporting results in addition to B of A, Morgan Stanley and Goldman Sachs, the Tech and consumer stocks the market will be very interested with are Tesla and Netflix. United Airlines reports as well.

Expectations are certainly muted from a year ago, and the lowered expectations have already been inserted on the game board by most analysts and ratings firms. Therefore, any good news should have a positive impact on the indices continued grind higher.

Of note this week is the Fed Black out period in advance of the July 25-26 meeting where traders are currently expecting another .25 rate hike after the last sessions pause.

 

Plan your trade and trade your plan.

 

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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 when it comes to Futures Trading.

Futures Trading Levels

for 07-18-2023

#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG

3b644da2 2bee 4d39 8d98 5208a20bec39

Economic Reports, Source: 

Forexfactory.com

 

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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.

Trading Futures Options vs. Trading Commodity Futures

Posted on by Cannon Operations

Pros and Cons, Risk vs. Reward, and Techniques for Trading Options on Futures

Read more about trading futures here

Trading futures options and commodity futures are both popular strategies in the financial markets. While they share some similarities, there are distinct differences in their structure, characteristics, and potential benefits and risks. In this article, we will explore the pros and cons of trading futures options compared to trading commodity futures, and discuss the risk versus reward dynamics of these approaches. Additionally, we will delve into various techniques used for trading options on futures.

Pros and Cons of Trading Futures Options: Trading futures options offers several advantages. One key benefit is the leverage and potential for higher returns. Options allow traders to control a larger position in the underlying futures contract with a relatively smaller investment. This amplifies the profit potential when the market moves favorably. Additionally, options provide traders with the flexibility to design strategies for different market conditions, including bullish, bearish, and neutral scenarios.

Another advantage of trading futures options is the limited risk involved. Unlike futures contracts, purchased options have a predefined maximum loss, which is limited to the premium paid. This can provide a sense of security for traders, as they know their maximum potential loss upfront. Additionally, options can be used as a hedging tool to protect against adverse price movements in the underlying futures contract.

However, trading futures options also has its drawbacks. Options have an expiration date, which means traders must be mindful of time decay. As the option approaches its expiration, its value may erode rapidly, even if the underlying futures price remains relatively stable. This time decay factor can lead to losses for option buyers if the market does not move in the anticipated direction within the desired timeframe.

Furthermore, liquidity can be a concern when trading futures options. Compared to commodity futures, options markets may have lower liquidity, resulting in wider bid-ask spreads. This can impact the ease of executing trades and may lead to slippage. Traders should consider the liquidity of options on the futures they are interested in before initiating positions.

Risk vs. Reward Dynamics: Trading futures options involves a trade-off between risk and reward. On the risk side, the maximum loss for an options buyer is limited to the premium paid. However, if the market moves against the anticipated direction, the loss can be substantial relative to the premium. This risk can be mitigated by employing risk management techniques, such as stop-loss orders or position sizing based on a predetermined percentage of the trading capital.

On the reward side, trading futures options can offer significant profit potential. When the market moves favorably, options traders can benefit from leverage and achieve higher returns compared to the premium invested. This potential upside can attract traders seeking enhanced profit opportunities. However, it’s important to note that trading futures options requires skillful market analysis and timing to capture these gains.

Techniques for Trading Options on Futures: Several techniques are commonly used when trading options on futures. These include:

  1. Long Call or Put: This is a directional strategy where traders buy call options if they expect an upward price movement or put options if they anticipate a downward price movement in the underlying futures contract.
  2. Covered Call or Put: In this strategy, traders simultaneously own the underlying futures contract and sell a call or put option against it. This technique generates income from the premium received, but limits the potential upside.
  3. Spread Strategies: These involve the simultaneous purchase and sale of multiple options contracts with different strike prices or expiration dates. Examples include vertical spreads (bull call spread, bear put spread), horizontal spreads (calendar spread), and diagonal spreads.
  4. Long Straddle and Strangle: These strategies involve buying both a call and a put option (straddle) or buying out-of-the-money call and put options (strangle) with the expectation of significant price volatility. They can profit from large price swings regardless of the market direction.
  5. Long Butterfly and Condor: These strategies involve combining multiple call and put options to create a position with limited risk and limited profit potential. They are suitable when the trader expects the underlying futures price to remain within a specific range.

It’s important for options traders to understand the characteristics, potential risks, and rewards associated with each strategy. Thorough analysis and consideration of market conditions are crucial for successful options trading.

Trading futures options and commodity futures each have their own advantages and disadvantages. Buying futures options offers leverage, flexibility, and limited risk, but also involves time decay and potential liquidity concerns. It requires careful analysis, risk management, and knowledge of various options trading techniques. On the other hand, trading commodity futures provides direct exposure to the underlying asset, potentially greater liquidity, and no time decay. Traders should carefully assess their risk tolerance, market outlook, and trading goals to determine the most suitable approach for their investment objectives.

Ready to start trading futures? Call 1(800)454-9572 and speak to one of our experienced, Series-3 licensed futures brokers and start your futures trading journey with Cannon Trading Company today.

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.

Weekly Newsletter: The Rising Wedge Trading Pattern + Levels for June 17th

Posted on by Ilan

Cannon Futures Weekly Newsletter Issue # 1154

 

Join our private Facebook group for additional insight into trading and the futures markets!

Have a safe Memorial Day Weekend. Trading Schedule HERE

In this issue:

  • Important Notices – FX Trading Contest
  • Trading Resource of the Week – Trading Pattern: Rectangle Trading
  • Hot Market of the Week – August Live Cattle
  • Broker’s Trading System of the Week – ES Day Trading System
  • Trading Levels for Next Week
  • Trading Reports for Next Week

 

  • Important Notices – FX Trading Contest

Participate in the upcoming Currency Cup: FX Trading Challenge where you’ll trade our suite of highly liquid benchmark FX contracts in a risk-free environment while competing against other traders for the chance to win cash prizes.
Learn how to trade FX futures and options
Through participation in our challenge, you’ll receive daily exclusive educational videos where you’ll learn about the key benefits of trading FX futures contracts.
Trade the world’s leading currencies
Competition Dates
Starts:
Sunday, July 23 at 5:00 p.m. CT / 22:00 UTC
Ends:
Friday, July 28 at 12:00 p.m. CT / 17:00 UTC
Prize Details
Overall Leaderboard
First Place Prize: $2,500
Second Place Prize: $1,500
Third Place Prize: $850
 This competition is open to residents in the United States (US), Canada (CA) excluding Quebec, *Brazil (BR), United Kingdom (UK), Germany (DE), Netherlands (NL), Switzerland (CH), United Arab Emirates (UAE), Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), Republic of Korea (KR), Taiwan (TW), and Japan (JP).
*Residents of Brazil must have a bank account in the United States to be eligible to receive a prize.
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  • Trading Resource of the Week – : Rectangle Trading Pattern

By Joe Easton, Senior Broker
Formation:
  •    This pattern is defined as price coming into a tight range between support and resistance
  •    This pattern is a continuation pattern. If the trend was up it will continue up and down it will continue down
  • Typically, volume is lower through this period of consolidation.

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Try a FREE demo of the platform used to show the charts in this educational article. The platform is FREE and has charts, news, DOM, T&S, Alerts, advanced order entry, options and MUCH MORE!
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In the examples above the range is creating a rectangle pattern in an uptrend. Ideally this pattern breaks higher without breaking lower support. If lower support is broken this pattern would no longer be a rectangle.
How to Trade:
The ideal entry is toward the bottom of the rectangle support. If entered on this line your stop should be below support. Price should bounce off support 2 to 3 times to be confident support is present.
The more conservative entry would be when the resistance in the rectangle is broken. This can happen very quickly and needs to be timed more accurately. The lower support line then becomes your stop. You could also make the resistance line become your stop.
When price breaks out you can measure the width of rectangle and project the price to move from the breakout that same distance at a minimum.
Summary:
Rectangles patterns exist in low volume consolidation in both uptrends and downtrends. Price corrects in two ways, time and price. This would classify more as a time correction considering price stays relatively consistent. Once price closes above the resistance you can expect the price to not retrace back into the rectangle. If there is a false breakout, the continuation is less likely to occur. Generally, if you are able to spot a rectangle you can expect the price trend to continue.
Important: Trading commodity futures and options involves a substantial risk of loss.
The recommendations contained in this chart are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results
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 needs.
August Live cattle Is extending its rally into new highs where the chart is taking aim at its low percentage fourth upside PriceCount to the 183.30 area. This objective is consistent with the weekly chart High established last month it should be enough to satisfy this phase of the bull market.
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.
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With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.
PRODUCT
SYSTEM TYPE
Intraday
Recommended Cannon Trading Starting Capital
$12,000
COST
USD 130 / monthly
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The performance shown above is hypothetical in that the chart represents returns in a model account. The model account rises or falls by the average single contract profit and loss achieved by clients trading actual money pursuant to the listed system’s trading signals on the appropriate dates (client fills), or if no actual client profit or loss available – by the hypothetical single contract profit and loss of trades generated by the system’s trading signals on that day in real time (real‐time) less slippage, or if no real time profit or loss available – by the hypothetical single contract profit and loss of trades generated by running the system logic backwards on back adjusted data. Please read full disclaimer HERE.
Sign Up for a Free Personalized Consultation with a Broker from Cannon Trading Company
Questions about the markets? trading? platforms? technology? trading systems? Get answers with a complimentary, confidential consultation with a Cannon Trading Company series 3 broker.

  • Trading Levels for Next Week

Daily Levels for July 17th, 2022
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
Would you like to receive daily support & resistance levels?
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Weekly Levels

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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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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 herein 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 judgment in trading.

 

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.

Trading Levels for July 14th – UoM Consumer Sentiment UoM Inflation Expectations

Posted on by Ilan
Get Real Time updates and more on our private FB group!

An Introduction To Trading Futures

An introductory guide to trading futures. If you’re a trader who is interested in branching out from equities or cash FX into futures, this guide will provide a great starting point. If you already know something about futures trading, you can jump to any chapter for a review or to the back of the booklet and test your knowledge in our Futures Quiz.

 

Plan your trade and trade your plan.

 

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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 when it comes to Futures Trading.

Futures Trading Levels

for 07-14-2023

#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG

3b644da2 2bee 4d39 8d98 5208a20bec39

Economic Reports, Source: 

Forexfactory.com

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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.

Trading Levels for July 13th – PPI and the Bigger Picture

Posted on by Ilan
Get Real Time updates and more on our private FB group!

Bigger Picture

By Mark O’Brien, Senior Broker

 

Taking a look at a relatively bigger picture of the world’s growth – or lack thereof – below you’ll find a list of natural resource commodities and their performance over the first half of the year.

The list is certainly metals-centric and no softs (cocoa, sugar, cotton, coffee, orange juice) or livestock were included.  Nevertheless, it illustrates the broad theme of the global economy, in which the world’s leading demand engine – China – has experienced at best a sputtering recovery after nearly three years of pandemic-related falloff.

Notice just two: lithium and gold were the only ones heading into the second half of 2023 with positive returns.

Noteworthy is gold’s hold on to positive returns attributable to the relatively stable U.S. dollar and steady demand by the world’s central banks, which is likely to persist as long as the risk of recession remains for the big players – China, Europe and the U.S. – and high-quality, liquid assets remain desirable.  Compare gold to crude oil, which despite output cuts by OPEC+ countries and forecasts for demand to continue outpacing supply into 2024, has stayed negatively impacted by stalled economies.

 

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Plan your trade and trade your plan.

 

Watch video below on ways to project exits on trades.

Projecting possible targets when trading futures

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

for 07-13-2023

#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG

3b644da2 2bee 4d39 8d98 5208a20bec39

Economic Reports, Source: 

Forexfactory.com

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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.

Major Commodity Exchanges for Crude Oil and Oil Futures Trading

Posted on by Cannon Operations

Find out more about trade crude oil futures here.

Commodity exchanges play a crucial role in facilitating the trading of various commodities, including crude oil and oil futures. These exchanges provide a platform for buyers and sellers to engage in transactions, hedge risks, and determine the prices of commodities. Several major commodity exchanges around the world are known for their active trading of crude oil and oil futures. Let’s explore some of these exchanges, their geographic locations, the types of crude oils traded, and the top five producers of crude oil globally.

1. The Chicago Mercantile Exchange (CME), also known as CMEX, is one of the largest and most influential financial exchanges in the world. Founded in 1898, it is located in Chicago, Illinois, and has played a significant role in the development of futures and derivatives trading.

  • General Overview: The Chicago Mercantile Exchange (CMEX) is a prominent financial exchange that facilitates the trading of a wide range of financial products, including crude oil futures. At the CME, a wide range of financial products are traded, including commodities, equity indexes, interest rates, and foreign exchange.
  • Speculation: Speculation within the CMEX market is an integral part of price discovery and risk management. It is an inherent aspect of financial markets, and the CME is no exception. Speculation involves taking risks with the hope of making profits from anticipated price movements. In the context of crude oil futures, speculators can take positions based on their expectations of the future direction of oil prices. They may buy futures contracts if they believe prices will rise, or sell contracts if they expect prices to decline. Speculation within the CMEX market has both positive and negative implications. On one hand, speculators play an important role in providing liquidity and efficient price discovery. Their presence allows market participants, such as producers and consumers of crude oil, to manage their price risk effectively. Speculators absorb risk by taking the opposite side of hedging transactions, providing a valuable service to the market.
  • While speculators contribute to market liquidity and information flow, their activities can also introduce volatility and raise concerns about market manipulation. Appropriate regulations and oversight aim to strike a balance between fostering a vibrant marketplace and mitigating potential risks associated with speculation.
  • The presence of speculators in the crude oil futures market can lead to concerns about market manipulation. Manipulative practices, such as spoofing or wash trading, can distort prices and undermine the integrity of the market. Regulators continuously monitor and enforce rules to prevent such activities and ensure fair and orderly trading.
  • To manage the potential risks associated with speculation, the CME and regulatory bodies impose position limits and margin requirements. Position limits restrict the maximum number of contracts that speculators can hold, preventing them from exerting excessive control over the market. Margin requirements mandate that traders maintain a certain amount of funds in their accounts to cover potential losses, thereby mitigating risk.

2. Intercontinental Exchange (ICE) – United Kingdom: The Intercontinental Exchange, based in London, operates the ICE Futures Europe, where a significant volume of crude oil and oil futures contracts are traded. The Brent crude oil futures, the most widely recognized benchmark for oil pricing worldwide, are traded on this exchange. Brent crude oil is sourced from the North Sea and is known for its higher sulfur content compared to WTI.

3. Shanghai International Energy Exchange (INE) – China: The Shanghai International Energy Exchange, situated in Shanghai, China, has gained prominence in recent years. It operates the INE Crude Oil Futures, which provides a platform for trading crude oil futures contracts denominated in Chinese yuan. The crude oil futures contracts on INE are based on the Shanghai crude oil benchmark, which is a medium sour crude oil.

  • Importance of INE Crude Oil Futures: INE Crude Oil Futures plays a crucial role in China’s efforts to enhance its energy market and strengthen its influence in the global oil market. As the world’s largest energy consumer, China’s demand for crude oil continues to rise. By establishing a domestic futures contract, China aims to gain more control over its oil pricing, reduce reliance on international benchmarks, and develop a pricing mechanism that better reflects regional supply and demand dynamics.
  • Contract Specifications: The INE Crude Oil Futures contract is denominated in Chinese Yuan (CNY) and trades on the INE. The contract size is 1,000 barrels of crude oil, with delivery months extending for the next 12 calendar months. The crude oil grade specified in the contract is medium sour crude oil, allowing market participants to trade a specific grade of oil that is relevant to the Chinese market.

4. Dubai Mercantile Exchange (DME) – United Arab Emirates: The Dubai Mercantile Exchange, located in Dubai, facilitates the trading of various energy futures contracts, including the DME Oman Crude Oil Futures. The DME Oman contract serves as a benchmark for pricing Middle East crude oil exports to Asia. Oman crude oil is a medium sour crude known for its higher sulfur content.

  • Contract Specifications: DME Crude Oil Futures represent the delivery of Dubai, Oman, or Upper Zakum crude oil. The contract specifications include the following:
  • Underlying Commodity: Dubai, Oman, or Upper Zakum crude oil
  • Contract Size: 1,000 barrels
  • Tick Size: $0.01 per barrel
  • Pricing Unit: U.S. Dollars per barrel
  • Contract Months: Up to 36 consecutive months
  • Trading Hours: Sunday to Thursday, 02:00 pm to 11:30 pm Gulf Standard Time (GMT+4)
  • Delivery Location: Fujairah, United Arab Emirates

5. Multi Commodity Exchange (MCX) – India: The Multi Commodity Exchange, based in Mumbai, India, operates the MCX Crude Oil futures These contracts enable participants to trade Indian crude oil futures. The Indian crude oil basket comprises a mix of various crude oil types, including Brent, Dubai, and Omani crudes.

  • Contract Specifications: MCX Crude Oil Futures contracts have specific specifications that traders need to understand. The contract size for MCX Crude Oil Futures is typically 100 barrels, denominated in Indian Rupees (INR). The minimum price fluctuation, also known as the tick size, is INR 1 per barrel. This means that a price change of INR 1 per barrel results in a profit or loss of INR 100 per contract.
  • Factors Affecting MCX Crude Oil Futures Prices: Several factors impact the prices of MCX Crude Oil Futures. These include:
  1. Global Crude Oil Market: MCX Crude Oil Futures prices are influenced by international crude oil prices, particularly benchmark prices like Brent Crude or West Texas Intermediate (WTI). Supply and demand dynamics, geopolitical events, production cuts or increases by major oil-producing countries, and changes in global economic conditions all play a significant role in determining crude oil prices.
  2. Currency Exchange Rates: As MCX Crude Oil Futures are denominated in Indian Rupees, fluctuations in currency exchange rates, particularly the USD/INR exchange rate, can affect the prices of MCX Crude Oil Futures. A stronger Indian Rupee relative to the US Dollar can potentially lower the prices of MCX Crude Oil Futures and vice versa.
  3. Inventory Data: Inventory reports, such as the weekly crude oil inventory data released by the U.S. Energy Information Administration (EIA), can influence crude oil prices and subsequently impact MCX Crude Oil Futures. Changes in inventory levels, indicating either a build-up or drawdown of crude oil stocks, provide insights into supply-demand dynamics and can impact market sentiment.
  4. Macroeconomic Factors: Broader economic factors, such as GDP growth, inflation rates, and monetary policy decisions, can impact crude oil prices. Economic indicators that reflect the health of major oil-consuming nations, including India, can influence MCX Crude Oil Futures prices.

 

Ranking of the Top Five Producers of Crude Oil Worldwide:

  1. United States: The United States is the world’s largest producer of crude oil, thanks to its significant shale oil production. The country has experienced a surge in oil production in recent years, driven by advancements in extraction technologies such as hydraulic fracturing (fracking).
  2. Saudi Arabia: As the leading producer within the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia holds substantial reserves and maintains a high level of crude oil production capacity. The country plays a crucial role in global oil markets and has a significant influence on oil prices.
  3. Russia: Russia has consistently been one of the top producers of crude oil It possesses vast oil reserves and operates expansive oil fields. Russian oil production is a vital component of the country’s economy, contributing significantly to its export revenues.
  4. Canada: Canada is renowned for its vast oil sands reserves, particularly in the province of Alberta. The extraction and production of oil from these unconventional sources have propelled Canada into the ranks of the world’s major crude oil
  5. Iraq: Iraq holds significant oil reserves, making it one of the top producers globally. Despite facing geopolitical challenges, the country has managed to sustain and increase its oil production, contributing substantially to the global crude oil

Major commodity exchanges worldwide facilitate the trading of crude oil and oil futures contracts, providing a platform for market participants to engage in transactions and manage price risks. Geographic locations such as the United States, the United Kingdom, China, the United Arab Emirates, and India are home to prominent exchanges where various types of crude oils are traded. Additionally, the top five producers of crude oil globally include the United States, Saudi Arabia, Russia, Canada, and Iraq, with each country playing a significant role in shaping the global oil market.

Ready to start trading futures? Call 1(800)454-9572 and speak to one of our experienced, Series-3 licensed futures brokers and start your futures trading journey with Cannon Trading Company today.

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.

Tomorrow’s Trading Levels for ES, NQ, Gold, Crude, Bonds and much more!

Posted on by Ilan
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Make it a great trading week!

See important reports for the week below.

Remember that no one given trade or one trading day will make you, however with out proper money management – it can break you!

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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 when it comes to Futures Trading.

Futures Trading Levels

for 07-11-2023

#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG
#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG

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Economic Reports, Source: 

Forexfactory.com

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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 Brokers, Commodity Brokers, and Physical Commodity Brokers

Posted on by Cannon Operations

A futures broker, a commodity broker, and a physical commodity broker are all different types of professionals involved in the trading of financial instruments and physical commodities. While there can be some overlap in their roles, there are distinct differences among them. Here’s an explanation of each profession and how their experience can benefit a hedging futures account:

1. Futures Broker: A futures broker is a licensed professional who facilitates the buying and selling of futures contracts on behalf of clients. These contracts are standardized agreements to buy or sell an asset (such as commodities, currencies, or financial instruments) at a predetermined price and date in the future. Futures brokers work with exchanges where futures contracts are traded and provide execution services, market research, and advice to their clients.

The experience of a futures broker can benefit a hedging futures account in the following ways:

  1. Expertise in Futures Markets: Futures brokers have in-depth knowledge of various futures markets, including commodities, currencies, and financial derivatives. They can provide valuable insights into market trends, liquidity, and contract specifications, assisting hedgers in making informed decisions.
  2. Execution and Order Management: Futures brokers are responsible for executing trade orders promptly and efficiently. Their experience in order management systems and connectivity with exchanges can help ensure timely execution and minimize slippage, which is crucial for hedgers seeking to enter or exit positions at specific price levels.
  3. Risk Management: Hedging involves managing price risk by taking offsetting positions in the futures market. Futures brokers can guide hedgers on constructing effective hedging strategies, including choosing appropriate contract sizes, contract months, and hedge ratios. They can also help monitor and adjust hedge positions as market conditions change.

2. Commodity Broker: A commodity broker is a professional who specializes in facilitating the trading of physical commodities, such as agricultural products, energy resources, metals, or soft commodities (e.g., coffee, cotton). Commodity brokers connect buyers and sellers of physical commodities, providing brokerage services for physical delivery contracts.

The experience of a commodity broker can benefit a hedging futures account in the following ways:

3. Physical Market Insights: Commodity brokers have knowledge of the physical commodity markets, including supply and demand dynamics, production cycles, transportation logistics, and storage facilities. This expertise can assist hedgers in understanding the fundamental factors impacting the price of the underlying commodity being hedged.

  1. Fundamental Analysis: Physical market aspects are fundamental to understanding the supply and demand dynamics of the underlying asset. Discount futures brokers often analyze various factors affecting the physical market, such as crop production, inventory levels, geopolitical events, weather conditions, and economic indicators. By staying informed about these aspects, brokers can provide clients with valuable insights into the factors influencing futures prices and help them develop trading strategies accordingly.
  2. Seasonality and Cycles: Understanding the seasonal patterns and cycles in the physical market is crucial for discount futures brokers. Certain commodities, such as agricultural products or energy resources, exhibit seasonal trends based on planting and harvesting seasons, weather conditions, or demand patterns. Brokers who are knowledgeable about these patterns can guide clients on potential price movements and timing their trades to capitalize on seasonal opportunities.
  3. Supply and Demand Factors: Physical market aspects directly impact the supply and demand dynamics of commodities. Discount futures brokers monitor factors such as production levels, consumption trends, global trade flows, technological advancements, and government policies that affect the supply and demand balance. By assessing these factors, brokers can offer insights into potential shifts in market equilibrium, which can influence futures prices and assist clients in making informed trading decisions.
  4. Market News and Reports: Keeping track of market news, reports, and research related to the physical market is essential for discount futures brokers. They stay updated with industry publications, government reports, market research, and relevant news sources to gather insights into market trends, price forecasts, and potential risks. This information allows brokers to provide clients with timely and accurate information that can impact their trading decisions.
  5. Quality and Delivery Considerations: Hedging physical commodities involves ensuring the quality and delivery of the underlying product. Commodity brokers can provide guidance on contract specifications, grading standards, delivery locations, and related logistics, helping hedgers align their futures positions with the specific requirements of the physical market.

Physical Commodity Broker – A physical commodity broker focuses specifically on facilitating the trading of physical commodities. They specialize in arranging the physical delivery of commodities, connecting buyers and sellers, coordinating transportation, and overseeing logistics.

The experience of a physical commodity broker can benefit a hedging futures account in the following ways:

  1. Ensuring Timely Delivery: Delivery logistics are essential for physical commodities brokers to ensure that commodities are delivered to the buyer within the agreed-upon timeframe. This requires coordinating with various parties involved in the logistics chain, such as suppliers, warehouses, transporters, and shipping companies. Brokers must have a strong understanding of the logistics process to anticipate potential delays and take necessary steps to mitigate them, thereby ensuring timely delivery to clients.
  2. Managing Storage Facilities: Physical commodities brokers often work with storage facilities to hold commodities until they are ready for delivery. These facilities can include warehouses, silos, tanks, or other specialized storage facilities depending on the type of commodity. Brokers need to monitor storage capacity, quality control measures, and ensure compliance with regulations governing storage and handling of commodities. Managing storage facilities effectively helps brokers maintain inventory control and meet delivery obligations.
  3. Coordinating Transportation: Transportation is a critical aspect of delivery logistics. Brokers must arrange for appropriate transportation methods to move commodities from the storage facilities to the buyer’s designated location. This involves selecting the right mode of transport, such as trucks, rail, ships, or pipelines, considering factors like cost, distance, and the nature of the commodity. Brokers must also handle freight negotiations, coordinate loading and unloading, and track the movement of commodities during transit.
  4. Compliance with Regulations: Delivery logistics in physical commodities trading are subject to various regulatory requirements. Brokers must ensure compliance with local, national, and international regulations related to transportation, storage, and handling of commodities. This includes adhering to safety regulations, obtaining necessary permits and licenses, and complying with customs and trade regulations. Failure to meet regulatory requirements can result in delays, penalties, or even legal issues, highlighting the importance of thorough compliance management.
  5. Documentation and Record-Keeping: Delivery logistics involve extensive documentation and record-keeping to ensure transparency and accountability throughout the process. Brokers must maintain accurate records of contracts, shipping documents, bills of lading, certificates of quality, and other relevant paperwork. These documents provide evidence of ownership, facilitate customs clearance, and serve as proof of delivery. Effective documentation management minimizes the risk of disputes and provides a comprehensive trail of the commodity’s journey from seller to buyer.
  6. Risk Management: Delivery logistics pose inherent risks in physical commodities trading. Brokers must proactively manage these risks to protect their clients’ interests and their own business. This includes assessing transportation and storage risks, implementing appropriate insurance coverage, and having contingency plans in place for unforeseen events such as natural disasters or political disruptions that could impact the delivery process. By effectively managing risks, brokers can ensure that commodities are delivered securely and minimize potential losses or liabilities.
  7. Communication and Coordination: Successful delivery logistics heavily rely on effective communication and coordination among all parties involved. Brokers must establish clear lines of communication with suppliers, buyers, storage facilities, transportation providers, and any other relevant stakeholders. Maintaining regular communication helps brokers stay informed about delivery progress, address any issues promptly, and provide updates to clients. Strong coordination among all parties involved ensures seamless execution of the delivery process.

In summary, while there are similarities among futures brokers, commodity brokers, and physical commodity brokers, each has its own specialized focus. Their experience can benefit a hedging futures account by providing expertise in futures markets, execution and order management, risk management, insights into physical commodity markets, quality and delivery considerations, delivery logistics, and market access. It is important for hedgers to assess their specific needs and seek professional guidance from the appropriate broker(s) based on their hedging objectives and the underlying assets involved.

Ready to start trading futures? Call 1(800)454-9572 and speak to one of our experienced, Series-3 licensed futures brokers and start your futures trading journey with Cannon Trading Company today.

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.

RISK DISCLOSURE: Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.