Price Banding + Futures Trading Levels for July 22nd, 2022
Posted By:- Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
Get Real Time updates and more on our private FB group!
Price Banding
By Mark O’Brien, Senior Broker
The CME Group – where stock index futures like the
E-mini S&P 500,
E-mini Nasdaq, E-mini $5 Dow Jones and other markets trade – has several measures in place to ensure that their markets work in an efficient and orderly manner during volatile market conditions. Among the more commonly-known put in place by the CME Group are their price limits and circuit breakers.
Another, maybe less-commonly known, but very important measure to understand is price banding.
Price banding is a mechanism designed to help prevent erroneous, unintended trades. Price banding rejects orders outside a given range, or band. Bands are calculated dynamically, meaning they’re constantly moving, based on the last traded price of a market. A price band is defined as the highest bid price and lowest ask price from the last traded price within which a non-stop order – like a limit order – can be placed.
For example:
The price banding for the E-mini S&P 500 is 6 points.
If the market’s last trading price is 3980.00, its price band is between 3986.00 (bid), 3974.00 (ask). If a
BUY LIMIT order is placed with a LIMIT PRICE of 3988.00, because the LIMIT PRICE is outside/above the upper 6-point price band the order would be rejected.
If a
SELL LIMIT order is placed with a LIMIT PRICE of 3942.75, because the LIMIT PRICE is outside/below the lower 6-point price band the order would also be rejected.
Price banding is applied to each CME Group produce individually. A complete list of banding information for CME Group markets is available via this Excel reference sheet.
A short video further explaining price banding – and price limits – is available at the CME Group web site on
this page.
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 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
07-22-2022
Improve Your Trading Skills
Economic Reports, Source:
Forexfactory.com
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.
Posted in: Future Trading News | futures trading education
