Prior to this blog’s release, the Federal Reserve Bank’s Open Market Committee held rates steady at 5.25% – 5.50% for the second consecutive meeting, yet another indication that the global central bank rate hike cycle is coming to an end. At the same time, Fed. chair Powell stayed on message by suggesting more rate hikes could be in the pipeline should inflation remain “sticky.”
Keep in mind that a favorite inflation gauge of the Fed is the quarterly Core Personal Consumption Expenditures Index (Core PCE), which last Friday recorded its eighth monthly decline in a row – down to a 3.68% YOY increase and the lowest reading since May 2021.
Energy:
If there was a fear / anticipation that the crisis in the Middle East would lead to extended physical supply disruptions for the energy markets, that fear – and crude oil prices – has abated in the last week or so. After its initial ±$2.00 per barrel gap-up opening to ±$83.25 per barrel the Sunday after the outbreak of hostilities, Dec. crude oil spent two weeks reaching up to $89.85 intraday on Friday the 20th. As of this typing, it’s trading over $9.00 per barrel lower near $80.00 per barrel, below pre-hostility prices. Certainly without notice, the war could escalate. Expansion militarily between the current parties involved, or in concert with expanded state or non-state participation including the United States, Iran, Syria, Hezbollah could inject a “war premium” into energy prices and extend to other commodities.
Risk:
The point here is not to opine that this is the direction the conflict will go. There are a range of possible scenarios for the Israel-Gaza conflict, from an expansion to a broader regional war to a negotiated cessation of hostilities. There are parties and catalysts capable of steering the situation in either direction.
The idea is to caution traders of the potential for increased volatility and to suggest you approach your futures trading generally with risk-defined strategies, such as hard stop orders, option protection, hedge positions & futures and options spread applications.
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.
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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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.
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.
The big question in the October 30 week is whether the FOMC will hold the fed funds target rate range at 5.25-5.50 percent for the second meeting in a row This will be released Wednesday @ 1PM CDT .
The present crop of economic data and anecdotal evidence is expected to result in no change in rates after the October 31-November 1 meeting. Fact: US economy grew 4.9 percent in the third quarter. If the labor market reflects slower hiring activity, it also shows few signs of an acceleration in layoffs. Inflation was less improved in the September reports, but at least some of that is due to rising gasoline costs which are now moderating quickly.
Tightening in financial markets is doing some of the FOMC’s work in making credit conditions more restrictive. Last week Fed Chair Jerome Powell noted that he thinks there are “meaningful” impacts from past rate hikes still to b remain in the spotlight when it unveils its fiscal fourth-quarter results after Thursday’s close. Analysts, on average, expect Apple to report earnings up $1.31 per share (+1.6% YoY) on revenue of $84.2 billion (-6.6% YoY). born out in future data.
This sets the stage to extend the pause in the current rate hike cycle. However, Fed policymakers will remain hawkish on the inflation outlook and prepared to raise rates further if the data do not indicate further progress in disinflation. This week Non-Farm Payrolls will be released at 7:30 am CDT Friday and presumably the FED policymakers won’t know what prior impacts of rate increases will have had in hiring the past month.
As for Earnings this week AAPL will remain in the spotlight when it unveils its fiscal fourth-quarter results after Thursday’s close. Analysts, on average, expect Apple to report earnings up $1.31 per share (+1.6% YoY) on revenue of $84.2 billion (-6.6% YoY).
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.
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 Resource of the Week: Bitcoin & Ether Futures Volume Rises!
See volume and open interest below article
Trading Bitcoin futures and trading cryptocurrencies directly represent two distinct approaches to engaging with the digital asset market. Each method offers its own set of advantages and disadvantages, catering to different types of traders and investors. In this discussion, we will explore the differences between trading Bitcoin futures and trading cryptocurrencies.
Bitcoin futures represent a derivative financial product that allows traders to speculate on the future price of Bitcoin without actually owning the underlying cryptocurrency. Here are some key points to consider when trading Bitcoin futures:
1. Regulation and Legitimacy: Bitcoin futures are traded on the Chicago Mercantile Exchange (CME). This provides a high level of valuable legitimacy and oversight for institutional and risk-averse investors.
2. Leverage and Margin: Futures contracts offer leverage, allowing traders to control a larger position with a relatively smaller amount of capital. While this can amplify profits, it also increases the potential for significant losses.
3. Risk Management: Futures contracts are standardized and come with risk management tools like stop-loss orders, which can help traders limit their exposure to losses.
4. Speculative Nature: Trading Bitcoin futures is primarily a speculative activity. It’s more about predicting price movements rather than investing in the long-term potential of Bitcoin as a technology or store of value.
5. Market Hours: Futures markets have specific trading hours and are closed on weekends. This can limit access to trading opportunities and reactiveness to global events.
6. Settlement: Bitcoin futures contracts typically settle in cash, which means that traders receive the equivalent value in US dollars at contract expiry, rather than the actual Bitcoin.
Trading Cryptocurrencies:
Trading cryptocurrencies directly involves buying and selling the digital assets themselves on various cryptocurrency exchanges. Here are some key considerations when trading cryptocurrencies:
1. Lack of Regulation: Cryptocurrency markets are generally less regulated than traditional financial markets. While this offers more freedom, it also exposes traders to potential risks, including fraud and market manipulation.
2. Volatility: Cryptocurrency markets are known for their extreme price volatility. This can present both opportunities and risks, attracting traders with a high-risk tolerance.
3. Long-Term Investment: Some traders and investors choose to buy cryptocurrencies with the intention of holding them for the long term, believing in their potential as a store of value, technology, or financial innovation.
4. 24/7 Availability: Cryptocurrency markets operate 24/7, allowing traders to respond to market developments at any time. This can be advantageous for those who want to trade outside traditional market hours.
5. Security: Trading cryptocurrencies directly also comes with the responsibility of securing your assets in a wallet, protecting them from hacking, theft, and loss.
In summary, the choice between trading Bitcoin futures and trading cryptocurrencies directly depends on an individual’s investment goals, risk tolerance, and trading strategies. Bitcoin futures offer a more regulated and structured approach to speculate on Bitcoin’s price, while trading cryptocurrencies directly provides ownership and exposure to the digital asset’s intrinsic value. It’s essential for traders to carefully assess their preferences and risk profiles before deciding which approach aligns with their objectives. Moreover, diversification within one’s portfolio can also be a prudent strategy to mitigate risks associated with both trading Bitcoin futures and holding cryptocurrencies directly.
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.
December Heating Oil rallied after completing the second downside PriceCount objective early this month but found tough overhead against the September highs and settled back. At this point, IF the chart can resume its break with new sustained lows, the third count would project a run to the 2.71 area.
PriceCounts – Not about where we’ve been , but where we might be going next!
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.
Broker’s Trading System of the Week
With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.
“System Description” is based upon information obtained from specific system marketing documents, system developers and/or system vendors themselves. While the information is believed to be reliable, we cannot guarantee its completeness or accuracy.
Actual Monthly Performance
The table and charts represent the monthly/quarterly/annual summation of actual trades based on system-specified contract(s) executed through Striker Securities, Inc. using the referenced trading system or system vendor for the stated time period. Commissions and monthly vendor fees are deducted from the tabulation. Results are based on 1 contract. If a client trades 2 contracts his gain or loss is twice as displayed (and so on). This table is presented for information purposes only and is not a solicitation for the referenced system or vendor. The purpose of this information is for clients to compare their brokerage statements to what is displayed on Striker’s site. Striker as a matter of policy has no ownership with the referenced system or vendor or any other trading system or vendor. Past trade history may not be indicative of future results. The results indicated here may or may not be typical of the performance of this system and, ALTHOUGH WE BELIEVE THIS INFORMATION TO BE ACCURATE, CANNON TRADING COMPANY MAKES NO ENDORSEMENT OF THIS OR ANY SYSTEM NOR WARRANTS ITS PERFORMANCE. This is not the only trading system that Striker executes for its clients. Potential traders should carefully investigate, evaluate and compare trading systems before investing capital. Some or all trading systems may involve an inappropriate level of risk for potential traders. It is the nature of commodity trading that where there is the opportunity for profit, there is also the risk of loss. In opening an account through CANNON TRADING COMPANY, Customer acknowledges and agrees that he/she will rely solely upon the information that CANNON TRADING COMPANY provides to you. Thus, all prior third-party materials provided are superseded by the information and disclosures provided by CANNON TRADING COMPANY.
Important Information About this Trading System Analysis
Statistics, tables, charts and other information on trading system monthly performance are based on actual trading unless otherwise specified. Actual dollar and percentage gains/losses experienced by investors would depend on many factors not accounted for in these statistics, including, but not limited to, starting account balances, market behavior, developer fees, incidence of split fills and other variations in order execution, and the duration and extent of individual investor participation in the specified system. While the information and statistics given are believed to be complete and accurate we cannot guarantee their completeness or accuracy as they results are key punched and subject to human error. Performance information is not the performance of a single account, but a compilation of several accounts over time, and is based on the physical trading ticket. THIS INFORMATION IS PROVIDED FOR EDUCATIONAL/ INFORMATIONAL PURPOSES ONLY AND USED BY CURRENT CLIENTS TO AUDIT THEIR STATEMENTS TO STRIKER SITE. These results are not indicative of, and have no bearing on, any individual results that may be attained by the trading system in the future.
This trading system, like any other, may involve an inappropriate level of risk for prospective investors. THE RISK OF LOSS IN TRADING COMMODITY FUTURES AND OPTIONS CAN BE SUBSTANTIAL AND MAY NOT BE SUITABLE FOR ALL INVESTORS. Prior to purchasing or leasing a trading system from this or any other system vendor or investing in a trading system with a registered commodity trading representative, investors need to carefully consider whether such trading is suitable for them in light of their own specific financial condition. In some cases, futures accounts are subject to substantial charges for commission, management, incentive or advisory fees. It may be necessary for accounts subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets. In addition, one should carefully study the accompanying prospectus, account forms, disclosure documents and/or risk disclosure statements required by the CFTC or NFA, which are provided directly by the system vendor and/or CTA’s.
The information contained in this report is provided with the objective of “standardizing” trading systems measurements, and it is intended for educational /informational purposes only. All information is offered with the understanding that an investor considering purchasing or leasing a system must carry out his/her own research and due diligence in deciding whether to purchase or lease any trading system noted within or without this report. This report does not constitute a solicitation to purchase or invest in any trading system which may be mentioned herein. CANNON TRADING COMPANY AND STRIKER SECURITES, INC. MAKES NO ENDORSEMENT OF THIS OR ANY OTHER TRADING SYSTEM NOR WARRANTS ITS PERFORMANCE. THIS IS NOT A SOLICITATION TO PURCHASE OR SUBSCRIBE TO ANY TRADING SYSTEM.
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.
Questions about the markets? trading? platforms? technology? trading systems? Get answers with a complimentary, confidential consultation with a Cannon Trading Company series 3 broker.
Would you like to receive daily support & resistance levels?
First Notice (FN), Last trading (LT) Days for the Week: www.mrci.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 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.
All traders will begin with a virtual account of $100,000.00 Your goal: increase the balance to as much as possible by the conclusion of the competition.
Top three traders with the highest P&L balance at the end will get a cash prize.
One winner will be chosen from the remaining participants to receive a cash prize.
The prizes to the winners shall be awarded in the form of a check (or any other form as reasonably determined by StoneX) and sent to the winner within ten business days of receiving the required tax documentation.
As a trader, you will come across many factors that you must consider before entering or exiting the markets. Some of the most important aspects to look for are economic events that can move the markets drastically one way or another.
There are many types of economic events including releases by a governing body, changes in sales or consumption of commodities, and increases in supply and demand. All of these can affect the markets you trade, making it important for you to know how and when these changes are happening.
In this “Trading Around Key Economic Reports” FREE Course you will learn:
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.
December Cotton completed its first upside PriceCount objective but to this point has not been able to extend its rally any further. Now, the chart has activated downside counts on the correction lower. The first objective projects a run to the 83.87 area.
PriceCounts – Not about where we’ve been , but where we might be going next!
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.
Broker’s Trading System of the Week
With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.
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.
Questions about the markets? trading? platforms? technology? trading systems? Get answers with a complimentary, confidential consultation with a Cannon Trading Company series 3 broker.
Would you like to receive daily support & resistance levels?
First Notice (FN), Last trading (LT) Days for the Week: www.mrci.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 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.
What you need to know before the close of the trading week:
By Senior Broker, Mark O’Brien
General:
It will likely be challenging to predict the next stage of the Israel/Hamas war in terms of how broadly it draws in other participants. For now, diplomatic efforts – negotiating for the release of hostages, calls for a cease fire, bringing humanitarian aid to civilians in Gaza – have toned down the severity of the fighting. Concurrently, Israel is softening up the opposition by bombing of targets thought to be Hamas military strongholds and the markets are anticipating the launch of a ground war.
Even with the conflict entering its 20th day and seeing how commodities have already reacted in that time, the start of ground fighting and/or a broadening of participants would likely see sharper moves in particular futures contracts, i.e., gains in energies, flight-to-quality upward movement in gold and the Swiss franc and even food-related commodities like wheat. Conversely, equity index futures – U.S. and more broadly – will be vulnerable to draw-downs. Note that the E-mini Nasdaq already fell into correction territory on Wednesday following the latest tech earnings.
Financials:
One instrument at a potential cross-roads – it’s current 6-month / ±$11K per contract decline a dominant catalyst for dragging shares around the world to multi-month lows – is the 10-year T-note futures contract. Its correspondent benchmark yield is hovering at a 15-yr high of 5%. Already vulnerable to information on the pace of the U.S. economy, the conflict uncertainty poses a new agitator to the market.
Crypto:
After trading down to 3-year lows below 15,000 last October, on Tuesday, Bitcoin futures traded through 35,000, a 17-month high, a ±$10,000 move for a Micro Bitcoin futures contract (contract size: 1/50 Bitcoin), a ±$100,000 for the “adult” / Bitcoin futures contract (contract size: 5 Bitcoin).
Softs:
With new all-time highs being set all year – almost weekly – orange juice futures (basis Nov.) are poised to break through $4.00/lb. (contract size: 15,000 lbs, 1 cent = $150), more than double its ±$1.85 levels in January, a ±$32,000 per contract move. Florida orange growers harvested their smallest crop in nearly 90 years, the result of an ill-timed freeze, two hurricanes and the citrus psyllid, a tiny invasive winged insect that has spread citrus greening disease and is laying waste to Florida’s groves.
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.
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.
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.
The past two weeks have seen very choppy price action especially in stock indices futures, with sudden and sharp swings from highs and lows.
This contrasts with the smoother and steadier price action we witnessed before the terrible October 7 attack on Israel. As a trader, you need to evaluate the market conditions and the instruments you are trading, and how they respond to geopolitical events and overall market rhythm and price action.
You also need to adapt and be alert to what is changing, because what worked six weeks ago may need some adjustment in order for it to work for the next six weeks. Day trading is challenging, and many times price movement is just noise in a trending or non-trending environment. Some people try to use order flow to get clues and capture a small part of the market, while others trade based on the news and overall market feel.
In my opinion, using counter trend techniques and respecting the VWAP has been more effective in these past two weeks than other methods. Plan your trade, trade your plan!
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.
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.
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.
The Week Ahead: Earnings, ECB rate Decision, GeoPolitical
By Senior Broker, John Thorpe
The Week ahead barring any new geopolitical tensions as we remain vigilant scanning the actions of many political leaders throughout the globe as genuflection = volatility. Chest thumping aside, Wednesday’s important number is New Home sales.
As for the most anticipated earning reports this week the following is from Barron’s:
In terms of the most anticipated names, here is the calendar for the week:
Existing Home sales released at 9am CDT are expected to report Year over year sales greater than -16%
Watch your blindside and expect more volatility! Plan your trade and trade your plan.
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.
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 stock index futures instead of individual stocks is a strategy that offers several advantages to investors and traders. Stock index futures, such as Nasdaq 100 futures, S&P 500 futures, and Dow Jones futures, allow market participants to gain exposure to a broad market index rather than investing in individual stocks. This approach has gained popularity for several reasons, making it an attractive choice for those looking to diversify their portfolios, manage risk, and potentially achieve better results.
Diversification: One of the primary benefits of trading stock index futures is diversification. Instead of investing in a single stock, which can be subject to company-specific risks, trading futures on a stock index provides exposure to a basket of stocks. The Nasdaq 100, S&P 500, and Dow Jones Industrial Average (DJIA) are well-known stock indices, and trading futures on these indices allows traders to benefit from the collective performance of multiple companies. This diversification spreads risk and can reduce the impact of negative news or events affecting individual stocks.
Liquidity: Stock index futures are highly liquid, making it easier for traders to enter and exit positions. Liquidity is essential for executing trades at desired prices and minimizing slippage, which can be more challenging when dealing with less liquid individual stocks. The liquidity of index futures also ensures that there are typically tighter bid-ask spreads, reducing transaction costs for traders.
Leverage: Stock index futures often require a smaller capital outlay compared to buying a portfolio of individual stocks. This allows traders to leverage their positions, potentially amplifying their returns. However, it’s important to note that leverage also comes with increased risk, so traders should use it judiciously and be aware of the potential for substantial losses.
Risk Management: Stock index futures are valuable tools for managing risk. They can be used to hedge an existing stock portfolio or to speculate on market movements. For instance, if an investor owns a portfolio of technology stocks and believes there may be a market downturn, they can use Nasdaq futures to hedge their exposure. If the market declines, gains on the futures position can offset losses in the stock portfolio.
Lower Company-Specific Risk: By trading stock index futures, investors can avoid the company-specific risk associated with individual stocks. While stocks can be impacted by events like earnings reports, management changes, or product recalls, these factors have a limited impact on stock index futures. Traders can focus on broader market trends and economic factors when trading futures contracts.
24-Hour Trading: Stock index futures often have extended trading hours, allowing traders to react to global events and news outside regular market hours. This can be advantageous for those who want to stay informed and make trading decisions around the clock.
Transparency and Regulation: Stock index futures are traded on regulated exchanges, providing a high level of transparency and oversight. This can instill confidence in traders, knowing that their transactions are conducted in a well-regulated environment.
In conclusion, trading stock index futures offers several advantages over trading individual stocks. These futures contracts provide diversification, liquidity, leverage, and risk management benefits. They are especially popular for traders looking to gain exposure to broad market indices like the Nasdaq, S&P 500, and Dow Jones. By trading stock index futures, investors can reduce company-specific risk, manage their portfolios more efficiently, and potentially achieve better risk-adjusted returns. However, like any investment, it is essential for traders to understand the complexities and risks associated with futures trading and to employ sound risk management practices.
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 ti
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.
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.
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.
