Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
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As a thank you….you get to have first look at an article I wrote and will be part of a series of articles about the different economic reports and different ways to explore trading around these reports:
Futures Trading 101: Trading Around Economic Reports
Trading is truly a fascinating pursuit. The markets can in still excitement, frustration, irritation, exhilaration – really a wide range of emotions – conceivably, even within a single trade. Trading is definitely one of those undertakings where one has to constantly study, evolve and grow.
There are also a number of different approaches to trading, including day trading, swing trading and position trading. There are strategies that focus on just trading straight futures contracts, others solely trade options, including selling/writing options, still others incorporate long and short positions simultaneously – spread trading – utilizing futures and/or options.
One narrowly defined approach to trading – probably most relevant for day traders – is trading around economic reports.
The release of economic reports occurs almost daily. Most come from the U.S. federal government and look at national or large regional data; some come from other private surveys. Some garner considerable attention by traders; others draw barely a thought, much less a glance at their impact on the markets. This article doesn’t attempt to detail any particular number of them and their significance. Rather, it lists some pointers that can help traders prepare for reports releases.
- Know the times reports are set for release
- Know which markets reports may impact
- Know what the markets are expecting and how different outcomes will affect market movement
- Do your homework, i.e., go over charts from earlier dates when similar reports were released.
- Keep a journal. Focus on the reports that affect the markets you trade. In general, I like to know what the market expects, observe the market’s reaction to the actual data, let the initial strong move occur and then if there is a clear direction, I like to try trading the second wave. That means if I am looking to go short, I would give the market time, take a look at price action and wait for higher prices to go short. It’s possible I may miss the trade but I prefer to be rather conservative and follow the thinking that “no trade is better than a bad trade.” Another way more experienced traders can play major reports is by placing limits to both buy and sell at points they consider are the outer ranges for the short time frame. One must be experienced enough and understand the many factors and risks in trading during major numbers and know how to send attached orders.
- If you trade energies, you should know that Wednesday morning at 9:30 A.M., Central Time a key weekly report is released. If you trade natural gas, Thursday morning at 9:30 A.M., Central Time is similarly worth keeping an eye on.
- The financial markets (Treasury Bonds & Notes) are probably the markets most influenced by economic reports, such as Non-farm Payrolls/unemployment, housing starts, permits and home sales, Producer & Consumer Price Indexes, Consumer Confidence and others.
- There are a few great sources on the web that will list these reports and their meaning, including some free sources as well as paid services. The latter often provide real time updates and commentary.
- The vast majority of these reports are regularly scheduled weekly or monthly. Others, such as Federal Open Market Committee events occur every 6-8 weeks. Do your homework.
- Last but not least, do not enter a trade with the idea that you’ll just get in and see how it goes. Risk levels, potential targets, in other words, a game plan should be considered BEFORE you enter the trade!
- I will expand on this topic in future articles and write specifically about certain reports, the markets they affect, and more. Until then, don’t just jump in and start trading economic reports. Talk to a series 3 professionals at Cannon Trading Co, Inc. who can help you understand more, provide you with an honest outlook of both the risks and opportunities and who can help you devise a game 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.
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Levels for Trade Date of 02.10.2017
|Contract March 2017||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||Apr. Gold||March Silver||Mar. Crude Oil||Mar. Bonds||March Euro|
|Resistance 3||1256.4||18.03||54.24||154 22/32||1.0768|
|Resistance 2||1251.3||17.94||53.72||154 4/32||1.0744|
|Resistance 1||1241.7||17.80||53.40||153 4/32||1.0709|
|Support 1||1227.0||17.57||52.56||151 18/32||1.0650|
|Contract||March Corn||March Wheat||Mar. Beans||March SoyMeal||Mar. Nat Gas|
French Industrial Production m/m
French Prelim Non-Farm Payrolls q/q
Italian Industrial Production m/m
Manufacturing Production m/m
Goods Trade Balance
Construction Output m/m
Industrial Production m/m
Import Prices m/m
NIESR GDP Estimate
Prelim UoM Consumer Sentiment
Prelim UoM Inflation Expectations
Federal Budget Balance
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.