Weekly Newsletter #1027 – Margins Update, Circuit Breakers – DOW Jones Chart – Trading Levels 11.02.2020
Posted By:- Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
Cannon Futures Weekly Letter Issue # 1027
Dear Traders,
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MARGINS UPDATE:
Upcoming elections fear, COVID resurge and other factors really helped spike up volatility.
Most of Cannon clearing partners and risk managers have increased margins to full overnight or what we call 100% margins even during the day.
This does NOT apply to all platforms and clearing houses we work with. Some only raised margins for during the night session and some also raised margins through out the day.
Most platforms will provide a notice when you login regarding margins.
Cannon offers over 10 different platforms via 5 different clearing houses.
If you are a client who day trades and utilize day trading margins – PLEASE confirm with your broker what are the current margins based on the platform you use and the markets you trade.
During this Time:
*Expect the unexpected…
* Have an idea of what you are looking to do, keep in mind possible risk and have a game plan. Now more than ever, plan your trade and than trade your plan!
* Think money management, hedging risk while you are still trying to figure out how to profit.
- Try to use preset brackets/ automated stops and limits etc. if you are able to with your software.
* Know what is going on, reports, current margins, current limits and more.
*Trade smaller. The bands are much larger. Watch the VIX. MICROS and smaller sized contracts like mini Silver and mini crude are good alternatives.
* DO NOT assume anything…if you are not sure, contact us and we will try our best to assist with the combined, vast experience we have here as a team.
* Wash hands, take this seriously and do your best to stay healthy….
Circuit Breakers:
I’ve received some questions about the price limits or circuit breakers we have seen mostly in stock index futures. Hopefully this explains things a bit better:
A price limit is the maximum price range permitted for a futures contract in each trading session. When markets hit the price limit, different actions can occur depending on the product being traded. Markets may temporarily halt until price limits can be expanded, they may remain in a limit condition or they may stop trading for the day, based on regulatory rules.
This is for Stock Index futures but keep in mind MANY other markets are experiencing LARGE swings and moves.
Overnight limits (5:00 P.M. – 8:30 A.M., Central Time): the futures contract is limited to a 7% price move up or a 7% price move down, based on the futures contract’s prior day’s settlement price (3:15 P.M., Central Time).
If PRICE LIMITS hit 7% up or down and trading will cease until the NYSE cash market opens at 8:30am Central Time.
This is for Stock Index futures but keep in mind MANY other markets are experiencing LARGE swings and moves.
Overnight limits (5:00 P.M. – 8:30 A.M., Central Time): the futures contract is limited to a 7% price move up or a 7% price move down, based on the futures contract’s prior day’s settlement price (3:15 P.M., Central Time).
Further, if a contract market moves beyond +/- 3.5% within an hour during the overnight session, trading will be paused for two minutes.
If PRICE LIMITS hit 7% up or down and trading will cease until the NYSE cash market opens at 8:30am Central Time.
This applies to the main stock index futures contracts available, such as the ES, MES, NQ, etc.
What is so dangerous you may ask?
If you are long an ES during the night session and the market is limit down (7%) you can NOT get out. There is a chance that when the market opens up at 8:30 AM CDT that the market will then go down the 13% limit without you being able to exit. That means that on certain situations you can lose MORE than you have in your account.
If you don’t understand how the circuit breakers/ price limits work…make sure you call us and talk to a broker at + 1 310 859 9572
This only applies for the overnight session ending at 8:30 A.M. Central Time. At that point, a new set of rules kick in ONLY to the downside.
-7% Trading Halt 15 mins
-13% Trading Halt 15 mins
-20% Closed for rest of day
Trading 101: One of the Most Important (and often overlooked….) Aspects of Day Trading – Learn to Accept Losses
(I think this is a very important read during this time.)
I am frequently asked, (and many times I ask myself) about the keys to trading success in general and futures trading in specific. The list is long and, to be honest, it is not an exact science.
Successful trading is a mix of art and math, personality and discipline and much more in between. I have seen many different ways to make money in the futures and commodities world. I saw and still see clients trade and make money.
Yet, the list of clients who lose money is bigger than the ones who make money….Why?
Dow Jones Industrial Avg. Cash Index WEEKLY chart below. Notice the levels and notice the turning up in volatility on bottom of the chart.
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 when it comes to Futures Trading.
Futures Trading Levels
11-02-2020
Weekly Levels
Economic Reports, source:
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.
