![\"Futures](\"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-content\/uploads\/2019\/04\/dollar-exchange-rate-544949_1920-1024x724.jpg\" "\\"\\"")
<\/p>\n<\/p>\n
<\/p>\n
The sweep of the coronavirus around the world ranks as one of the most impactful events in decades. Due in large part to sweeping lockdowns of businesses, travel and social activities, global markets, particularly commodity markets, have experienced price disruptions on an unprecedented scale. Recall earlier this year, the front month crude oil futures contract (May) traded at a value below $0.00 per barrel and at the close of trading one day, its price settled at a negative value. Conversely, gold\u2019s December futures contract recently reached an all-time high above $2,000 per ounce. These price moves and similar ones \u2013 in silver, copper, stock indexes like the S&P 500<\/a>, Nasdaq & Dow Jones<\/a>, lumber and others \u2013 can be at least partly attributed to abrupt changes in supply & demand patterns during this international health crisis and its effects on producers\u2019 and consumers\u2019 behavior.<\/p>\n In this environment, the case could be made to review trading strategies and make adjustments \u2013 in market selection (think \u201cfull-sized\u201d vs. mini- or micro- contracts), risk parameters \u2013 both in terms of dollar value and price toleration \u2013 market selection\/allocation, trade frequency and for automated systems, adjustments to algorithms. All this would be to expect a continuation of the last several months\u2019 market movement\/volatility.<\/p>\n As part of a strategy review, it would be a good idea to also be aware of any price limits or circuit breakers in place for the markets you\u2019re trading. A price limit is the maximum price range allowed for a futures contract for a trading session. At those price limits, trading may halt for a period of time and an expanded price limit is set, or it may be stopped for the day. Circuit breakers are price limits that when hit, set a timer within which the market is restricted from moving beyond the price limit. In some markets, price limits and circuit breakers are based on percentage moves from the prior day\u2019s closing price and thus are recalculated each day.<\/p>\n Grains and livestock futures contracts, for example, have daily price limits that remain in place for an entire trading session. Stock indexes have both price limits that remain in place for an entire trading session and several circuit breakers: ones that are in place overnight and others that work only during the day. During high volatility periods of time, if markets trade to circuit breakers or price limits, orders placed during at that time can be rejected by the exchange. In summary, knowing these price parameters is especially important.<\/p>\n For more information on how CME Group price limits and circuit breakers work, visit this link<\/a>.<\/p>\n