Climbing above the bulls and bears. In Man v.s. Markets Cannon Trading addresses the topics on every traders mind in order to rise above the futures market fray. Learn stategies on demo trading and being a demo trader.
1. What do I need to start trading futures?
2. Day Trading Commodities with Crude Oil Futures - New Article
4. (Day) Trading Futures vs. ETFs, Stocks - New Article
5. Demo Trading - Why Didn't I Get Filled?6. Ranking 30 Futures Market Moving Events
So you’ve come this far. You’ve evaluated different vehicles of investment, and you have
decided to expand your portfolio to include commodity futures, Now
what? You are going to need a few tools at your disposal: a knowledgeable commodity broker that
is quick on their feet, a reliable, efficient platform that will get you the information
you require and executes your trades on a timely basis, and perhaps most importantly a
plan.
Let’s begin with the most important requirement: because futures are so highly
leveraged (if you are holding one contract of the E-mini S&P 500, the notional value of the
contract is 50x the current index price), there’s no doubt it can be a very risky
asset class and you should only be trading with “risk
capital”, or money that you can stand to lose and won’t affect your
lifestyle if you do. Once you’ve accumulated your risk capital and you’ve
come to terms with the nature of trading futures, you can take matters a step further by
doing research on what kind of trader you want to be.
Our Vice President, Ilan Levy-Mayer, wrote a piece entitled “What’s Your
Trading Blood Type” that’s available for you to read. It is a free resource here on our
website, and at the very least it will be a solid step in the right direction on the long and winding path that is
futures trading.
Trading commodities in and of itself is a very difficult task that requires lots of patience and research; to go
against your own grain and force yourself into a trading stereotype that does not fit is only going to make the
uphill battle seem that much less possible. Some day-traders simply do not have the patience to hold positions for
more than an hour, while many swing-traders lose their minds to anxiety when trying to enter and exit a trade within
15 minutes...Read Full Article.
Crude Oil is one of MY favorite futures market for day trading. Before I dive in and share with you how the volatility in crude oil fits my risk tolerance for day trading and provide a couple of chart examples, we should review some of the specifications of Crude Oil Futures.
Crude Oil Futures have monthly expiration. So each month we trade a different contract month, so one needs to know when is the first notice day and last trading day for crude oil futures in order to always make sure we are trading the proper month with the most liquidity and avoid any chance of getting into delivery situation.
Next is the contract size. Crude Oil futures are based on 1,000 barrels. To be honest from a day trading perspective all I care is that each tick or 1 cent fluctuation is $10 against me or in my favor per contract. That means that a move from 92.94 to 92.74 = $200.
Another factor is trading hours. At the time I am sharing my thoughts with you, April 8th 2013, crude oil futures trade on the CME Globex platform and trade from 5 PM CDT until the next day at 4 PM CDT. That is 23 of straight trading hours. I definitely don't recommend day trading this market 23 hours...but it is good to know the trading hours.
Volume in crude oil futures is pretty good to trade in my opinion. Averaging about 300,000 contracts per day.
One last pointer to touch on is the Energy Information Administration (EIA) report that normally comes out Wednesday at 9:30 CDT (on short weeks, holidays etc. , this report will be pushed to Thursday at 10 AM CDT). I tell my clients that this report is way too volatile and I like to be out 5 minutes before and not resume trading 5 minutes until after the report comes out. This report by itself deserves a writing but on short, the report provides information on how our stock pile is doing ( = supply/demand) and the market will move based on the numbers versus what was expected. Again as a day trader, your main job is to know about this report, when it comes out and in my opinion stay out of the market during this time...Read Full Article.
Over my 20+ year career as a commodities broker, I have studied and traded a wide range of approaches to trading the futures markets. From candlestick formations to the commodity channel index, from condors to turtle trading, there’s an enormous catalog of tools and methods available for traders to consider.
One method I have noticed is surprisingly underrepresented among retail traders is futures spread trading, where a single position in the market consists of the simultaneous purchase of one futures contract and sale of a related futures contract as a unit. I call it surprising because some of the most invested players in futures trading – and arguably the most sophisticated – include large speculators and commercial firms who regularly employ spreads. This includes traders in the markets who often actually buy and sell the physical commodities we trade. Farmers, ranchers and other food growers along with food producers, petroleum companies who either drill for oil or natural gas or refine these products – or both, financial institutions with enormous holdings in treasuries, equities or currencies, mining interests and their buyers – all these areas of production and distribution employ spreads from time to time as an important aspect of their businesses. Indeed, spread trading is a fundamental and essential part of the commodities futures markets...Read Full Article.
According to the Wall Street Journal, assets in Exchange Traded Funds (ETFs) have grown to roughly $2 trillion dollars since their inception. Exchange Traded Funds were created to compete with the $20 trillion dollar Mutual Fund Market as it was the only market in which you could achieve broad class diversity outside of individual stocks. ETFs were also designed to overcome the drawback that mutual funds could only settle on the close of daily business at their Net Asset Value (NAV). Previously, broad diversification across market sectors could only be purchased or sold at the close of the business day based on the equity, bond or raw material elements included in the weighted averages of every component of the sector mutual fund—thus, ETFs came into play.
Read Full Article.
Demo Trading. Also known as simulated trading, paper trading, playing with Monopoly
money; whatever you'd like to call it, a demo can be your best friend or your worst
enemy. Every Futures broker dreads having this
conversation with their clients, as it is necessary with every new trader; however, much
to a broker’s chagrin, every new trader will say that they already understand when in
fact they rarely do. Let me assure you, if you're a new or even intermediate trader, you
probably don't. You may understand one popular issue of the conversation but odds are if
you have been paper trading for five years waiting to be "successful" or to
"understand the futures markets" in the simulated world before moving on, you
have less of a chance of being successful in the live futures markets because you're
setting yourself up for failure (if you ever do, in fact, trade in the live markets).
You should seriously consider speaking with a licensed commodities and futures broker
before diving in...Read the full article.
By: Justin Smith, Cannon Trading Commodities Broker
Every trader has done it. You've done it, your friends have done it, even your broker has done it at one point early in their career.
Here's the scenario:
You've finally finished your futures education at Cannon Trading Company. You've done you're homework on stops, limits, indicators and price movements for the market you're trading. You're ready to go, you enter your limit order and you wait.
**DING**
You get filled. Your heart rate picks up, a wry smile crosses your face and you begin to imagine the possibilities of the one trade you're in: How much can I make? How much can I lose before it's too much? You've waited through months of technical trading and deep meditation to get here, and now it's finally paying off with one of your first trades in the live market. Sayonara paper trading; aloha live futures...Read the full article.
BROKER NOTES:
It should be noted that this list was compiled based on the AVERAGE rankings by the senior brokers here in the office. Therefore, it should be noted that there are differences in opinion, ESPECIALLY on the position of the "Factory Orders" and "Philly Fed Survey", which some believed should be switched around. Feel free to comment, phone in or email us your questions or concerns. We're happy to get into a discussion about any of these events and how they affect the markets.
Source for definitions: Econoday
Disclaimers:
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** 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!
