online futures trading platforms?
May 11th, 2008
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Archive for May, 2008
Fundamentals of Futures Trading
May 8th, 2008
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Jeff Wright asked:
‘Futures’ here means ‘futures contracts’ and futures trading refers to the act of trading futures contracts. Like stock trading, we have different floors (exchange) to trade each commodities. Commodities here can vary from gold, silver, S&P 500 index, livestock, wheat or cotton…and we can categorise them in two types: those need physical delivery and those require cash settlement. The contracts which require a physical delivery are known as commodity futures and include futures for agricultural commodities like rice, wheat, sugar, oats; energy commodities like natural gas, crude oil, heating oil and others such as animals, wood etc. Futures contract which require a cash settlement are known as financial futures and involve treasury notes, bonds, mutual funds etc.
Each commodity has different trade practices, especially ‘weather commodities’. Let’s have a look at an example from http://learnaboutfutures.com/leanhogscontent.php about lean hogs futures. Known as Lean Hog futures when first introduced at the CME, changed in 1997 to lean hog futures, this contract can be hedging tool for pork producers, importers, and exporters.)
Lean hogs are traded at CME (Chicago Mercantile Exchange). Trading hours is from 9:05 – 13:00 CT Electronic – Mon – Thurs 5pm to 4pm. Contract size is 40,000 lbs quoted in dollars and cents per hundredweight (cwt).
Unlike lean hogs, crude oil, a more popular commodity, is traded at NYMEX (New York Mercantile Exchange). Trading hours 9:00 am - 2:30 pm ET for open outcry and 6:00 pm to 5:15 pm for electronic trading. Contract size is 1,000 US barrels and is quoted in US dollars and cents per barrel.
Every futures trading require a futures trading broker or futures commission merchant (FCM). A futures trading broker is an intermediate between the public trader and the futures market, who deposit a margin from the web trader to the futures trading market to make the trader a recognized one. All the activies of the brokerage firms are monitored by a commission called Commodity Futures Trading Commission (CFTC).
KENTON
‘Futures’ here means ‘futures contracts’ and futures trading refers to the act of trading futures contracts. Like stock trading, we have different floors (exchange) to trade each commodities. Commodities here can vary from gold, silver, S&P 500 index, livestock, wheat or cotton…and we can categorise them in two types: those need physical delivery and those require cash settlement. The contracts which require a physical delivery are known as commodity futures and include futures for agricultural commodities like rice, wheat, sugar, oats; energy commodities like natural gas, crude oil, heating oil and others such as animals, wood etc. Futures contract which require a cash settlement are known as financial futures and involve treasury notes, bonds, mutual funds etc.
Each commodity has different trade practices, especially ‘weather commodities’. Let’s have a look at an example from http://learnaboutfutures.com/leanhogscontent.php about lean hogs futures. Known as Lean Hog futures when first introduced at the CME, changed in 1997 to lean hog futures, this contract can be hedging tool for pork producers, importers, and exporters.)
Lean hogs are traded at CME (Chicago Mercantile Exchange). Trading hours is from 9:05 – 13:00 CT Electronic – Mon – Thurs 5pm to 4pm. Contract size is 40,000 lbs quoted in dollars and cents per hundredweight (cwt).
Unlike lean hogs, crude oil, a more popular commodity, is traded at NYMEX (New York Mercantile Exchange). Trading hours 9:00 am - 2:30 pm ET for open outcry and 6:00 pm to 5:15 pm for electronic trading. Contract size is 1,000 US barrels and is quoted in US dollars and cents per barrel.
Every futures trading require a futures trading broker or futures commission merchant (FCM). A futures trading broker is an intermediate between the public trader and the futures market, who deposit a margin from the web trader to the futures trading market to make the trader a recognized one. All the activies of the brokerage firms are monitored by a commission called Commodity Futures Trading Commission (CFTC).
KENTON
September 26, 2007 Mid-Day Metals Report
May 8th, 2008
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IraEpsteinFutures asked:
Futures Trading, Online Trading, Metals Review, Sales: 800-284-3010
KALANI
Futures Trading and Analysis 09-30-2008
May 6th, 2008
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TradePilotPro asked:
Trading Futures
MENDE
Futures: Confidential Tactics Reveal How To Make Excellent Futures Trades
May 4th, 2008
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Jimmy Cox asked:
Trading is often considered a risky business. But, no one denies that there are also great rewards to be found in the markets. This dichotomy appears in every trade made. The key to making good futures trades is to understand this fact, and calculate the risk to reward ratio of all futures trades you make. You need to know what the likely return of the trade is if it goes according to plan, and how much are you likely to lose if it doesn`t. You need to know this before you make one or more futures trades.
In order for futures trades to make sense, it`s potential reward must outweigh its potential loss by as much as possible. Obviously, if a futures trade is more likely to fail than succeed, you shouldn`t make the trade. If the futures trades are equally likely to succeed or fail, it`s not a trade worth making either. If success is only slightly more likely than failure, you`re at least on the right side of the risk to reward ratio, but is it really worth it? If there`s no good trading opportunity in sight, wait until one appears.
How do you figure out the potential reward and the potential risk? You can determine the reward level by evaluating the strength of a futures stock, by tracking the outcome of similar futures trades made on other futures stocks for the same reason, an equivalent trend, by considering market conditions, and last by examining the technical and psychological resistance levels you see for the futures stock.
If, for example, you want to trade a particular futures stock based on a trend you`ve observed in four other stocks, which would mean you have a good, compelling reason for the futures trades you are considering, you`ll first judge the company`s strength. Check to see if it`s a leader in its sector that always has good earnings and tends to run up strongly during market rallies. Let`s say, for this example, that it does. Then look up the range of percentage returns those other four stocks gave. They are between 8 percent and 22 percent. Then, consider the market conditions, which are becoming more bullish. Last, check the resistance levels for the futures stock. Right now, it`s trading at 18 dollars; it`s got technical resistance at around 23 dollars, and although a little psychological resistance may appear at 20 dollars, it`ll be more of an issue at 25 dollars and certainly at 30 dollars.
A 10 percent rise in the futures stock`s price would bring it to slightly below 20 dollars. Since the futures stock and the market are strong and four other futures stocks have given good returns on this strategy, and since the futures stock has been as high as 23 dollars before, it`s reasonable to anticipate that the stock could see 23 dollars if it goes on a strong run. That would be a return of over 25 percent. It looks like the potential return on this trade is somewhere between 10 percent and 25 percent, with it likely to be higher end.
And what`s the potential loss? That depends on where you set your stops. Stops are a critical part of your trading plan, and should be given careful consideration. For this example, let`s say you don`t think the futures stock is likely to go down past 17 dollars, since the chart shows strong support there. If you set your stop just below 17 dollars and it ends up being triggered, your loss will be about 6 percent. That`s somewhat high, but since it looks very unlikely that the futures stock will head down that far, the risk of loss is not actually that high.
So, this trade gives you a probable upside of at least 10 percent and as much as 25 percent, with a relatively unlikely downside of 6 percent. This is a good risk to reward ratio. If you have a good reason for every trade you make, and make only futures trades with risk to reward ratios that are very promising, you maximize your chances for long term success.
RISCH
Trading is often considered a risky business. But, no one denies that there are also great rewards to be found in the markets. This dichotomy appears in every trade made. The key to making good futures trades is to understand this fact, and calculate the risk to reward ratio of all futures trades you make. You need to know what the likely return of the trade is if it goes according to plan, and how much are you likely to lose if it doesn`t. You need to know this before you make one or more futures trades.
In order for futures trades to make sense, it`s potential reward must outweigh its potential loss by as much as possible. Obviously, if a futures trade is more likely to fail than succeed, you shouldn`t make the trade. If the futures trades are equally likely to succeed or fail, it`s not a trade worth making either. If success is only slightly more likely than failure, you`re at least on the right side of the risk to reward ratio, but is it really worth it? If there`s no good trading opportunity in sight, wait until one appears.
How do you figure out the potential reward and the potential risk? You can determine the reward level by evaluating the strength of a futures stock, by tracking the outcome of similar futures trades made on other futures stocks for the same reason, an equivalent trend, by considering market conditions, and last by examining the technical and psychological resistance levels you see for the futures stock.
If, for example, you want to trade a particular futures stock based on a trend you`ve observed in four other stocks, which would mean you have a good, compelling reason for the futures trades you are considering, you`ll first judge the company`s strength. Check to see if it`s a leader in its sector that always has good earnings and tends to run up strongly during market rallies. Let`s say, for this example, that it does. Then look up the range of percentage returns those other four stocks gave. They are between 8 percent and 22 percent. Then, consider the market conditions, which are becoming more bullish. Last, check the resistance levels for the futures stock. Right now, it`s trading at 18 dollars; it`s got technical resistance at around 23 dollars, and although a little psychological resistance may appear at 20 dollars, it`ll be more of an issue at 25 dollars and certainly at 30 dollars.
A 10 percent rise in the futures stock`s price would bring it to slightly below 20 dollars. Since the futures stock and the market are strong and four other futures stocks have given good returns on this strategy, and since the futures stock has been as high as 23 dollars before, it`s reasonable to anticipate that the stock could see 23 dollars if it goes on a strong run. That would be a return of over 25 percent. It looks like the potential return on this trade is somewhere between 10 percent and 25 percent, with it likely to be higher end.
And what`s the potential loss? That depends on where you set your stops. Stops are a critical part of your trading plan, and should be given careful consideration. For this example, let`s say you don`t think the futures stock is likely to go down past 17 dollars, since the chart shows strong support there. If you set your stop just below 17 dollars and it ends up being triggered, your loss will be about 6 percent. That`s somewhat high, but since it looks very unlikely that the futures stock will head down that far, the risk of loss is not actually that high.
So, this trade gives you a probable upside of at least 10 percent and as much as 25 percent, with a relatively unlikely downside of 6 percent. This is a good risk to reward ratio. If you have a good reason for every trade you make, and make only futures trades with risk to reward ratios that are very promising, you maximize your chances for long term success.
RISCH
How much brokerage on crude oil futures?
May 2nd, 2008
Siddhant Batra asked:
In terms of dollars, how much is the standard brokerage charged for trading 1 future lot of Light Crude Oil (consider its price to be $120)
DADD
In terms of dollars, how much is the standard brokerage charged for trading 1 future lot of Light Crude Oil (consider its price to be $120)
DADD
Stock Trading - How many shares before you hit Partial Fills?
May 1st, 2008
kirkhilles asked:
Hi, I’m interested into getting into day trading in the future and had a question about partial fills (ie: you place an order for 1,000 shares, but only get a fill for 100 at a particular price).
Hi, I’m interested into getting into day trading in the future and had a question about partial fills (ie: you place an order for 1,000 shares, but only get a fill for 100 at a particular price).
How many shares (or amount of equity) of a heavily traded Fortune 500 company can you typically trade in a single transaction without getting partial fills. What about if you use Market orders vs. Limit Orders?
For instance, if you were to place an order for $100,000 of Google stock via a Market order, would you typically get the entire order filled immediately? What about if you try to sell $100,000 at Market?
What about if you do Limit orders vs. Market orders?
I would like to be able to trade very large quantities frequently during the day and would like to know if I’m going to need to account for partial fills.
Thanks so much!
(In response): Thanks, yes, I’ve been doing analysis for a couple of years now and know enough to be dangerous =).
The reason I mentioned the dollar amount as opposed to the number of shares is my assumption that there is a rough dollar amount to when you start reaching limits as opposed to quantities of shares.
For instance, which is more likely to get a partial fill (all other things being equal):
200 shares of a $500.00 stock
2,000 shares of a $50.00 stock
Is it better to day trader larger value stocks to reduce the chance of a partial fill or does it not matter?
AKBAR