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Futures Articles

 

Learn Hog Seasonal Spread by Don Dawson

One of my favorite styles of trading the Futures markets is the Intra-Commodity Spread. For this trade, we are going to be simultaneously buying and selling contracts of the same Commodity in different months. Once we have established this position, we will monitor the net difference between the two contract months. This is known as the Spread. We will be looking at the June11/February11 Lean Hog Spread... READ MORE

 

Learning from Consistently Profitable Traders by Don Dawson

Novice traders usually come into Futures trading thinking that they need some elaborate trading system or automated software to tell them when to buy or sell to become a successful trader. Soon after that, they feel like there is a hidden secret that only a select group of traders know about... READ MORE

 

Divergence at Turning Points by Don Dawson

Many of us are already using support/resistance levels to locate possible turning points in the markets. We can identify these by looking at multiple time frame charts. Depending on your style of trading (investor, swing trader, day trader, etc), you could use two larger time frame charts to identify trends and support/resistance levels. For a day trader this could be perhaps a daily and a 30-minute chart... READ MORE

 

The Other Big Guy on the Commodity Markets by Don Dawson

Trading Commodity Futures used to be on pure Supply and Demand in the true sense before Index Funds came along. For instance, there were consistent seasonal patterns that occurred year after year in the grain markets. In spring, the grains were planted and prices were generally higher during this time of year. During the winter months, much of the grains in the elevators were consumed by livestock (as much as 80% of Corn grown in the United States is used to feed livestock) in feedlots due to the lack of grass available to them... READ MORE

 

Equity Trailing Stop - When Do I Stop Trading for the Day? by Don Dawson

Many times I hear traders say they just want to make a certain amount of money per day trading, perhaps they are happy with $200, $500 etc. For most of them, I find out they are coming into trading from a career where they received a regular paycheck for some pre-set amount. Unfortunately, trading does not offer any guaranteed income levels. Most traders with this pre-defined profit target find themselves behind in trading on a regular basis and are putting excess pressure on themselves... READ MORE

 

Rollover Days - Are We All on the Same Page? by Don Dawson

All Futures contracts have expiration days where the contract literally stops trading. The Exchanges where the contracts trade are responsible for assigning positions to be delivered against for the commercial traders. Therefore, they would prefer to have as many speculators out of that contract before it expires as possible. This will help eliminate too many errors and possible delays in the delivery process for the commercial traders. To accomplish this task, they created a procedure called rollover day... READ MORE

 

Chart Term Misconception & What Price Closes a Gap by Don Dawson

Having been around the trading arena for many years, I have seen many changes to the world of trading. One of them has been how many new technical indicators and chart patterns have been introduced. When I started trading, we probably had 4-5 technical indicators, and perhaps 10-12 reliable chart patterns... READ MORE

 

Notes for a Novice Trader by Don Dawson

Before I started writing this article today, I decided to take my motorcycle out to Starbucks for a cup of coffee, then a short ride to the mountains. While riding and enjoying the beautiful scenery, I noticed three other motorcycles coming up behind me at a fairly quick clip. Since I was in no hurry, I waved them on past me to allow them to ride as they wished... READ MORE

 

Spread Trading Q & A by Don Dawson

Spread trading is one of the topics we discuss in the Commodity Futures class. This style of trading is very good for smaller account size traders after they figure out how to trade these. The capital required to trade these Spreads is a fraction of an outright Futures contract. Figure 1 shows a comparison of an outright Corn contract to a Corn Spread... READ MORE

 

Do You Understand How Derivatives Work? by David S Adams
Derivatives are one of the least understood financial instruments on the market. Some are very common and well traded, while others are controversial and have dire consequences for trading firms and the economy as a whole... READ MORE

 

Money Management and Futures Trading by David S Adams
Learning to implement proper money management is an important skill to master to stay in the futures trading business. All too often, trader trade to many contracts for the size of their futures account balance. I give my take on sizing your future trading contract and what trading limits you should follow... READ MORE

 

Futures Trading - You Need a Backup Plan by David S Adams
Loss of your data feed is just one of the problems futures traders face throughout the course of the day. Since your computer is such an integral part of your living and income, you must plan for unexpected problems that may occur and use best practices when trading... READ MORE

Futures Trading and Probability by David S Adams
Probability and trading are closely related and understanding the probability in trading is essential to trade correctly. Further, time frames and probability have another close relationship and I examine the meaning of that relationship as it relates to trading futures... READ MORE

 

How Do the Futures Markets Actually Function? by David S Adams
People often consider futures markets very complex entities, when in fact they are fairly simple in principle. I will concede the technology required to operate an exchange is very complicated but the actual trading system is standardized and easy to understand. A brief history of future exchanges might be in order, and they are far older than one might imagine... READ MORE

 

How Does a Futures Margin Account Work by David S Adams
Your margin account and the management of your margin account is one of the most important aspects of trading. I talk some about initial margin requirements and mark-to-market margin calculations.and give some info about brokers responsibility in margin use... READ MORE

 

The Three Biggest Mistakes New Option Sellers Make and How to Avoid Them by James Coreier
When considering whether or not to allocate capital to an option selling portfolio, many of the resources you may have access to describe the "right" way to go about selling options. Whether you hire a professional manager or attempt to go it alone, knowing what to do seems to take precedence over what not to do... READ MORE


Introducing the Ratio Credit Spread For More Protection by James Cordier

In volatile markets, or markets with the potential to become volatile, option sellers often look for a layer of extra protection to cover their downside risk "just in case." An effective tool for accomplishing this goal in an Option Selling Portfolio is the Ratio Spread. Read on to learn more... READ MORE


Taking Early Profits With Option Buybacks by James Cordier

A common question among investors is, "Is buying an option just to have it expire, in fact, worthless?" Are there benefits to having your option sit through expiration? Yes!.. READ MORE


Structuring Your Portfolio For Option Selling Success by James Cordier

Learn how to properly deploy the "active" capital in your account. Properly deploying your funds can build not only a more risk averse portfolio, it can pave the way for solid account performance throughout the year... READ MORE


Surprising Key to Option Selling Returns - Managing Your Margin by James Cordier

How you manage liquid cash in your account has more to do with overall success than almost anything else you do. Read on to learn more!.. READ MORE

Futures Charting - Adjusted or Un-Adjusted Charting Style? by Don Dawson

While instructing the Commodity classes, I get the question of "Which style of chart is best to use?" on a frequent basis. The answer, believe it or not, is both are good charts, but how you use the chart is what determines which one you should use. Let's get started explaining just what these adjusted and un-adjusted charts are, which style to use that best fits your trading, the symbols used in TradeStation to identify these charts, and of course review some charts of these two styles... READ MORE

 

Tracking Traders in the Market by Don Dawson

The origination of this report is the Commodity Futures Trading Commission (CFTC), a government regulatory agency that regulates the Futures industry. Since 1962, the Commitment of Traders Report (COT) has been available for review. The frequency of release dates has changed considerably to make the reports timely. From once a month to every two weeks and now weekly, we have access to this information. You can receive a weekly email reminding you that the report has been released and then retrieve the information for no charge, below is that link... READ MORE

Inter-Commodity Spreads for Future Traders by Don Dawson

This week Don writes about Inter-Commodity Spreads. In recent articles, he discussed the Intra-Commodity Spreads and now would like you to see how to use this other type of Spread. These Spreads are very popular and are used by professional traders on a daily basis. Inter-Commodity Spread trading offers a trader an opportunity to trade two related, but different markets simultaneously. He will show you how to calculate the Spread differences and offers you the information needed to calculate the margin to trade these vehicles... READ MORE

 

A Dsicussion on Where to Place Orders by Gabe Velazquez

In a follow-up to last week's article, Gabe goes over what he considers the proper approach in defining where a stop loss - vis-a-vis the chart - should be placed to prevent being stopped out prematurely... READ MORE

 

What You Must Know About Trading in the Futures & Options Markets by Jonathan Duncan

Ordinary people think that trading in the futures and options markets is always dangerous in nature.  It has a reputation for being dodgy, but this is a myth about options trading... READ MORE

 

Most effective How To Trade Futures by Jonathan Duncan

The stock market is a place where an investor can either make a lot of money or a little depending on how well he or she places their investments. The futures market in particular can be extremely high risk but the rewards reflect this risk also. By learning to trade in corn futures and other commodities, you can reap a high reward and find ways to lower your risk at the same time... READ MORE

 

How to Calculate Profit and Loss in Agricultural Futures by Carley Garner 

One of the most frustrating aspects of trading commodities is getting comfortable with how each contract is quoted, what the point value or multiplier of each contract is and most importantly how to calculate the profit, loss and risk of a trade... READ MORE 

 

Spread Trading - A Versatile Tool by Don Dawson 

The Commodity markets offer such a diverse way of actually trading them. As a trader, we can either be net long or short a Futures contract, we could buy or sell an Option on the Futures contract, or we could place a Spread trade. This week Don shows you how understanding Spreads in the Futures markets can give you a heads up as to when a market is about to top or bottom. He will also show you what to look for in a Spread that could be the early stages of a major Bull market… READ MORE

 

Commodity ETFs - Alternative Investing by Don Dawson

Trading Commodity Futures can be intimidating for some. With the limit moves, leverage, fixed contract size and having to open a separate trading account, this style of trading is not something you may want to do. Does this mean you should not understand how Commodities trade and what their trends are? Absolutely not, these markets can provide some great returns. This week Don discusses some of the different options you have to trade the Commodity markets without trading the derivatives themselves… READ MORE

 

Understanding Limit Moves in Futures by Don Dawson

Commodity Futures and Equities have many differences. This week Don addresses a situation in the Futures markets that does not appear in the Equities markets. These situations are referred to as Limit Moves. A Limit Move in the Futures markets can be a windfall or devastation for a trader depending on which side of the market they are on. We will examine some of the markets that still have these Limits and then discuss some ways to avoid being run over by these Limit Moves… READ MORE

 

Settlement Price? But the Market Has Not Closed by Don Dawson

The Commodity Futures markets are ever-changing. While electronic trading has opened up the borders to international trading and the ease of order entry, it has also made for some interesting changes that we as traders need to stay abreast of. This week Don addresses one of these changes and how to possibly deal with it. He'll examine some ways to set your charts to view certain Commodities for the correct session (open, settle and close)… READ MORE

 

Knowing Yourself and Revenge Trading by Don Dawson

I would like to go a little deeper into knowing one's self and recognizing signs of revenge trading. By knowing our strengths and weaknesses, we can anticipate how we may act when a circumstance arises while we are trading. Even if we have a perfect trading plan that under most conditions we follow, we still need to know how we personally will react to different events in our lives and how that affects our trading mentally... READ MORE

 

Time for a Checkup? by Don Dawson

With this decreased volatility comes questions and possibly self doubt about our trading strategies. Is it time for a trading plan checkup? We have all heard that once we develop our trading plan that we should stick to it regardless of what happens, right? There is sort of a catch twenty-two here, and the answer is a definite "yes, but." ... READ MORE

 

Does Size Matter? by Don Dawson

One of the big attractions to Futures trading for many people is the low start-up cost involved with funding their accounts to day trade. Unlike Equities, where you have to come up with about $30K to open a day trading account, you can open a Futures account with about $5K and control Futures contracts worth hundreds of thousands of dollars... READ MORE