CFD Vs. Futures…+ Trading levels for 10.25.2022

Get Real Time updates and more on our private FB group!

CFD (Contract For Difference) OR Futures?

By John Thorpe, Senior Broker

Futures Market structure provides a more level playing field for the retail trader than do the Forex and CFD markets. Last week I focused on the differences between Forex and Futures and left a little on the table as it relates to CFD’s, what they are and more importantly what they are not. But again, the focus of last weeks article was not to discuss the differences as much as driving home the point that the futures market gives you, the retail trader, a better shake. It’s a fairer market and offers better opportunities for success, day in and day out.

First, the need to stress to you that futures markets, no matter what hemisphere they are traded in are regulated, CFD’s are not. In Fact, CFD’s are banned in the U.S. and Brazil..

Similarities between CFD’s and Futures:

1.      Leveraged products- you simply need to place a good faith deposit or Margin to speculate on a position.

2.      Multiple markets to trade, from Grains, to Softs, Equity indices to Debt instruments and Metals to Energies.

3.      Both used as hedges.

4.      Derivative’s Both derive their value from underlying instruments.

Differences between CFD’s and Futures

1.      Futures are regulated in the U.S. by both the CFTC and the NFA while CFD’S are not. This lack of oversight of the CFD industry creates transparency issues.  Regulated markets are far more transparent giving the trader of Futures an edge over CFD’s.

2.      Although futures contracts have expiration dates and CFD’s do not, the CFD broker will charge you a carrying charge to hold the position overnight, much like Forex operates.

3.      Futures contracts are more liquid than CFD’s. The Futures contract is a publicly traded entity where all market participants, Hedger’s Institutions, Banks, retail investors are involved in the price discovery process. CFD’s markets are literally bookmakers. You trade against the broker and the broker throws of his/her risk in the regulated futures markets. This results in very wide spreads between the bid and the offer and really penalizes the trader.

4.      Futures offer standardized contract sizes, and often times offering mini sized and micro sized contracts, much like the CFD market does, but again with a transparent market.

if you are looking for transparency and a more level playing field and scratched your head or pounded your fist on the desk because of the problems you may have experienced trading Forex or CFD’s you have nothing to lose, give us a call or send us an email and will work with you to get your account open and trading in a much fairer environment.

As always, plan your trade and trade your plan. Please contact your broker or Cannon Trading with any questions.

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

10-25-2022

#goldfutures #sp500futures #crudeoilfutures # nasdaqfutures #dowfutures #futurestrading #futuresbrokers
SP500 #ES_FNasdaq100  #NQ_FDow Jones  #YM_FMini Russell #RTY_FBitCoin Index #BRTI SP500 Dec. Gold #GC_F Dec. Silver #SI_F Oct. Crude Oil #CL-F Dec. Bonds  #ZB_F Dec. 10 yr  #ZN_F Dec. Corn #ZC_F Dec.  Wheat #ZW_F Nov. Beans #ZS_F Dec. SoyMeal #ZM_F Oct. Nat Gas #NG_F Dec. Coffee #KC_F Dec. Cocoa #CC_F October Sugar #SB_F Dec. Cotton #CT_F Sept.  Euro Currency

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker
 1-800-454-9572 Explore trading methods. Register Here

Economic Reports, Source: 

Forexfactory.com

 

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.

Stop Getting Stopped? + Trading levels for 10.20.2022

Get Real Time updates and more on our private FB group!

 

Stop Getting Stopped??

By Mark O’Brien, Senior Broker

In our continued interest in assisting traders with strategy recommendations, here’s another look at one that can give short-term futures traders staying power in volatile markets. Any sound futures trading plan includes establishing the risk the trade will be taking – either in the form of a straight dollar amount, or a price point in the futures market you’re trading. The implementation of that plan typically involves the placing of a stop order to exit your futures position. One challenge to this plan is that it can lead to continuous exits and reentries in the market and an ongoing recalculation of your risk. This can be a repeated effort with mixed results, especially in volatile markets.

What if you could set up a trade with a risk toleration similar to an amount you would take with any straight futures trade, but with a greater price toleration and the “cost” to this would be a slightly reduced profitability that becomes less impactful to your trade as its profit increases?

I’m describing the straightforward purchase of an option that opposes the direction of your futures position. Let’s look at a timely example to paint a clearer picture.

At this blog’s writing the Dec. E-mini S&P 500 is trading at ±3705.00. If a trader decided to take a short position in the market and further decided – based on whatever technical indicators they used for guidance or a simple dollar amount – a risk of $1250 was appropriate for the trade, that would call for a placement of a 25-point BUY STOP order at 3730.00. Note the volatility in the market today. The Dec. E-mini S&P 500 has traded inside a nearly 100-point range (low = 3676.75 – high = 3774.25) and 3730.00 traded within the last few hours.

Setting aside an exit price for the moment, let’s look at an alternative strategy that involves entering the same short position at 3705.00 and at the same time incorporating the purchase of a 3705.00 call expiring tomorrow at 3:00 P.M., Central Time with a premium of ±25 points (±$1250). With this option in place your risk tolerance has been set to $1250 for the duration of the option’s lifespan, but your position’s tolerance to an adverse price has no limit. As far as an adverse move in the market your futures position might suffer, so too will the price of your option pay off. No matter how adverse the move, the risk on the trade will remain $1250 – the cost of the option.

The trade-off: by tomorrow at 3:00 P.M., Central Time, the market would have to move in favor of the position by at least the equivalent to the cost of the option (25 points), in order for the trade to begin profiting at the rate of a straight futures position. The market needs to move favorably enough to cover the cost of the option before the trade can turn profitable. Any favorable move by less than 25 points results in a commensurate reduction in the risk of the trade. For example, if at 3:00 P.M., Central Time the market is trading at 3695.00, the 10-point profit in your futures position partially offsets the 25-point cost of the option, resulting in a loss of $750.00.

The example above makes one important assumption, which is if the short futures position is below the option’s strike price at 3:00 P.M., Central Time, it is liquidated.

Also, you can adjust your risk depending on the opposing option you select, up or down the strike price ladder and the option’s expiration date. Of course, you would consider the risk parameters of any futures / futures option combination that will give you the needed perspective a trade like this has.

More on options here and specifically weekly options here.

As always, plan your trade and trade your plan. Please contact your broker or Cannon Trading with any questions.

Trader’s Checklist Click below on the image to play the VIDEO

 

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

10-20-2022

#goldfutures #sp500futures #crudeoilfutures # nasdaqfutures #dowfutures #futurestrading #futuresbrokers
SP500 #ES_FNasdaq100  #NQ_FDow Jones  #YM_FMini Russell #RTY_FBitCoin Index #BRTI SP500 Dec. Gold #GC_F Dec. Silver #SI_F Oct. Crude Oil #CL-F Dec. Bonds  #ZB_F Dec. 10 yr  #ZN_F Dec. Corn #ZC_F Dec.  Wheat #ZW_F Nov. Beans #ZS_F Dec. SoyMeal #ZM_F Oct. Nat Gas #NG_F Dec. Coffee #KC_F Dec. Cocoa #CC_F October Sugar #SB_F Dec. Cotton #CT_F Sept.  Euro Currency

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker
 1-800-454-9572 Explore trading methods. Register Here

Economic Reports, Source: 

Forexfactory.com

 

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.