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In This Issue
Note About Risk, Volatility and Margins
Economic Reports and Expiration Notices
GOOD TRADING!
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Newsletter Archives
December 30, 2008
The last few days we have witnessed volatility levels that the markets have not seen since post-Sept. 11th, 2001.
Each trader must examine how this increased volatility affects his or her trading (in our opinion the stock market has now changed its "personality" from a choppy, quiet uptrend into a more nervous and volatile trading environment).
Each trader is different and must assess and understand his mental as well as financial risk tolerance.
There are two aspects we urge you to review. The first is your money management and survival; the second is the concept of margin, in theory and in reality.
Money Management — While it is closely related to survival, money management can also stand alone. For your own survival, you must set trade/daily/weekly loss limits. Sound money management is closely associated with knowing your risk-reward ratio (per trade and per time frame).
Survival — This is the key! Do what you need to do in order to survive this brutal market condition and give yourself the chance of being able to trade down the road with more experience and a better chance of success. Survival is probably the biggest key for beginner traders. There is a saying in this business: "live to trade another day."
Margin is an extremely important concept both in theory and practice. It can also to help you with money management and survival.
Day-trading margins apply to the amount of money one needs to have in their account for trades that are opened and closed within the same day. Many traders USUALLY, in "normal market conditions," have access to trading with day-trading margins of $400 per contract - for example for the e-minis. While this allows for more aggressive buying power, it also increases your exposure in the market that would create big losses.
However, at times like this week for example, day-trading margins could be raised, without notice, to 50% of Exchange minimum margins or 100%. This is in response to increased volatility in the global markets.
Overnight margins apply to holding an open position beyond the close at 4:15 p.m. New York time for 1 contract of the e-mini S&P 500, which is currently, as set by the Chicago Mercantile Exchange, $4500.00 to be maintained above $3600.00.
Of course if you have multiple contracts you would multiply $4500.00 by the number of contracts that you hold.
For more information on current margins, visit our live margins page.
These markets are risky and when you leave positions open at the close of the Market at 4:15 pm New York time, you leave yourself and your broker to very large risk exposure.
At 4:15 New York time you MUST be FULLY MARGINED for ALL positions you hold.
Risk Management will be monitoring all activity to ensure that clients maintain proper margins in their accounts. Further, Risk Management may liquidate any positions that do not maintain sufficient equity in their accounts according to CME Rule 930.k.
Click the image to enlarge.
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Disclaimer: There is a risk of financial loss in futures and options trading. Futures trading is neither easy nor an easy way to make money. It takes hard work to have success. Please use sound money management when trading futures. Past performance is not necessarily indicative of future results. Nothing in this newsletter is intended to be a trading recommendation for you to buy or sell futures or options. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed. Readers are solely responsible for how they use the information in this newsletter.
Source: Moore Research Center, Inc.
| Date | Reports | Expiration & Notice Dates |
|---|---|---|
| 01/24 Thu |
7:30 AM CST - USDA Weekly Export Sales
7:30 AM CST - Initial Claims-Weekly 9:00 AM CST - Existing Home Sales(Dec) 9:30 AM CST - API & DOE Energy Stats 3:30 PM CST - Money Supply |
FN: Feb Crude Oil(NYM)
|
| 01/25 Fri |
9:30 AM CST - EIA Gas Storage
|
LT: Jan Soybean Options(CBT)
Jan Soy Meal Options(CBT) Jan Soy Oil Options(CBT) Jan Rough Rice Options(CBT) Jan US Treasury Bond Options(CBT) |
| 01/28 Mon |
9:00 AM CST - New Home Sales(Dec)
|
LT: Feb E-mini Natural Gas(NYM)
Feb Heating Oil Options(NYM) Feb RBOB Gasoline Options(NYM) Feb Natural Gas Options(NYM) |
| 01/29 Tue |
7:30 AM CST - Durable Orders(Dec)
9:00 AM CST - Consumer Confidence(Jan) |
LT: Feb Natural Gas(NYM)
Jan Copper Options(CMX) Jan Platinum Options(NYM) Jan Palladium Options(NYM) Jan Silver Options(CMX) Jan Gold Options(CMX) |
| 01/30 Wed |
7:15 AM CST - ADP Employment(Jan)
7:30 AM CST - GDP-Adv(Q4) 7:30 AM CST - Chain Deflator-Adv(Q4) 9:30 AM CST - API & DOE Energy Stats 1:15 PM CST - FOMC Policy Statement |
FN: Feb Natural Gas(NYM)
|
| 01/31 Thu |
7:30 AM CST - Personal Income & Spending(Dec)
7:30 AM CST - USDA Weekly Export Sales 7:30 AM CST - Initial Claims-Weekly 8:45 AM CST - Chicago PMI(Jan) 9:30 AM CST - EIA Gas Storage 3:30 PM CST - Money Supply |
FN: Feb Gold(CMX)
Feb Silver(CMX) Feb Copper(CMX) LT: Jan Feeder Cattle Options(CME) Jan Feeder Cattle(CME) Feb Heating Oil(NYM) Feb RBOB Gasoline(NYM) |
* 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!