Intraday Spread Trading?

One trading strategy worth considering for stock index traders is 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. In spread trading, the strategy involves gauging how the price difference between two futures contracts—the spread—will change. Spread trading is focused more on the price difference between the two contracts – often highly correlated – and less on the prices of the outright contracts themselves. One basis for employing spread trading is that it can be easier to take advantage of price discrepancies between two stock index futures than to predict price movements in either of the underlying contracts. Some of the most invested players in futures trading – and arguably the most sophisticated – include large speculators and commercial firms regularly employ spreads.

Because spread trades involve both a long and a short position in contracts that are related to each other, they are generally viewed as less volatile and therefore less risky than an outright position in a single contract. Additionally, since spread positions generally reflect lower market risk, there are lower margin requirements. For example, as of this blog post, the spread between one E-mini S&P 500 futures contract and one E-mini Nasdaq receives a 70% reduction from their combined initial margin requirements. The spread between the E-mini S&P 500 and the E-mini Dow Jones receives an 88% reduction in their combined initial margin requirements.

MORE TO FOLLOW>>>>>>

Plan your trade and trade your plan. 

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

4-27-2023

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.

It’s important to note that the gold-to-silver ratio is just one indicator among many that investors use to assess market conditions, and should not be relied on in isolation.

Plan your trade and trade your plan. 

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

4-19-2023

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.

After two days of very light volume in stock index futures, I suspect tomorrow will be a different ball game.

CPI Tomorrow! The CPI will be critical to the inflation outlook for Fed policymakers.

Previous CPI reports have created velocity logic events in the stock indices at the CME.

Please read more details about velocity logic and price banding HERE.

The above reports will Bookend the FOMC minutes release @1pm CT on tomorrow.

If you recall the FED Meeting Black out period was before the Bank issues so don’t expect too much verbage about the banking situation in this report.

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

4-12-2023

Improve Your Trading Skills

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.

FOMC Tomorrow

The following are my PERSONAL suggestions on trading during FOMC days:

·    Reduce trading size

·    Be extra picky = no trade is better than a bad trade

·    Choose entry points wisely. Look at longer time frame support and resistance for entry. Take the approach of entering at points where you normally would have placed protective stops. Example, trader x looking to go long the mini SP at 3925.00 with a stop at 3919.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 3919.75 and place a stop a few points below in this hypothetical example ( consider current volatility along with support and resistance levels).

·    Expect the higher volatility during and right after the announcement

·    Expect to see some “vacuum” ( low volume, big zigzags) right before the number.

·    Consider using automated stops and limits attached to your entry order as the market can move very fast at times.

·    Keep in mind statement comes out at 1 Pm Central time, the news conference which dissects the language comes out 30 minutes later so the volatility window stretches out.

·    Know what the market was expecting, learn what came out and observe market reaction for clues

·    Be patient and be disciplined

·    If in doubt, stay out!!

A Cannon broker will be able to assist, provide feedback and answer any questions.

Micro E-mini Futures and Options Webinar

Access new markets with the enhanced suite from CME Group

CME Group invites you to attend an online event focusing on the Micro E-mini futures and options suite on Wednesday, March 22.

Join us as Craig Bewick, Senior Director of Client Development & Sales, and Paul Woolman, Global Head of Equity Products, discuss the trading performance and rise in liquidity of Micro E-mini Equity futures and options. In addition, they will cover recent enhancements to the suite, including the introduction of Micro E-mini S&P MidCap 400 and SmallCap 600 futures as well as the Micro E-mini Monday-Thursday Weekly options.

Follow the link below to register for this online event. Further instructions will be provided following registration.

REGISTER HERE 

DATE:

March 22, 2023

TIME:

8:00 a.m. – 9:00 a.m. (CT)

1:00 p.m. – 2:00 p.m. (GMT)

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

3-22-2023

Improve Your Trading Skills

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.

Trade June indices as well as June currencies!

PPI tomorrow

Between bank failures and rollover, mini SP traded 6 million contracts yesterday and approx. 4.5 million today. Daily range ( high to low) was near or above the 100 points for the mini SP!

The injected volatility back into the markets make this a different playing field than we had few weeks ago…

Few pointers below, Hope it helps.

*Expect the unexpected…

* Have an idea of what you are looking to do, keep in mind possible risk and have a game plan. Now more than ever, plan your trade and than trade your plan!

* Think money management, hedging risk while you are still trying to figure out how to profit.

* Know what is going on, reports, current margins, current limits and more.

* Consider short term options instead of futures and/or MICROS

* Trade smaller. The bands are much larger. Watch the VIX.

*While I have no idea were the market is going from day to day, minute to minute, week to week etc. I do know that in the past, some of the sharpest and largest rallies were short covering after a large sell off. More often than not market sell offs and volatility like we are seeing do not end up as V type of action but more like U or W when it is all said and done.

* DO NOT assume anything…if you are not sure, contact us and we will try our best to assist with the combined, vast experience we have here as a team.

My colleague, John Thorpe, Ex floor broker, contributed the following on the VIX and the VVIX:

We recommend all stock indices intraday traders to keep an eye on the VIX for directional clues and study, many of you have access through other means to view this critical trading barometer, VIX now trades 5 days per week ,23 hours per day. if you need to add the VIX data to your trading platforms , it’s 3 bucks per month, penny wise and pound foolish if you don’t. Contact your broker on how to add the Volatility Index traded through the CBOE to your trading platform

If you are looking for other reference material please contact your Cannon Broker for lists of solid, informative and helpful trading tomes

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

3-15-2023

Improve Your Trading Skills

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.