Futures Made Simple

Futures Made Simple

Language: English

Pages: 320

ISBN: 0730376834

Format: PDF / Kindle (mobi) / ePub


The essential guide to trading futures, without all the fuss

This uncomplicated guide for beginners proves that you don't have to be a financial wizard to successfully trade futures . . . and you don't have to hire a financial advisor to tell you what to do either. Instead, Futures Made Simple outlines the basic strategies that even novice investors can use to make money with futures. The book lays just what you need to know—what futures are, how the exchanges work, how to analyse the markets, and how to trade futures either on- or offline.

  • An excellent entry-level guide to futures trading
  • Written by a successful trader with almost two decades of experience in equities, futures, options, and other vehicles
  • Features easy-to-understand examples and bulleted summaries of key points to make learning simple

For investors at any level of experience who want to move into futures trading, Futures Made Simple offers expert advice and fundamental guidance for profitable investing.

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your broker or executing your own trades through the use of an online trading platform. Orders fall into two categories — market orders, which are intended to trade immediately, and limit orders and stop orders, which are standing orders to trade when certain conditions are met. Market orders A market order, also referred to as an ‘at best’ order, is an order to buy or sell at the current market price. It will result in a trade being filled immediately at the best price possible.

4.18 is an example of price slippage occurring in the corn market. Stop orders working around the price indicated (around 586 cents per bushel) would have been filled at a much higher price when the market experienced a huge gap (at 621 cents per bushel). This is a difference of 35 cents per bushel, or $1750 per contract (35 cents per bushel × $50 per 1 cent). Traders who were short corn and working a stop exit order would have experienced a much greater loss per contract than they were expecting

is filled, the other order is automatically cancelled. The OCO legs, or trades, become active only when the initial entry order is filled. OCO orders are a powerful tool for futures traders for a number of reasons. They allow maximum loss levels to be set via the use of the stop-loss function. They allow profit targets to be set via the use of the limit order, thus ensuring that when the target is reached it will become active in the market, which alleviates the need to watch the market in

specifications for the CBOT wheat futures contract are shown in figure 6.5. Figure 6.5: CBOT wheat futures contract specifications Source: CME Group Inc. Trading hours Wheat futures contracts are traded electronically 21 hours per day on CME’s electronic Globex platform, from 5.00 pm each day until 2.00 pm (Chicago time) the following day, beginning at 5.00 pm on Sunday night. There is a three-hour gap in trading each day between 2.00 pm and 5.00 pm Monday to Thursday. Wheat

interest rate. For example, a rate of 2.75 per cent is quoted as 97.25 (100 - 2.75 = 97.25) on a $1 000 000 contract; 1 basis point (1 one-hundredth of 1 per cent, or 0.01%) equates to $25.00. A 1 per cent interest rate move equals $2500.00 (100 basis points x $25.00 = $2500.00). The minimum price move or tick is one-quarter of 1 basis point (0.0025) or $6.25 in the nearest expiring month (0.0025 x $2500.00 = $6.25); and half of 1 basis point (0.005) or $12.50 in all other months (0.005 x

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