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  1. #11
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    Price Quotes

    Futures contracts are not all priced in dollars and cents, with a handy decimal point and two numerals behind it. So, it is important to understand how the market you are trading is quoted. For example, the grains have minimum ticks of quarter-cents while T-bonds are priced in 32nds, sugar in points based on the contract size and some stock indices in multiple-point increments.

    Your PCM Brokers representative can explain how the markets are priced and how to decipher a quote on the quote system you are using. For example, a corn quote might read $4.2525 for $4.25 and ¼ cents per bu., or it could be listed old-school as 4252, where the last digit represents 2/8 of a cent, or ¼ cent.
    Note that the opening price is generally the midpoint of the opening range or a single price designated by the exchanges. The end-of-day value of a futures contract used to determine margin calls is called the “settlement” price. Settlement prices are determined by exchanges based on closing prices.

    Volume

    Volume tells you how many contracts traded hands in a particular contract or market. Total volume equals all contracts traded. (The purchase and sale of a single contract counts as one, not two.) Volume helps measure the strength of price movements.

    Open Interest

    Open interest tells you how many contracts exist—are live or active—in the market at any given point in time. This is similar to the number of shares outstanding for a stock. The larger the open interest, the greater the liquidity (i.e., ease with which you can enter or exit the market).

  2. #12
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    Who Trades Futures

    Who Trades Futures

    Participants in the futures market fall into two broad categories—speculators or hedgers. Speculators take risk and provide liquidity for hedgers who are seeking to dispose of any number of kinds of business risks they face.

    Speculators
    Speculators take risk and seek to profit from the ups and downs of futures prices. Speculators can be individuals like you to professional traders working alone or within trading groups. They also could be institutional money managers. But, whoever they are, profit is their primary objective.
    Similar to stock trading, speculators in futures use both fundamental and technical analysis to generate signals as to the future price movements of a specific contract. They might trade support and resistance levels from a futures price chart. Or, they might study global supply and demand. Professional traders increasingly use computerized algorithms to monitor the markets and take advantage of very slim pricing opportunities. The volume of trading generated by speculators provides liquidity for hedgers.

    Hedgers
    Hedgers use the futures markets to get rid of the price risk that is inherent in their business. Farmers, food processors, energy producers— and even corporate treasury departments—are examples of hedgers who lock in prices using futures contracts to protect against price movement and volatility. Hedging becomes a form of price insurance as it establishes a price for something they intend to buy or sell in the cash market at a future date.
    Stock traders can hedge, too. Let’s say you hold a broad range of stocks or a stock index in your portfolio. You are concerned about near-term performance given market conditions, but do not want to lighten your holdings because of capital gains tax consequences — plus, long term you’re bullish. Selling a stock index futures contract could protect your exposure to a drop in the stock market.

  3. #13
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    Why Trade Futures

    Why Trade Futures

    Let’s get right to it. Why should you even be interested in futures trading? What’s in it for you?

    Leverage
    This is the big one for most traders. In futures trading, the capital you devote to holding a position is substantially less than what you need to hold an equities position—even on margin.
    A non-margined equities account requires you put up 100% of the value of the security. Even a margin account requires an initial deposit of at least 50% of the stock’s current value. In contrast, you typically are required to put up just 5%-20% of a contract’s value to hold a futures position.
    Your gain or loss, however, is still calculated as if you had deposited 100% of the value of the contract.
    Leverage is what gives futures trading its reputation for being risky. Although it can make your money work harder and deliver more profits when you are on the right side of the market, leverage is equally effective at magnifying your losses if the market is going against your position.
    There is no doubt that leverage is a two-edged sword. Experienced futures traders will tell you that using stops, taking small losses and being vigilant about your risk-management practices will help you stay on the right side of the leverage beast.
    Ask your PCM Brokers representative about current minimum margin requirements for the markets you are interested in trading. Be aware that margin requirements can change at any time, and are particularly likely to do so when the markets are volatile. Also, you can always commit more capital to margin than the minimum requirements in order to reach a comfortable level of leverage for you.

  4. #14
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    Example of Leverage:
    At $6 per bu., a 5,000-bu. corn futures contract is worth $30,000. If the price of corn rises by 10% to $6.60, the contract is then worth $33,000—a gain of
    $3,000 for someone who is long futures at $6. If the margin requirement for one corn futures contract is $2,000, then a 10% price increase (and
    gain of $3,000 in contract value) means a futures trader made a 150% return on the capital required to hold the position.

  5. #15
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    Tax Advantages
    Given their short-term nature, futures trading profits get a preferential 60/40 long-term/short-term capital gains tax treatment. This means that 60% of gains are considered long- term and are taxed up to 15%, while the remaining 40% of gains are considered short-term gains and are taxed up to 35% (regardless of the time the contract is held). Please discuss how this may affect your situation with your tax advisor.

    Increased Opportunity
    Futures trading appeals to those who embrace opportunity and freedom. For example, futures trading does not discriminate against someone who wants to trade on the short side of the market. The the margin and order-entry requirements to sell short are the same as if you want to be long. You don’t have to “borrow” anything to get into a short position, and there’s no uptick rule for selling short.

    Second, many futures markets—even U.S. stock indices—are open virtually 24 hours day from Sunday night through Friday afternoon. You’re able to trade when it’s convenient for you—or whenever global news prompts you to take action.

  6. #16
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    Asset Diversification
    Futures allow investors to broaden the range of asset classes held in their portfolios, thereby potentially reducing risk and improving long-term returns. According to a study published by the CME Group, portfolios with as much as 20% of assets in managed futures yielded up to 50% more than a portfolio of stocks and bonds alone.

    Futures also allow a “pure play” with the underlying commodity that simply is unavailable with stocks, even those with strong correlation. For example, a mining stock could be considered as having exposure to the gold market. But it is not a “pure play” because other factors exist, e.g., sector influence and corporate management, that affect the value of the security but are not related to the commodity’s price.

    Financial Protection
    Futures trading has its roots in protecting against the risk of adverse price movement. Indeed, the markets began in the mid-1800s as a way for commodity producers and users to “hedge” against prices going against their best interest. Today, companies worldwide do exactly that, particularly with financial futures contracts that cover stocks, interest rates and currencies.

  7. #17
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    Basic Futures Trading Strategies

    Basic Futures Trading Strategies

    ************************************************** ****************
    The most-often used trading strategies in the futures markets are pretty simple. You buy if you think prices are going up or sell if you think prices are going down.
    ************************************************** ****************

    And, in futures trading, selling first is just as easy as buying first—the positions are treated equally from a regulatory point of view. The following two strategies are just a starting point. For more advanced futures-trading strategies, request the PCM guide “Introduction to Spread Trading.” Or, learn some trading strategies for options on futures with the PCM guide “Introduction to Options on Futures Trading.”

    Buy Futures
    If you expect a futures market’s price to be higher in the future than it is today, you would buy a futures contract, or “go long.” If you are right about both market direction and timing and the price indeed rises, you can then sell the same futures contract to collect your profit (minus commissions and other fees). However, if you are wrong about the market’s direction or your timing is off and prices ultimately fall, then you will take a loss when you exit the position. And, because of theleverage in futures, that loss could be greater than your initial margin deposit.

    Here’s an example, using July 2014 soybeans trading at $13.00 per bushel in January 2014. In January, you think soybean prices are likely to rally into the summer, so you put up $4,000 in initial margin and buy a July 2014 soybean futures contract. Four months later, soybean prices have rallied $1 per bushel and you decide to take your profits and close out your long position by selling a July 2013 soybean futures contract. That generates a profit of $5,000 (minus commissions and fees*), or return on initial margin of 125%.





    Of course, there’s always the possibility that prices don’t behave as you expect. If soybean prices dropped $1 per bushel from January to April and you exited your initial long position at a loss, you would have lost your initial margin of $4,000 plus an additional $1,000 (plus commissions and fees*).



  8. #18
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    Sell Futures

    The concept of selling something you don’t own is often a stumbling block for traders new to futures. But it’s easy to overcome. Just remember that a futures contract simply represents the commitment to either sell or buy an asset at a future date. So when you sell to initiate a position, all you’re committing to is selling at that price in the future. In the meantime, you don’t need to own the underlying commodity or financial instrument. Selling a futures contract as your initial position
    is just as simple as buying a futures contract. You believe the price will go down, so you sell.
    If you ever traded stocks, you’ll be glad to know that no borrowing or loan fees are involved with shorting futures. You simply sell as easily as you buy.
    If you are correct in your market direction and timing and prices decline, then you can profit from your short position by simply buying the same contract. However, if the market moves against your position and rallies, then you would suffer a loss when exiting—and the loss could be more than what you put up to make the trade.

    As an example, you believe in January that soybean prices will fall into the summer. So, you put up $4,000 in initial margin to take a short July soybean futures position. By April, the market has fallen $1 per bushel, which equates to a $5,000 decline in the value of the contract. Because you shorted the market when
    the contract value was higher, you can buy it back at the lower price and make $5,000 (minus commissions and fees*).


    However, if soybean prices rally $1 from January to April, your short position will show a $5,000 loss (plus commissions and fees*) if you buy July futures to
    exit the position.



  9. #19
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    To Get Comfortable with Futures Trading Terms

    Hi everybody,
    I think the following table would help you with understanding and getting comfortable with futures terms.



  10. #20
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    ​I have been doing my Forex Trading with FXOpen Markets from the last 10 Years and they are very Reliable and Trustable International Forex Brokers

  11. ARIONFORXtarder
 

 
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