Futures Blog by Bill McCready » Money Management

Futures Traders Need To Watch Rollover Dates

Futures — Fri, 23 May 2008 18:49:13 +0000

Futures contracts are written for a specific, finite time period which means they must be rolled over on a regular basis to remain viable. Some contracts, such as crude oil, expire and need to be rolled monthly. Others, such as cotton or gold, expire and can be rolled only on certain specific months of the year. Expiration dates are specified in the contract and will vary with the asset being traded. Before you buy a contract, you should know what the expiration date is and what your rollover options are. Rollover dates are standardized for contracts of different asset classes and are set by each exchange. It’s important to know and track the specific expiration dates and requirements of futures contracts you purchase so that you don’t miss those all important rollover dates.

For most futures contracts traded on the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT), the following expiration and rollover practices apply:

Contracts expire on the third Friday of each quarter: March, June, September and December. Contract expiration months are represented by the following letter assignments: March=H, June=M, September=U and December=Z
Rollover is 8 days before expiration. For example, this month, December 2007, the rollover date is Thursday, December 13.
Rollover is always on a Thursday. Generally, rollover will be on the second Thursday of the month; however, if the first day of the month begins on a Friday, rollover will be on the first Thursday of the month.
Trading volume shifts to the new contract at market open on rollover day (9:30 a.m. EST).
New day trading or swing trading positions opened on rollover day should utilize the new contract expiration month irrespective of when you plan to close your position.
If opened within a few days of rollover day, new swing positions should be opened using the new contract.

Market myths and rumors abound as expiration and rollover dates come due. Savvy futures traders will always check the source, study their market indicators and confirm the probabilities of the rumor before acting.

For more information, 11 free trading lessons and a free ebook, visit Futures Trading Secrets.

Trading Signals for 03/25/08

Futures — Wed, 26 Mar 2008 05:55:52 +0000

Trading is a skill learned by observation, study, practice and a combination of mental control, money management and simple signal generation. The Futures Trading Secrets Course shows you how to combine three simple signals into a high probability trade setup. Adding a logical element of a prinicpal target and the application of proper money management (which includes, stops, exits, position sizing and targets) is the key to trading success.

The following chart used all of these principles for a Trading Signal for 03/25/08. Note that these two signals yielded a total of 23 points in 30 minutes. Is this profit unusual? Yes! But the signals generated occur 5-10 times each day. And the average move on the eMini S&P currently is 5.4 points before a reversal or retracement. Generating even a net 2 points a day consistently is possible with practice and discipline.

Don’t Quit Your Day Job — Yet!

Futures — Thu, 19 Jul 2007 11:15:28 +0000

Success as a futures trader is dependent on your ability to master technique, psychology and money management. Life as a trader can be phenomenally successful, but it can be equally risky, particularly while you’re learning to dot the i’s and cross the t’s. It would be a mistake to quit your day job until you’ve mastered the three elements of successful trading. Master only one and your lack of knowledge and expertise in either one of the other two areas may bring you to the brink of disaster and topple you over. Remember, mastery and balance of all three elements is vital to success.

In our next several posts we’re going to focus on each element of success. Today, let’s talk about money management.

Show Me the Money

Good money management is critical to success as a futures trader. You need to know:

how to track of your results
how to budget and set aside risk capital
how to diversify
and, as song goes, when to hold, when to fold and when to walk away.

Keep track. No matter how big or small the trade, always track your results. Keep a daily scoresheet so you know to the second how far ahead or behind you are. It’s essential information in planning your next move and deciding how much risk you can afford. You should also keep a daily trading diary that tracks not only your trades but the rationale behind your decisions, market factors you weighed, how you reacted, even how you felt that day. Periodically reviewing your diary will help you identify behavioral patterns so you can continually improve your technique.

Budget your risk. It’s like they say in Vegas, don’t gamble with money you can’t afford to lose. It’s the same with futures trading. Don’t trade with the rent or grocery money. Budget an amount you can afford to risk and stick to your budget. Trading funds should be considered venture capital — it might pan out, it might not. Trade small and learn your system before you increase your risk.

Diversify. You diversifying to decrease your risk. If you put all your eggs in one basket and win, you win big; but if you lose, you lose big. Divide your investment between several options and no one move will blow you out of the water. Your wins may be smaller but they’ll become more consistent and more numerous. In the long run, you’ll come out ahead.

Listen for alarm bells. As Kenny Rogers sings in The Gambler: “You got to know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run.” If you can’t walk away from a trade when something doesn’t seem right, you’ve got a problem. You have to listen for those internal alarm bells. Futures trading is like poker. For the uninformed and unwary it’s a high-stakes game of chance where the possibility that you’ll lose your shirt looms large. For the savvy and experienced trader, it’s a game of skill, technique and money management with the potential for huge rewards. The trick is in knowing the difference.

Visit the Futures Trading Secrets website to find out how you can master the essential elements of futures trading and learn the expert secrets that will allow you to become a successful futures trader.

Stay tuned. Next time: Psychology