Things You Need To Know
*Note: For the purpose of this blog, I am using the dt Pro trading platform and the associated contract symbols and margins
Contract Symbols — Each futures and commodity contract has its own unique symbol. For example, the symbol for corn is ZC. If you were to see “ZCN1”, that would represent the July 2011 Corn futures contract. The “N” indicates the month of July and 1 represents the year 2011. The month and year will always be the last 2 parts of a futures contract.
Monthly Symbols — Each month in futures trading has its own unique symbol. These symbols are standard across the industry. The commodity month symbols may appear confusing, but there is reason for why these symbols were chosen. Letters that can be duplicated for an existing commodity symbol are not used (e.g. S for Soybeans, C for Corn, and etc.). They have also skipped letters that could be confused for numbers when you are looking at a “ticker tape” or the commodity symbols along the bottom of your TV screen.
Contract Specifications — Everything about a futures contract is standardized except its price. Quality, quantity, last trade date and settlement procedure are already determined. This predetermined information can be found by viewing the contract specifications. Exactly how much of a commodity are you controlling with one contract? What’s the minimum price increment? Click here to find the contract specifications for a given commodity and view the contract size, tick values and more.
Contract Margins — How much money do I need in my account to trade a contract of a certain commodity? Futures trading gives you the ability to use leverage in the markets — this means you can control large dollar amounts of a commodity with a comparatively small amount of capital. That small of amount of capital required in your account is known as margin.
Types of Margins:
- Initial Margin — the amount of money/deposit required to enter a position (sometimes referred to as overnight margin)
- Day-trading Margin — the amount of money you need to have in your account if you are in and out of the market before the trading session ends (it can be half of the initial margin or less)
- Maintenance Margin — the amount of money you need to have in your account to hold or maintain a position (note: if your account balance drops below the maintenance margin level and the market closes, you will be on margin call and will need to reduce or liquidate positions or send enough funds to the account to get it above the initial margin level required for the contracts you are trading)
View the list of the margins for the contracts you are trading.
Trading Hours — Different markets trade at different times of the day. Make sure you are placing your order at the proper time. This link states the open and close time for each individual futures contract. View the trading hours.
Futures Calculator — The math! How much do you stand to gain or lose on a trade? Our Daniels Trading Futures Calculator on our site is a great short cut and resource to get your answer! Check it out here — it’s free and easy to use.
Putting it Together
Now that you have the information you need, watch this short video tutorial I created that shows you how to pull all the information together and place an online trade on our dt Pro Platform.
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