This is a sample entry from Brian Cullen’s email newsletter, The Cullen Outlook, published on December 11, 2012.
February LIVE CATTLE
SELLING at 130.00 on a STOP (GTC) … last trade 130.20
- Risk will be 131.50 …($600.00)
- OBJ will be 127.00 …1,200.00
Initial margin for this contract is $1,350.00
3 reasons: With the early weakness in the grain markets post USDA numbers from this morning, the news of potential for slowing exports to Russia due to imposed bans from US and slaughter numbers from yesterday being well above expectations, I look for this market to trade lower over the next few trading sessions.
From our Insider Market Advisory this morning:
“With weights near a record high, big deliveries, poor packer margins and the potential for a clogged export pipeline, the market looks vulnerable to more selling at least in the short term. The outlook into the 2013 remains supportive from a supply perspective. Big open interest and potential for financial market instability leaking over to beef demand is also a short term negative force.”
Have a look:
THE RISK OF LOSS IN TRADING COMMODITY FUTURES AND OPTIONS CONTRACTS CAN BE SUBSTANTIAL. THERE IS A HIGH DEGREE OF LEVERAGE IN FUTURES TRADING BECAUSE OF SMALL MARGIN REQUIREMENTS. THIS LEVERAGE CAN WORK AGAINST YOU AS WELL AS FOR YOU AND CAN LEAD TO LARGE LOSSES AS WELL AS LARGE GAINS.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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