• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar
  • Skip to footer
Daniels Trading

Trade Futures, Spreads and Options with Confidence.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • Technical Ag Knowledge
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • CME Group Offers
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • Apply
    • Access My Account
    • Funding
  • Contact
Home / Education / Futures & Options 101 / Orders in the Pit

Orders in the Pit

A futures brokerage firm (“house”) that is a member of Chicago Mercantile Exchange (CME) places orders to buy or sell futures or options contracts for companies or individuals and earns a commission on each transaction. Everyone who trades futures and options on futures contracts must have an account with a futures brokerage house, which is officially called Futures Commission Merchant (FCM). Futures brokerages are not the same as stock brokerages, but some companies are licensed to trade both stocks and futures.

How do pit-traded orders come in?
Customers of a futures brokerage firm send orders to CME via telephone or a computerized order-entry system. The brokerage firm receives the order at its communication desk on the floor of the Exchange.

Placing the Order

When you place an order over the phone or via your computer, you specify the futures contract you want to buy or sell, including the contract month. Each commodity has more than one contract, each one with a different maturity date. For example, there are 10 Eurodollar futures contracts with maturity dates of March, June, September and December. So if you want June Eurodollars, you have to let the brokerage firm know that. You also say whether you’re buying or selling and how many contracts you want bought or sold. With certain types of orders, you even specify the price.

Trading Language
When you place an order, you need to use the right language. “Buy me” means to go “long” or buy contracts. (Going “short” means to sell contracts).

A market order is one type of order. When you place a market order, you are asking that order to be filled at the best available price immediately after receipt of the order. You might say, “Buy two December Swiss francs at the market.” After the brokerage firm writes up this order, it’s rushed to the floor broker in the pit, who executes it right away. Or, if you place an order online for one of CME’s electronically traded contracts, your order is filled via a computer matching system.

If you place a limit order, you’re asking the broker to fill the order at a specified price. If you say, “Buy 20 January Lumber at 395 even” ($395.00/thousand board feet), the floor broker can fill the order at 395.00 or any price lower, but not at a higher price. Likewise, if you say “Sell 10 May Lumber at 40 even” ($400.00/thousand board feet), the floor broker can fill the order at 400.00 or any price higher, but not at a lower price.
Pit Orders

If the price you state in your limit order isn’t reached during the trading session, your order won’t be filled at all.

A spread trade is a specialized type of trade involving the simultaneous purchase and sale of two different but related futures contracts. The spread is the price difference between the two contracts.

Spread trading can include trading different delivery months of the same commodity (March Lumber versus July Lumber) or trading the same months of different futures contracts.

Additional Lessons

  • Futures Contract
  • Futures Exchange
  • Contracts Traded
  • Supply and Demand
  • Fundamental Analysis
  • Technical Analysis
  • Trading Pit
  • Risk Management
  • Hedgers & Speculators
  • Options on Futures
  • Reading Quotes
  • GLOBEX
  • Hand Signals
  • Expiration Months

Contents Courtesy of CME Group.

Primary Sidebar

Tips & Strategies

blog-header

How to Harness the Power of Moving Average Crossovers

A moving average is one of the most popular technical indicators. Traders frequently use them to discern trends, identify reversals, and locate support and resistance levels. Let’s look at these powerful technical tools and one unique event: the moving average crossover. What Is a Moving Average Crossover? Moving average (MA) is a “calculation used to… Read more.

Advanced Techniques for Futures Trading: Order Carry Over vs. End of Day Cancellation

Technical Analysis of Stocks: Understand the Pros and Cons

In today’s equities marketplace, the technical analysis of stocks is a popular discipline. Each day, millions of market participants use tools, indicators, and price action as primary decision-making mechanisms. Read on to learn more about the advantages and disadvantages of stock market technical analysis. The Technical Analysis of Stocks Technical analysis is the study of… Read more.

Probabilistic Modeling for Trending Markets

Many mathematicians start with the same, single assumption when they commence any probabilistic modeling: the probability of a market moving higher or lower on any given day is 50%. Though this may seem oversimplified…

More Tips & Strategies

  • Will the Russia-Ukraine War Cause a U.S. Recession?
  • What Is the Best Way to Sell Stock Options?
  • What Are the Four Risks of Trading Stock Options?
  • Understanding the Impact That Stock Option Time Decay Has on Stock Options
  • Bearish and Bullish Options Trading Strategies
  • How High Will Crude Oil Prices Go?
Trustpilot

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

StoneX Financial Inc.
Daniels Trading Division
230 South LaSalle Suite 10-500
Chicago, IL 60604
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot
Risk Disclosure
  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top
 

Loading Comments...
 

You must be logged in to post a comment.