learn to trade futures

Trading futures and options on futures involves a substantial amount of risk. Accordingly, Carley Garner and DeCarley Trading, have allocated substantial resources to help people to learn to trade futures.  After all, an educated brokerage client is a better client.  

Years of commodity market experience as futures brokers has contributed to the cause; we hope you enjoy these articles focused on trading in futures, option trading, and commodity market analysis. 

  • the financial futures report

    Trade tariff talk is just that, we've yet to get anything concrete. Yet, the market is emotional.

    This is nothing new, if there is anything we've learned from the first year (+) of the Trump presidency it is the conversation always starts with drama, but then settles down to something more reasonable. Unfortunately, the markets haven't quite figured that out yet. Those that believe markets are efficient, will have a hard time explaining what we've seen in the previous three or four trading sessions.

    Tariff discussions, without any concrete decisions, can't explain such big swings in asset prices. The only rational explanation for this type of volatility is (ironically) irrationality. Markets are emotional, and we are being reminded of that. The low volatility slumber of 2016 and 2017 were anomalies and are probably behind us.

    The "buy and holders" might not be happy with the market environment before us, but the reality is the expanded volatility will eventually provide opportunities for traders (particularly option sellers). Further, it might not feel like it but this is a healthier market than what we saw in late 2017 and January 2018.

  • the financial futures report

    Historically FOMC minutes have been an afterthought, but in today's climate they are a big deal to futures traders

    The futures markets have been hanging on every word that trickles from the mouths of Federal Reserve members. Even off-handed comments made on their personal time have been moving through the grape vines.

    Today's FOMC minutes didn't offer any surprises. The Fed feels like the U.S. economy is moving in the right direction, which justifies a rate hike. But overseas market turmoil (namely China) has them pressing pause. The market seemed to like what they heard.

    In more bullish equity market news, the Chinese stock market opened for trade today after being closed for an entire week in observance of a national holiday (this is odd to us because it is essentially illegal in the U.S for the stock exchange to be closed more than 3 consecutive days). Once the bell rung, Asian traders bid prices higher to catch up with the global equity market rally that had taken place without them.

  • the financial futures report

    In today's DeCarley Perspective (see here:https://madmimi.com/s/f78468) we noted the fact that the VIX is trading at historically depressed levels. Specifically, VIX futures near 15.00 and the cash market VIX near 11.00 is a relatively rare event. Even more interesting, is the fact that the VIX rarely stays at such depressed levels for long. This is because at such levels the market is discounting nearly all event risk. Traders are simply complacent, or as a former colleague might have said, "they are fat, dumb, and happy."

    On the flip side, if we are right about the VIX being near a low, the ES should be near a high.

  • the financial futures report

    China is playing Trump's game...start the discussion with a bazooka before eventually pulling out the bb gun to negotiate.

    US equity and commodity markets were reeling last night on news of new Chinese tariffs. Not surprisingly, the markets overreacted. China's tariff threats don't go into effect immediately, and there is plenty of time for negotiations to take place. Further, it is important to remember that China imports much more to the US than the US does to China. Thus, an immediate fifty handle collapse in the ES on the news probably wasn't justified. As the day wore on, traders began to realize this and put their money where their mouths were by buying into the dip.

    We saw similar action in the commodity markets, namely soybeans and the meats. We had previously recommended bullish trades in corn, soybean meal, cattle and hogs that caused some stress during today's session but appear to be on the right track. In any case, there is no logical reason to see a market such as live cattle go from being nearly limit down to limit up within the span of hours.

    There is no room for complacency, nor panic, in these markets. The goal should be to stay hedged and grounded.

  • the financial futures report

    For Futures Traders, the Countdown to the Fed is on

    Six days from now we'll finally find out whether or not the Fed believes initiating a rate hike is a good idea. The investment community is polarized by the debate, and it seems the Fed might be too. We are still of the belief that they won't be looking to make any moves until the October or December meeting (most likely December), but either way the impact on the economy will be minimal.

    Even if they raise the overnight borrowing rate a full percentage point over the next year, funds will be historically cheap. With that said, we will likely see a knee jerk reaction to the first rate hike but that doesn't mean the actual value of financial assets have changed. More often than not, equity markets moved higher overall in the early stages of a rate hike campaign.

  • The Fed and triple witching Friday are generally bullish events for the stock market

    Although the CME has mitigated some of the impact of the triple witch with their addition of weekly expiring options, the event still influences the quarterly expirations (March, June, September, and December). The most common course of action is a short squeeze going into expiration. In this particular instance, we are referring to Friday, June 17th. The squeeze higher often extends itself into the time the June contract goes off the board, which will be at 8:30 am Friday morning. Accordingly, those wishing to get bearish this market should look for opportunities late next week.

    Similarly, Fed meetings have generally enticed S&P buyers in the days before the FOMC's interest rate policy announcement. The two-day meeting begins on Tuesday, so we could see some buying early in the week.

  • the financial futures report

    The data is suggesting inflation remains an non-issue

    Yesterday's PPI was reported to be even softener than analysts expectations. The headline figure suggests that prices at the producer level have decreased by .5%, but even the core reading was -.3%, Today's CPI painted a similar picture; the headline was -.2% and the core was .2%. In a nutshell, these reports are telling the markets the Fed isn't forced to take action. They can continue to take their time with the timing of the first rate hike in over 9 years.

    A few months ago we had predicted that the Fed would probably wait until the December meeting to begin raising rates because at that time most people will be enjoying the holidays, rather than drooling over everything the Fed does. We still think that this is a rather high probability. However, the Fed Funds futures market has dwindled the odds of a December rate hike to about 25% (in other words, the market disagrees with us).

    The "market' doesn't value the odds of a hike above 50% until we get into the spring of 2016. This is a dramatic change in stance of that seen a few months ago in which the Fed Funds futures market was suggesting a 50% chance of a rate hike in the October or December meeting.

  • the financial futures report

    The market is pricing in a good payroll number as it reverses pessimism over North Korea

    Late Monday afternoon I was watching a business news station. The panel was discussing the implications of a North Korea missile being fired (they were still trying to confirm the rumor that it had occurred). There was talk of a limit down opening to the E-mini S&P (the news broke during the daily afternoon pause of trading). They were right about sharp selling on the open but the bearish tone was quickly forgotten by tax reform talk. Even a 500-year flood couldn't deter the fiscal policy bulls. By Thursday's close all of this week's bearish headlines had been forgotten.

  • the financial futures report

    It's been a confusing day for the financial futures markets

    Last week we heard several Federal Reserve Presidents tout their hawkish stance; they went as far as to say an April rate hike is on the table. However, the Fed Chair Janet Yellen, took the other side of that argument in her speech to the Economic Club of New York. She emphasized measured and gradual rate hikes were the "only" way to go. She reiterated, the pace will be so slow the process could take years. However, she also stipulated the decisions made in each FOMC meeting will be data dependent.

    It seem to us, market participants would be better served simply ignoring the chatter of Fed Presidents, and focusing solely on the Chairman. Doing so would certainly reduce some of the noise caused by overzealous speculators.

    Contrary to the Fed Chair's suggestion that the economy still needs to be nursed back to life, Pending home sales were up 3.5% in February and the Case-Shiller 20-city Index saw a 5.7% increase in January. Further, the March Consumer Confidence Index jumped to 96.2.

  • ZB and ES futures trading newsletter

    GDP surprises to the upside, but weak oil futures going into the weekend negates the benefits

    Stronger WTI crude oil futures trade overnight, and the flirting of an upside breakout, had the ES buyers in full bloom. However, the crude rally was rejected by technical resistance and later in the day suffered from a smaller than expected decline in operating rigs in the U.S. Accordingly, the U.S. equity indices failed to hold overnight gains.

    On a positive note, the second estimate of second quarter GDP was reported at 1%. Under normal circumstances, this would be a disappointment but in today's sluggish environment it could almost be categorized as a blockbuster report. To boot, personal spending and personal income ticked higher along with the final reading of Michigan Sentiment.

    This is the first time, in quite a while, we've seen a string of positive economic data. Until now, the trend has been for good news to be followed by bad. Now that data is firming up we have a hard time believing the S&P will revisit the low 1800s any time soon. Nevertheless, the last few trading days in February are normally weak, so we could see a few days of back and filling before heading higher.

Follow Carley Garner on Twitter