Thursday, May 2, 2013

Futures Trade Sample

Futures Markets has been around for hundreds of years; long before the existence of electronically traded markets like the NASDAQ and CME Globex. Ironically the fundamentals of trading have not changed, what has changed are the vehicles in which we use to trade.
The Advantages of Trading Futures
Trading futures contracts have several advantages over other investments:
  1. Futures are highly leveraged investments. To ‘own’ a futures contract an investor only has to put up a small fraction of the value of the contract (usually around 10%) as ‘margin’.
  2. An investor can make money more quickly on a futures trade. Firstly, because he is trading with around ten-times as much of the commodity secured with his margin, and secondly, because futures markets tend to move more quickly than cash markets. (Similarly, an investor can lose money more quickly if his judgement is incorrect, although losses can be minimised with Stop-Loss Orders, placing stop-loss orders to maximum effect.)
  3. Futures are harder to trade on inside information. After all, who can have the inside scoop on the weather or the Chairman of the Federal Reserve's next proclamation on the money supply? The open outcry method of trading - as opposed to a specialist system - insures a very public, fair and efficient market.
  4. Most commodity markets are very broad and liquid. Transactions can be completed quickly, lowering the risk of adverse market moves between the time of the decision to trade and the trade's execution.
  5. Commission charges are small compared to other investments and are paid after the position has  ended.
Off-Exchange Futures offered at ICMBrokers
ICMBrokers focuses on giving access only to those off-exchange futures instruments that are electronically traded, highly liquid, and most desired by online traders.  By limiting our product offering, we are able to guarantee best market execution for our customers.

Particulars of the Offered Instruments 

Contract Size
Tick value
Energy Derivatives
Light Sweet Crude Oil
1,000 Barrels
Index Derivatives
Dow Jones
$10 x Index Value
Mini Dow Jones
$5 x Index Value
$20 x Index Value
Mini S&P
$50 x Index Value
Commodity Derivatives
112,000 lbs.
Financial Derivatives
EUR 125,000
British Pound
GBP 62,500
Swiss Franc
CHF 125,000
Japanese Yen
JPY 12,500,000
Australian Dollar
AUD 100,000
Canadian Dollar
CAD 100,000

Margin Requirements
In order to buy or sell 1 contract (lot) of a futures instrument with ICMBrokers, the investor must have a minimum of $1,000 in the account ($2,500 for off-exchange financial futures).  Though an initial margin of $1,000 is required, ICMBrokers has no maintenance margin on standard accounts.  In order to guarantee that clients’ accounts do not extend into negative equity, the trading platform automatically closes all positions at the 5% Equity/Margin ratio.

Profit and Loss Calculation Examples
• Sell 5 CL at 43.50  |  Buy 5 CL at 42.60

   43.50 (open price)   x 5 (lots traded) x 1,000 barrels (contract size) = 217,500
   42.60 (close price)   x 5 (lots traded) x 1,000 barrels (contract size) = 213,000
                                                                                                            $ 4,500 (Profit)
• Buy 3 DJ at 8340   |   Sell 3 DJ at 8520

   8340 (open price) x 3 (lots traded) x 10 (contract size) = 250,200
   8520 (close price) x 3 (lots traded) x 10 (contract size) = 255,600
                                                                                             $ 5,400 (Profit)

To know more about our ICMBrokers Futures Instruments please click the link: ICMBrokers Off-Exchange Futures

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