You've finally finished your futures education at Cannon Trading Company. You've done you're homework on stops, limits, indicators and price movements for futures market and you're commodities trading. You're ready to go, you enter your limit order and you wait.
By: Justin Smith, Cannon Trading Commodities Broker
Every trader has done it. You've done it, your friends have done it, even your broker has done it at one point early in their career.
Here's the scenario:
You've finally finished your futures education at Cannon Trading Company. You've done you're homework on stops, limits, indicators and price movements for the market you're trading. You're ready to go, you enter your limit order and you wait.
You get filled. Your heart rate picks up, a wry smile crosses your face and you begin to imagine the possibilities of the one trade you're in: How much can I make? How much can I lose before it's too much? You've waited through months of technical trading and deep meditation to get here, and now it's finally paying off with one of your first trades in the live market. Sayonara paper trading; aloha live futures.
Then, all of a sudden, the top of the hour hits and the market starts acting up. It's getting more volatile and more volatile; it's picking up speed and taking an unforgiving turn against you. You can't think straight, all you can think about is your losing position that could get worse and worse as the seconds go by. You race to put in a stop order, but you finally have to settle for a market order just to stop the bleeding. You stare.
You're out of the market. What the hell just happened? You stare at the screen; did your indicators lie to you? Is your system faulty? Did you not listen to your broker? Well, probably not. But you're down several handles, you've lost some money and your pride is aching.
It was a regular morning, you even patiently waited out the first hour of trading to try and get a better idea of what the day might have in store for the markets; yet in that one minute at the top of the hour the market experienced a major reversal and you have no explanation. You're sitting there scratching your head, furious that you'd prepared for your trade for so long and lost so much in such a short time without any idea why.
You dial Cannon Trading to get an idea of what happened only to find your broker on the other end is just as confused as you are; however they're not perturbed by the market swing, only about your confusion and why you were in the markets at the time in the first place! You're directed to the daily announcements only to find everybody has been waiting all morning for a report to come out that would determine the day or even the next week of trading. And you missed it.
All that technical preparation, the months of practice and pep-talking yourself before you entered the trade, and you were foiled by an announcement that the rest of the trading world saw coming a week ago.
One of the single most frustrating mistakes you can make in the markets is not preparing yourself fundamentally for the announcements of the day ahead, and one of your first steps should be your trading calendar to make sure that doesn't happen. There are about 100 events listed on market announcement sites, and while not every one of them effects the markets as much as the last, it's important that you at least know what each one means.
Cannon Trading Company has taken care of the leg work for you here by polling its brokers (a staff including CTA's and brokers from the floor of Chicago with as much as 30 years experience) to find out which market events they consider to be the most important and what other lessons you need to understand when reviewing the events for the day. The list below is a group of events in order of impact to the markets according to the brokers of Cannon Trading, but there are a few things to keep in mind:
Now, without further adieu...
* According to the Commodities brokers of Trading Volley
It should be noted that this list was compiled based on the AVERAGE rankings by the senior brokers here in the office. Therefore, it should be noted that there are differences in opinion, ESPECIALLY on the position of the "Factory Orders" and "Philly Fed Survey", which some believed should be switched around. Feel free to comment, phone in or email us your questions or concerns. We're happy to get into a discussion about any of these events and how they affect the markets.
Source for definitions: Econoday
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!