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Following the rise of the digital marketplace, day trading futures has become an exceedingly attractive way to make a living. Featuring low barriers to entry, readily available leverage, and a near 120-hour work week, futures furnish motivated individuals with a freedom not found in most occupations.

If you have the three D’s ― desire, dedication, and discipline ― then day trading futures may be the professional opportunity you’ve been looking for. However, there are a few prerequisites to satisfy before jumping into the market with both feet. Let’s take a look at these ingredients and explore several ways that you can pursue a living in the futures markets.

The Bare Necessities

Day trading futures is an opportunistic discipline. There’s no base salary, 401(k), health insurance or paid vacation time. Your take-home pay is a direct function of wins, losses, and expenses. To give yourself a shot at generating a livable wage, here are five factors indispensable to your venture in futures:

  • Purpose: Goals are critical to the long-term success of any trader. If your primary objective is to secure an income solely from trading, then choosing an approach that’s capable of generating adequate returns is of paramount importance.
  • Capital and time: Depending upon your interpretation of what defines an acceptable income, the demands upon your resources will vary. For instance, it will take substantially more time and capital to make an annual stipend of $100,000 than it will to make $50,000. Simply put, your dedicated resources must be in alignment with the financial objective or the odds of failure increase dramatically.
  • Brokerage account: It’s impossible to trade futures without a brokerage account. Whether you are self-directed or hands-off, the services of a broker are required.
  • Trading platform: The modern marketplace is digital, existing online. Aside from computing power and an internet connection, access to a software trading suite will be necessary.

Given a defined purpose, adequate resources, platform, and the services of a broker, it’s technically possible to begin day trading futures for income. Now let’s break down the different ways of actually engaging the market.

Ways of Earning a Living Day Trading Futures

Perhaps the most important asset that a trader can possess is a concrete plan. That means a comprehensive strategy for the markets, designed to promote the achievement of trade-related goals in concert with all available resources. A trading plan is the structural framework that guides the entire operation ― without one, failure (capital loss) becomes probable.

There are literally thousands of day trading strategies touted online for generating income. Theoretically, all are designed to generate income ― all you have to do is select, modify, or create a viable one.

Here are a few ways that an aspiring day trader can engage the markets on a self-directed or assisted basis:

  • Black box systems: Black boxes are all-inclusive trading systems available for purchase. They furnish the individual with a fully automated approach to trading; simply plug it in and turn it on.
  • Public domain indicators: Retail traders frequently build their own systems based upon technical indicators available to the public. Successful trading methodologies that incorporate such technicals as Bollinger Bands, momentum oscillators, and Fibonacci numbers are not uncommon in futures.
  • Proprietary indicators: Proprietary indicators are available to interested parties on a lease or pay-for-play basis. Featuring secret derivations, traders frequently use proprietary indicators to conduct trade either in isolation or combination with other technical tools.
  • Social/copy trading platforms: Over the past decade, social and copy trading has grown in popularity around the world. Copy trading occurs when a trader links a brokerage account to another for the automatic duplication of trades. This is typically done for a fee, with the cost varying depending upon the track record of the service or master trader.

The beauty of futures is the flexibility that it offers participants. A diverse collection of products, robust liquidity, and limited fees make income generation via day trading futures possible using any of the above-mentioned methods.

Getting Started in Futures

Changing a career path is a big decision, and making the transition to full-time trader is an even bigger one. Mistakes in the markets cost money, so a smart course of action is to test the waters on a small scale before going for broke.

If you’re pondering taking the plunge, brushing up on your futures IQ is a must. A great place to start is the online educational portal at Daniels Trading. Featuring blogs, webinars, and expert analysis, it has everything you need to build your knowledge about futures.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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When it comes to futures analysis, there are two primary schools of thought: fundamental and technical. Each discipline has legions of dedicated followers who eagerly engage the market every day from unique vantage points. No matter a trader’s size or style, any adopted methodologies are rooted in either fundamental or technical analysis.

Traditional Market Analysis

Since the dawn of the marketplace, participants have attempted to attribute fluctuations in asset pricing to the relevant economic underpinnings of the day. By examining critical market drivers, traders attempt to identify the intrinsic or real value of an asset.

Fundamental analysis is viewed as being the traditional form of market study, a tried-and-true process of crafting trade-related decisions. Fundamental futures analysis may be either qualitative or quantitative, giving traders a broad spectrum of subject matter to digest. Here are a few of these factors local to the futures markets:

  • Supply and demand: The evolving relationship between supply and demand is a key fundamental. Disequilibrium in this area can lead to scarcity or abundance, both of which are capable of dramatically impacting asset valuations.
  • Current events: Weather, politics, and armed conflict can be important parts of any fundamental market outlook.
  • Economic cycle: Micro- and macroeconomic trends are often viewed as being important drivers of intrinsic value.
  • Market state: Addressing the prevailing bullish or bearish sentiment facing an individual asset, or the broader market, is a key aspect of fundamental analysis.

The quintessential goal of fundamental analysis is to determine whether an asset is overvalued or undervalued. For instance, assume Carey the Corn Trader is breaking down the drivers of the North American age markets. After studying the impacts of inclement weather and political developments on the sector, Carey projects corn will sell at a premium come harvest in November. Accordingly, Carey decides to open a long position in December corn futures (ZC) offered by the CME. If the price of December corn rallies toward harvest time, Carey will be in a position to profit from the fundamentals-based trade.

It’s All About Price Action

Originating in 17th century Amsterdam, technical analysis is the study of price action itself. In an attempt to accurately forecast future market behavior, technical analysis is used to place historical and current price action into a manageable context. The result is a concrete framework for crafting trade-related decisions.

As the marketplace has evolved into a digital format, the popularity of technical futures analysis has exploded. Here are two pillars of the entire area of study:

  • Charting: Regardless of format, the pricing chart is the basis of modern technical analysis. Candlestick, OHLC, volume, and Time price offering (TPO) charts are several of the most popular types.
  • Indicators: Both proprietary and public domain indicators play an integral role in technical analysis. Tools such as Fibonacci Extensions and momentum oscillators are regularly employed by traders seeking to find a quantifiable edge.

In contrast to the study of fundamentals, technical analysis aims to identify when price is overbought or oversold. The goal is not to determine an asset’s intrinsic value ― it’s to project the forthcoming direction of price itself.

To illustrate the functionality of technical futures analysis, assume that Drew the Ag Commodity Scalper is watching the same corn market as Carey. Drew is not concerned whatsoever about where the ZC contract will be trading at in December. All that matters to him is the relative location of price and its potential direction. In order to place evolving price action into context, Drew utilizes intraday pricing charts with multiple moving averages and a Bollinger Band overlay. Accordingly, Drew crafts trading decisions based upon price’s dialogue with the selected indicators and adopted strategy ― nothing else.

Which Futures Analysis Is Right for You?

In truth, there is no holy grail of futures analysis. Both fundamental and technical approaches to the market can be viable, if they operate within the structure of a rock-solid trading plan.

A great place to access both fundamental and technical perspectives on today’s markets is the online Trading and Advisories portal available at Daniels Trading. Featuring expert advice and timely analysis, it has everything you need to develop a comprehensive picture of the current marketplace.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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As any veteran trader will tell you, having your stops run is not a pleasant experience. However, it doesn’t need to be a financial disaster. While the connotation surrounding the word loss is ominous, do not be fooled ― the stop loss order is often a trader’s best friend.

Types of Stop Loss Orders

A stop loss is an order designed to force the closure of an open position at market. If it’s a long position, a sell order is used; if it’s a short position, a buy order is warranted.

The functionality of a strong stop loss order should promote efficient trade by minimizing slippage and facilitating a timely market exit. However, optimizing these two key elements of trade depends largely upon which type of stop traders incorporate into their trading strategy.

Not all stop losses are created equal. Each offers the user a unique collection of attributes. Here  are four of the most common and the trade-related areas in which they excel:

#1 Market Orders

A tried-and-true way of entering or exiting a position immediately, the market order is the most traditional of all stop losses. Placing a market order is easy; simply hit the “Join Bid/Offer” or “Flatten” buttons on you trading DOM, and the order is instantly sent to market for execution. Accordingly, any open long or short positions are closed out at the best available price.

Market orders are great for closing positions when time is of the essence. However, be forewarned ― slippage can be significant in exceptionally volatile or thin markets.

#2 Stop Limits

When precision is the primary objective, stop limits are the order of choice. A stop limit order rests at market at a specific price until filled. Unless the order is able to be executed at exactly the defined price, or within a predefined offset, it will sit at market until filled or cancelled.

To illustrate, assume that Archer the crude oil trader is long one lot of July WTI crude oil from $58.06. To protect the open position, Archer places a stop limit order at $57.84 with a defined offset of 1. This means that if price falls to $57.85 or $57.84, the long will be closed out at one of the two prices.

Stop limit orders are most useful within a highly regimented trading strategy. Scalping and other high-volume approaches often rely on the specificity of the stop limit. Nonetheless, it’s important to realize that the stop limit order may go unfilled during times of extreme volatility.

#3 Stop Markets

For a majority of retail traders, the stop market is the go-to stop loss order. It combines the functionality of both the market and stop limit order types, ensuring a speedy exit upon a specific price point being hit.

Like the stop limit, the stop market rests at market until price hits the predetermined level. Upon election, it’s filled at the best available price, as per the market order. This is a useful feature because it guarantees the closure of an open position.

Stop market orders can be extremely useful in volatile markets. In practice, they give the trader an ability to pre-plan a hasty exit from a position under duress. Potentially significant slippage is once again a concern, as it is with traditional market orders.

#4 Trailing Stops

Among all of the stop loss types, trailing stops are among the most advanced. A trailing stop moves in concert with price action, from a defined distance.

Once again, let’s say that Archer is long one lot of July WTI crude oil from $58.06. In lieu of other orders, Archer implements a trailing stop order at $57.91 with a predetermined lag of 15 ticks. As price moves forward, the trailing stop does also, on a tick-by-tick basis.

Trailing stops are valuable to traders who want to let positive positions run, lock in profits, or protect against a market reversal. They are especially receptive to trend and range trading methodologies.

Know Your Stops

Managing active trades in the live futures markets can be a challenge. Sudden spikes in volatility and order flow are common, stressing the need for efficient profit taking or market exit. One way to gain competency in this department is to implement the correct stop loss order for your strategy.

For more information on stop loss orders and other strategic concerns, check out the Tips & Strategies section of blogs available at Daniels Trading. There you will find valuable information on the various futures order types as well as many other facets of trade management.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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Touted as long overdue by many in the derivatives community, the launch of Micro E-mini futures by the Chicago Mercantile Exchange (CME) on May 5, 2019, brought the leading U.S. equities indices online to the retail world. In the first four days alone, participants traded almost 2 million contracts ― the CME’s most successful product initiation in its 171-year history.

So, how can you benefit from actively trading Micro E-mini Futures? Let’s dig into a few key elements of these markets and talk about the many advantages afforded to active traders.

Choices, Choices

The Micro E-minis provide retail traders a collection of options encompassing the vast majority of the U.S. equities markets. Aside from pink sheet or foreign listings, the Micro E-minis give traders a way to engage small-, mid-, and large-cap stock indices. If you’re an equities buff, then these four distinct products are for you:

Product  Symbol
Micro E-mini S&P 500 Index Futures MES
Micro E-mini DJIA Index Futures   MYM
Micro E-mini NASDAQ-100 Index Futures MNQ
Micro E-mini Russell 2000 Index Futures   M2K

Just as the CME’s full-sized and E-mini listings do, Micro E-mini futures are priced in relation to the underlying index. This attribute promotes efficient and intuitive trading for those involved in the market, minus undue tracking errors.

Manageable Contract Size and Tick Value

In the same spirit as the E-mini lineup of products, the Micro E-minis reduce the applied leverage or “size” of the contract. The Micro E-minis are effectively one-tenth the size of a standard E-mini product. This smaller size gives retail traders of all capitalizations the ability to implement a wide-variety of previously untenable strategies.

When it comes to holding an open position in the market, tick value is a major consideration. If too big, profitable trades are often prematurely exited. If too small, a golden opportunity may slip by the wayside. Micro E-mini futures give you the ability to tailor tick value to any specifications.

Here are the tick values for one-, two-, and three-lot positions of each product:

Product  Tick Value (1)  Tick Value (2)  Tick Value (3)
Micro E-mini S&P 500   $1.25 $2.50 $3.75
Micro E-mini DJIA $0.50 $1.00 $1.50
Micro E-mini NASDAQ-100 $0.50 $1.00 $1.50
Micro E-mini Russell 2000   $0.50 $1.00 $1.50

The strategic implications of the reduced tick values of the Micro E-minis are extensive. Adopting strategies with wider stop losses and letting an open position “breathe” becomes possible. In addition, the using multi-bracket order functionality is also feasible. If actively trading a conventional E-mini contract, both methodologies would require a much greater capital allocation, potentially making each a nonstarter.

Reduced Margins

In the same spirit as smaller tick values, the reduced margin requirements associated with Micro E-mini futures can open the door to an array of trading opportunities. Margin requirements for the Micro E-minis do vary depending upon broker. However, here is a basic set of margin values for quick reference:

Product  Initial Maintenance Intraday
Micro E-mini S&P 500   $630 $630 $100
Micro E-mini DJIA $649 $590 $100
Micro E-mini NASDAQ-100 $836 $760 $100
Micro E-mini Russell 2000   $390 $355 $100

The low intraday margins allow for larger position sizing on short-term trade setups. Accordingly, the reduced initial and maintenance margins give active traders the ability to hold open positions through the daily “overnight” break, weekend, and holiday market closures. As a result, the adoption of longer-term strategies such as swing trading or intermediate-term investing becomes possible.

Going Live with Micro E-mini Futures

In many ways, the Micro E-minis give equities index traders unprecedented freedom and flexibility. In years past, carrying an open position into the daily close or trading multiple contracts required a significant financial commitment. Now, active futures traders can attack the U.S. equities indices from various angles without breaking the bank.

For more information on the Micro E-minis and how they may complement your plan for the markets, schedule a free consultation with a member of the Daniels Trading team today.  

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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Gold has been a premium asset for centuries, acting both as a store of wealth and a means of exchange. Whether used in specie, a currency peg, or debt collateral, it has always been synonymous with prosperity. Subsequently, gold is an attractive asset to central banks, governments, and financial institutions around the globe.

The World Gold Council (WGC) estimates that about 190,000 metric tons of bullion have been mined over the course of human history ― a relatively small figure. Given its limited supply, the question of “who owns the world’s gold?” is an important one.

International Gold Holdings

Since the early 1970s, gold has not functioned as the backbone of the global monetary system. When the U.S dollar was withdrawn from the gold standard in 1971, the Bretton Woods monetary system collapsed, officially ending the dependence of international commerce on bullion.

Although gold no longer serves as a currency peg, governments and central banking authorities remain committed to stockpiling gold as a store of wealth. As of year-end 2017, the world’s top 10 gold proprietors were:

Country/Institution  Stocks (tons)
United States 8,133.5
Germany     3,373.0
International Monetary Fund (IMF) 2,814.0
Italy     2,451.0
France   2,435.9
China 1,842.6
Russia 1,778.9
Switzerland 1,040.0
Japan 765.2  
Netherlands 612.5

Taking a quick look at this table, two observations immediately jump out as proof of gold’s global financial importance. First, two of world’s top five gold producing nations (Australia and Canada) didn’t have large enough reserves to make the list. Second, the International Monetary Fund isn’t a country; it enjoys no military or governmental protections. The IMF exists solely as a global banking giant and functions as an independent entity reliant upon bullion.

Central Banks, ETFs, and the Public

It’s no secret that central banks are big fans of acquiring gold. Because gold is a viable hedge against systemic and financial risk, stockpiling bullion is better than acquiring huge amounts of fiat currency.

The institutional gold hoarding trend has been historically evident, with central banks around the world periodically padding their reserves. Recently, for the year 2018, central banking authorities purchased 651.6 metric tons, the most since 1967. The leaders in this frenzy were the central banks of the United States, Russia, Turkey, Poland, and India.

In addition to central banks, exchange trade funds (EFTs) also actively accumulate gold. For physically backed ETFs, securing gold reserves is an integral part of ensuring the fund’s security. Here are the two largest and their respective bullion holdings:

Fund Total Reserves Ounces Per Share
SPDR Gold Trust 24 million ounces 0.0946
iShares Gold Trust   8.8 million ounces 0.0096

Despite central bank and ETF bullion stocks, the largest buyers of physical gold are individual people ― specifically, purchasers of jewelry. More than 2000 tons of gold each year is converted to jewelry before being sold to the public. Among all of the world’s citizens, it’s estimated that the people of India hold the largest amount of bullion, about 22,000 tons.

Due to gold being in finite supply, concerted buying from central banks, ETFs, and the public can drive prices significantly higher. Of course, the opposite is also true: Large block sales can lead to a flood of bullion on the open market. As with most commodities, supply and demand forces rule when it comes to asset pricing.

Getting Started with Gold Futures

Trading gold futures offers many advantages to market participants. Holding physical bullion can be a hassle because storage fees and asset security are major concerns. In addition, ETF offerings feature considerable maintenance costs and per trade fees. Conversely, gold futures contracts offer supreme liquidity and leveraging options for risk appetites of all kinds.

A great place to get started in bullion is by reading the gold futures overview available at Daniels Trading. Featuring product specifications, quick facts, and current market outlooks, it’s a rock-solid jumping off point into the precious metals trade.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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The futures market is a common destination for traders who aim to make a living at their craft. Whether it’s through the currency, equity, debt, or commodity asset classes, futures markets give professional traders a variety of advantages not found anywhere else in finance.

Aside from such obvious benefits as robust liquidity, reduced tax liabilities, and limited commission structures, futures also furnish active traders with several more subtle upsides. In this blog, we will take a look at five lesser-known reasons why many financial industry pros choose futures over other modes of trade.

Reason #1: Broad-Based Trading Opportunities

In comparison to stocks or currencies, trading futures gives an individual an opportunity to capitalize on macro trends in market behavior. To successfully trade a futures market, a trader doesn’t need to conduct an abundance of specialized research. Broad analysis, be it fundamental or technical, often proves useful. In many cases, it’s possible to cash in on general shifts in entire markets or economies, not just micro trends.

To illustrate this point, let’s say that Ashton the stock trader believes the S&P 500 is due to post extraordinary gains over the next 12 months. Futures make it easy to pursue profits, simply by buying a corresponding front-month E-mini S&P 500 contract(s). The process is much more involved if selecting an S&P 500-oriented mutual fund, ETF, or compiling a list of individual stocks for purchase.

Reason #2: The Availability of Leverage

Leverage is an element of finance frequently criticized, yet in constant demand. Professional traders understand that capital efficiency is a key element of making enough money to sustain a lifestyle. In short, futures provide the trader with enhanced purchasing power and the flexibility to pursue bold profits.

By offering initial margins somewhere in the neighborhood of 3% to 12% (depending on brokerage service and product), the futures market gives traders the ability to generate extraordinary returns. This pales in comparison to equities that require upwards of a 50% deposit on a position’s outstanding value.

Reason #3: Order Book Access

Following the rise of high frequency trading (HFT) practices and the growing popularity of dark pools, many professional traders sought the transparency of futures. In futures, market participants are able to access the exchange’s order book in a timely fashion. Market-related data sets — such as price, open interest, and traded volumes — are all available to the public. This is simply not the case for many equities markets or over-the-counter (OTC) venues such as the forex.

Reason #4: Extended Business Hours

The futures market gives participants the ability to trade on a near-24/5 basis. As futures have evolved from the open-outcry auction system to digital platforms, business hours have been extended well past the traditional 9-to-5 work day. This has opened the door to many strategic considerations because traders are now able to engage futures during the Asian-Pacific, European, and U.S. sessions.

If our equities player Ashton was so inclined, trading hours could extend well past the traditional New York Stock Exchange (NYSE) close at 4:00 p.m. EST. In the case of an evening corporate earnings release or a particularly active geopolitical news cycle, Ashton could strategically engage products facing the Dow Jones Industrial Average (DJIA), S&P 500, or NASDAQ.

Reason #5: An Abundance of Strategic Opportunities

It stands to reason that enhanced leverage, a wide-variety of products, and a near 24-hour business day will produce an advanced collection of trading opportunities. When taken with the robust liquidity, consistent volatility, and flexibility to actively buy or sell each product, the futures market offers exponentially more strategic options than other venues.

Getting Started in the Futures Market

Given the opportunities and integrity local to the futures markets, professional traders around the world choose them as premier avenues for the pursuit of their financial goals. To find out how you can get started in the futures markets, check out the brokerage service suite at Daniels Trading. From self-directed options to managed futures portfolios, the pros at Daniels have everything you need to benefit from the advanced functionality of futures.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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The sale of any personal asset often carries with it a negative connotation. Selling is sometimes associated with unwanted property liquidations, bankruptcy proceedings, or the precursor for physical relocation. For many, it’s viewed as being a necessary financial evil ― for others, it’s an essential part of everyday business.

Depending on a variety of factors, selling a futures contract may be either beneficial or excruciating. However, there are three specific times when selling a futures contract is a good thing. Let’s break down each of these situations and examine how a sudden sale can sound a lot like the ringing of a cash register.

Limiting Risk Exposure

Active hedging is a practice as old as the futures markets themselves. From corn growers to copper miners, a broad spectrum of industries implement strategic hedging plans via the flexibility of futures.

In practice, selling a futures contract is the quintessential commodity producer’s hedge. For instance, if you’re growing winter wheat, opening a short position in June Chicago SRW wheat futures insulates your risk of lagging spot prices come harvest time. Losses stemming from an untimely market downturn may be largely mitigated by selling a correlated futures contract.

Short positions are also frequently used to limit risk exposure to equities market volatility. Investors long on stocks frequently view the futures markets as a means of taking out an insurance policy on their holdings. The equities hedge works in a similar fashion as in ag commodities: The investor chooses to sell a related futures contract to realize gains from a broader market meltdown. Contracts such as the E-mini S&P 500, E-mini DOW, or E-mini NASDAQ are often sold as portfolio insurance against a Wall Street catastrophe.

Liquidating a Long Position

If you’re taking a long position in a futures market, then you’re buying a contract in anticipation that its value will rise. Accordingly, selling a futures contract is the mechanism by which an open long position is closed out at market.

If you execute a buy order within the framework of a comprehensive trading plan, then a subsequent sell means two things:

  • The open long position is partially or fully closed out
  • A profit or loss is realized from the sale

Unfortunately, all trades do not end up winners. In fact, the old saying “it’s not what you make, it’s what you don’t lose” is commonly taken as gospel in trading circles. Selling a futures contract can help limit losses by quickly exiting a bullish misread or locking in profits from an uptick in pricing. In both cases, the sale positively impacts your trading account balance.

Active Shorting

One of the strongest attributes of futures products is their inherent flexibility. Traders are able to profit from being either long or short a market simply by buying or selling a contract. In practice, it’s possible to make money from selling high and buying low, not just buying low and selling high.

When you sell a futures contract, you’re opening a short position in the market. Profits are realized from falling asset prices in relation to the bearish entry point. If you have a strong opinion that an asset is in for a dramatic sell-off or correction, then selling a related futures contract may be a good, and potentially lucrative, idea.

Selling a Futures Contract Isn’t a Bad Thing

As we mentioned earlier, selling is often viewed as being a product of financial weakness. In futures, this assertion could not be farther from the truth. Whether you’re hedging risk, bailing out of a fizzled rally, or getting in on a market correction, selling futures contracts are a great way of building market share.

For more information on the many opportunities available in the futures markets, schedule a free no-obligation consultation with an industry pro at Daniels Trading today.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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When it comes to active trading, the learning curve is steep, and time is money. Getting up to speed as quickly as possible may be the most important task that those new to the markets face.

However, there’s good news ― technology has streamlined the process of trader education. In decades past, a prospective trader’s ability to learn futures trading was confined to local commodity pits or 1-on-1 conversations with contacts in the markets. Now, the availability of online educational materials, expert webinars, and live market platform demos enables newbies to obtain a concrete knowledge-base from the comfort of their own homes.

Building a Strong Foundation: The Online Educational Suite

The evolution of electronic trading has brought the ability to engage the markets to the masses. In addition, tons of literature and blog content are available online 24/7/365. For anyone interested in futures, accessing a net-based educational suite is a great first step in learning about the markets.

A good educational portal is multifaceted and designed to help anyone learn futures trading on their own terms. All types of content are included, and brokerage services, exchanges, or independent third-parties are the sources providing the guidance. Here are some of the more common components found in a robust futures trading educational suite:

  • Futures 101: A simple introduction to what a futures contract is and how trade is conducted.
  • Guidebooks: Professional-level trading manuals addressing a wide range of market-related topics are great learning tools. Strategy, analysis, and general information are frequented subject matter.
  • Market and product specifications: Exchange-based product specifications are valuable information related to calculating margin requirements and implementing risk management parameters.
  • Blogs: Blog content is an indispensable part of staying up to date on everything from current events to the latest market technicals.

An online educational suite gives you the foundation on which to begin pursuing a complete trading education. The futures markets are dynamic environments; after you know the basics, the real learning can begin.

The Value of Webinars

Regularly attending webinars is a great way to brush up on almost anything related to futures. From operating a software trading platform to managing risk in real-time, an expert webinar is the next best thing to sharing a desk with a market professional. If you want to learn futures trading, webinars are a premier resource.

Webinars offer two benefits to students of the markets that text simply can’t:

  • Practical: By watching a professional trader or analyst engage the market, you may gain a realistic perspective toward futures.
  • Visual: For many people, visual learning is more effective than reading page after page of text. Watching a demonstration via webinar provides the viewer with a tangible feel of the subject matter.

Webinars offer a convenient way of boosting your trading chops. They can provide a glimpse into the reality of futures trading, what success looks like, and how to physically execute the many functions of active trade.

Engaging the Live Market

From heart surgeons to BBQ pitmasters, experts spend an extended period of time on “perfecting the craft” before ever attempting it in the real world. Futures traders are no different, and the market simulator is their key developmental tool.

Simply put, there’s no teacher like the live market. A simulator, or live-market demo, gives traders the ability to observe price action, place trades, and get a feel for futures absolutely risk free. If you’re serious in your quest to learn futures trading, then spending some time on a live-market simulator is an absolute necessity.

Learn Futures Trading on Your Terms

Education is critical to developing the skill set necessary for gaining competency in any field. Referencing online educational suites, on-demand webinars, and live-market simulators are valuable ways aspiring market participants learn futures trading.

If you’re looking to boost your futures acumen, be sure to reference the online resources available at Daniels Trading. Webinarsblogs, and expert trading guides are ready to help you make success a regular part of your trading day.  

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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The financial crisis of 2008 shook the foundations of traditional finance. For the first time since the Great Depression, the future viability of the U.S. as a financial entity came into question. Corporate bankruptcies, government bailouts, and a global credit freeze prompted droves of everyday people to actively seek security. Almost intuitively, gold became a premier port in the storm.

Panic!

Towards the end of 2007, it became apparent that the global economic system was under incredible strain. An environment of “toxic assets” had developed since the post-9/11 lending boom, exemplified by the popularity of subprime mortgages. While the writing of a huge amount of new consumer debt initially fueled economic growth and corporate earnings, the construct began to unravel in late-2008.

In one of the largest bankruptcies of all time, the century-old Lehman Brothers filed for Chapter 11 protection on Monday, September 15, 2008. The global investment bank’s filing turned Wall Street on its collective head, prompting an immediate 500-point session crash in the Dow Jones Industrial Average (DJIA). This was the beginning of a major correction in the U.S. equities markets, one that erased more than 50% of the DJIA’s value in 18 months.

As the stock market turbulence persisted, traders and investors ran for the hills. Valuations of safe-haven assets across the board spiked, led by gains in gold and U.S. Treasurys. Until the institution of multiple quantitative easing (QE) stimulus programs, market instability was almost a daily rule.

Gold Leads the Safe Havens

With real estate, equities, and commodities markets under tremendous bearish pressure, billions of dollars began a mass migration into safe-haven assets. Over the course of the financial crisis ― primarily 2007 to 2012 ― perhaps the most consistent winner was gold. Here is a quick look at gold’s annual performance during this period:

Year Percent Gained Closing Price
2007 +27.61% $836.50
2008 +8.29% $869.75
2009 +25.04% $1,087.50
2010 +29.24% $1,420.25
2011 +8.93% $1,531.00
2012 +8.26% $1,664.00

As the financial heat became unbearable, investors, businesses, banks, and even the public piled into bullion. For the five-year period that encompassed the financial crisis, gold very nearly doubled in value, rallying from just above $825 to north of $1650 per ounce.

The primary reason behind the exodus to gold was a broad uneasiness facing asset prices across the board. In addition, these fundamental market drivers served as the underpinnings of gold’s value during the crisis:

  • Lending freeze: The limited availability of credit was not relegated to individual borrowers. As angst spread through the financial community, banks of all kinds elected to hold gold instead of pursuing investment via standard interbank lending practices.
  • Ag commodity slump: Reduced demand for ethanol, exports, and decreasing overall consumption drove ag pricing down. Subsequently, gold became attractive as recession hindered any potential returns on ag commodities.
  • Quantitative easing (QE): From 2008 to 2012, the U.S. Federal Reserve (Fed) enacted an aggressive QE plan. In an attempt to stimulate economic growth, the Fed adopted a near-zero Federal Funds Target Rate while buying trillions in government bonds and mortgage-backed securities. As a result of QE, gold became a popular hedge against the perceived devaluation of the U.S. dollar.

In a variety of ways, buying gold or related derivative products insulates the holder from financial risk. The negative influences of currency devaluation, depressed commodity prices, or illiquid credit markets may be effectively limited. Due to its versatility as a hedging mechanism, gold is a go-to asset during trying financial times.

Getting Started with Gold

While stockpiling physical gold is one way of capitalizing on its benefits as a safe haven, trading related futures and options products also offer many advantages. For more information on all things gold, check out the comprehensive educational suite at Daniels Trading. Featuring expert analysis, product specs, and how-to webinars, it has everything you need to get up to speed on the gold market dynamic.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

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The new 737 MAX 8 aircraft from Boeing experienced two devastating crashes between October 2018 and March 2019. The impact of each was nothing short of catastrophic, both on the humanitarian and financial fronts. Official investigations revealed striking similarities between the crashes, prompting many aviation authorities to deem the 737 MAX unfit for commercial use. The fallout was extensive, sending shares of Boeing (BA) stock, as well as the entire Dow Jones Industrial Average (DJIA), plummeting.

Boeing (BA) and the Dow

As the world’s leading equity index, the DJIA represents the value of the 30 largest industrial companies in the United States. Since 1987, Boeing has maintained membership of this exclusive club as the de facto aerospace industry leader.

Here are the vitals of BA stock:

Category Specifications
Market NYSE
Market Capitalization $212.00 billion
P/E Ratio (Q1 2019) 21.56
52-Week High $446.01
52-Week Low (May 2018/19) $292.47

In practice, the DJIA employs a price-weighting methodology in its derivation. Subsequently, the index’s composition emphasizes share price, not necessarily a company’s market capitalization or role in the U.S. economy. For instance, a company with a share price of $400 wields several times the influence of one priced at $150. It’s due to this fact that BA stock is especially important to the relative valuation of the DJIA.

Here are the top 10 companies in the DJIA and their respective weights:

Company Weight (%)
Boeing 9.67%
UnitedHealth Group 5.95%
Apple 5.40%
Goldman Sachs 5.25%
Home Depot 5.10%
McDonalds 4.98%
3M 4.77%
Visa A 4.18%
Travelers 3.67%
Johnson & Johnson 3.64%

This chart illustrates the importance of BA stock to the entire DJIA. It has more influence than industrial giants McDonalds and Johnson & Johnson combined. This is a major factor impacting index pricing — and one that gained importance as controversy shrouded the 737 MAX airliner.

Crashes Have Consequences

The crash of Ethiopian Airlines Flight 302 on March 10, 2019, was the second instance of the 737 MAX failing in a six-month period. The first occurred on October 29, 2018, when a Lion Air passenger airliner plunged into the waters off the coast of Java, Indonesia. All 189 souls on board perished, with the initial cause of the event being unclear.

In both instances, one thing was strikingly evident: Crashes have consequences, specifically on Wall Street. For each of the unfortunate incidents, the stock price fallout was substantial:

  • 29 October 2018: BA fell by almost $20.00 per share, plunging 5% for the 29 October session.
  • 11 March 2019: Following an early session plunge of 13%, BA pared losses before closing the day down nearly 5%.

Because BA carries the greatest weight of all Dow 30 components, its influence on the entire index was significant. Industry estimates stated that the sudden plunge in BA stock on 11 March hindered the DJIA by 340 points. This is a massive figure, and one that brought enough short-term bearish volatility to negatively influence DJIA-based mutual funds, ETFs, and outright holdings.

Diversification Via Futures

In contrast to traditional stocks or mutual funds, futures give traders and investors a way of quickly addressing risk during exceptionally volatile times. In the case of the Boeing 737 MAX crashes, the E-mini Dow offered market participants a means of immediately hedging against weakness in the DJIA. By taking an offsetting short position in the E-mini DOW or buying a distant front-month contract, a savvy investor could have minimized the impact of plunging BA stock.

The integration of futures products such as the E-mini Dow into an equities-heavy portfolio affords investors the flexibility to address extraordinary circumstances in real-time. For more information on index futures contracts such as the E-mini Dow, check out the complete lineup available at Daniels Trading.

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Daniels Trading.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

Read Full Article

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