edge-clear-futures-broker

Edge Clear Futures Broker

At Edge Clear, we are led by industry experts who understand the complexities of trading. Our mission is to simplify your costs and provide you with a seamless trading experience that combines the best of technology, service, and risk control.

Key Features of Edge Clear:

  • Mission Statement: EdgeClear’s mission is to redefine the trading experience by providing unparalleled customer service, robust technology, and a personal touch. We are committed to empowering our clients, from entry-level traders to seasoned professionals, with tools and support that enhance their trading journey. Our focus is to be a catalyst for success, offering a platform where expertise meets innovation in the trading world.
  • Your Personal Broker: Giancarlo Saraceno
  • Sierra Chart: Experience the power of Sierra Chart, a versatile trading platform with advanced charting, cross-platform compatibility, and reliable data feeds, providing traders with an intuitive and dynamic trading experience.
  • Zero Order Routing Fees for Teton: Keep costs down with Edge Clear – enjoy the benefit of zero transaction fees specifically for Teton Order Routing. Experience efficient and cost-effective trading without the burden of additional transaction charges.
  • Professional Services: Elevate your trading experience with our comprehensive professional services. From EdgeQX, a quant-fund program for automated trading, to CTA managed accounts tailored to your goals, and personalized CME membership consultations, we offer a range of solutions designed to optimize your trading journey.
getting-started-with-the-futures-market

All You Need To Know About Futures Trading – Beginners Guide

getting-started-with-the-futures-market

All You Need To Know About Futures Trading

 

The Futures market is a great way to trade because it offers leverage. This means that you can buy or sell larger amounts of an asset than you would be able to with stocks, without the need for more money. Futures are also less volatile than stocks and have lower transaction costs. With these benefits and others, trading Futures may sound like a good idea to help diversify your portfolio!

If you want to start trading in the Futures markets, this post will cover everything from what Futures are all about, how they work, what tools you’ll need to get started for free (including charts), as well as some risks involved when trading them! When you’re done reading this post, you will be confident enough to start trading Futures contracts.

I started my Futures trading journey in August of 2017 and never looked back. Trading Futures just simplified everything. Before that I day traded stocks for a couple months the Summer of that same year, basically breaking even. I also traded options for a short period but didn’t really know what I was doing so I lost most of my options plays.

Around this same time, I was reading the book “Mastering the Trade” by John F. Carter, where he was talking about Forex and Futures, mostly Futures. I explored Forex, but Forex never really resonated with me, so I started looking at the Futures market. At the time I was looking at gold Futures primarily and I noticed the strategy I was using to day trade stocks also fit gold Futures. So, I decided to give trading gold Futures a try and the rest is history.

In the following sections, I will briefly explain what the Futures market is and some key things to know about it. I feel like the Futures market is the “hidden” gem of the financial markets. You’ll hear the media reference the Futures market but rarely anywhere else. Most of the hype is with stocks, forex, and cryptocurrency. Personally I have some experience with all those markets, I crushed it with bitcoin back when it surged in 2018, (100% luck) but I still prefer Futures out of everything else.

What this article will cover:

  • What is the Futures Market
  • Why Trade Futures
  • Key things to know about Futures
  • What you need to trade successfully

What Is The Futures Market?

“A future market is an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified date. Futures are exchange-traded derivatives contracts that lock in future delivery of a commodity or security at a price set today.”investopedia.com

I recently watched the movie “Rouge Trader” where the main character gave one of the best definitions I have heard. “A futures contract is an agreement to buy or sell a specified amount of a commodity at a future date for a specified price.” That’s all you really need to know. Honestly, you don’t even really need to know that much to be successful at trading Futures. You only need to speculate if the price of the Futures contract will either go up or down within a given period of time before the expiration.

 

futures-market-definition
investopedia.com

 

So, let’s say you want to buy a contract of coffee Futures expiring June 2021. Coffee Futures are currently trading at $100 (hypothetically, using arbitrary numbers for simplicity). If by June coffee is trading at $150 when the contract expires, you will have made a $50 profit per contract and the coffee will be delivered to you as agreed upon in the contract at the $100 price you paid for each contract. Again, I’m just using simple numbers for simplicity’s sake to illustrate the basic concept of how trading Futures work. There’s a bit more to it which we will get into later. Alternatively, if you do not want the physical delivery of coffee, you can sell the contract to another trader interested in trading at market value or a price you specify before the contract’s expiration date in June. These days most Futures traders exit their position before the contract expires to avoid an unwanted physical delivery.

 

coffee-futures-contract-specs
cmegroup.com

 

 

Why Trade Futures?

Typically, to trade  stocks or options you have to scan for the best stocks to trade every day, or every few days if swing trading. There are some stocks that you can trade pretty much every day, but those stocks are usually priced well above $100 a share and require a significant amount of cash to make decent money. Plus, there’s the PDT rule and interest if you are trading on margin. If you’re not familiar with the PDT rule, it basically doesn’t allow you to day trade stocks if you have less than $25k in your account, with the exception of a cash account. You can technically day trade a stock but there’s a limit to how many open and close orders you can have in a single day per week. If you want to know more about the PDT rule  investopedia.com is a great source.

 

Alternatively, you can trade options on stocks which allows you to get around the PDT rule, but there’s a pretty steep learning curve if you’re just getting into trading. With options it no longer becomes about whether the security increases or decreases in value. You also have to understand how the Greeks and implied volatility affect the premium price of the option. Options are beyond the scope of what we’re talking about here, so I won’t be going into the components that affect the price of an options contract here. Just understand that with options, there’s an added layer of information that must be understood thoroughly beyond the value of the underlying security.

So, getting back to the point, many of the major Futures contracts have plenty of volatility and volume that allows you to trade just one thing every single day. And all you need to be aware of to trade Futures is if you believe the price will either go up or down and if there’s enough volume for liquidity. How much money you can make from a single Futures contract is based on how much you’re willing to risk, taking into consideration how much cash you have to trade with.

Now that you only have to worry about trading one thing, this allows you to focus on what’s really going to help you become a successful trader. Making money as a trader really isn’t about what you trade, it’s more about how you trade.

Narrowing your focus to trading one thing allows you to expedite the development of your skills and psychology that’s required for good trading. You can always go back to other areas of the market later once you have mastered the art of trading.

Now there are even more ways to trade the Futures market. Recently, two new exchange products have been introduced into the Futures market, the Small Exchange and FairX. These new marketplaces within the Futures market aim to offer retail traders more ways to get the most out of their investment capital.

Check out my YouTube channel to learn more about these Futures marketplaces and how to get the most out of your trading.

 

Futures Market Schedule Fits Your Schedule

Another beauty of the Futures market is the fact that it’s open 23 hours a day, 5 days a week. The hours for the Futures market are from 6pm to 5pm EST the next day, Sunday through Friday. So, after the weekend the first session of the week starts Sunday at 6pm EST and the week ends Friday at 5pm EST. There’s a one hour break each day. Some less popular commodities have slightly different times, but these are the main hours for the Futures market as a whole.

This means that no matter if you have a full-time job, part-time job, or just busy with something else during normal NYSE trading hours, there’s still opportunity for you to trade in the Futures market. Also, some sectors of the Futures market, such as FX Futures and metals, trade better outside of the NYSE hours with plenty of liquidity. You will have plenty of opportunity to trade in the Futures market at a time that fits your schedule.

 

Low Startup Capital

Previously I mentioned the amount of money you have to trade with. Here’s another beauty of the Futures market. You don’t need a lot of money to get started. In fact, having more money does not make trading easier. If you can’t trade with $10,000 it’s going to be just as hard for you to trade with $10 million, if not harder. Usually, trading with a small amount of money will get you better results over the long term because it forces you to focus on risk management and discipline.

With Futures, now that we have the micros, you can get started with as little as $50, but in all honesty that will not be enough. At the absolute smallest for a new trader, I would say you would need about $1,000. You’re going to make mistakes and lose money in the process of gaining experience. However, there is another way you can get started for less by trading in a funded account, or a prop firm. Basically, if you can prove to them that you know how to trade, they will give you the capital to trade with in exchange for a portion of your profits. I’m currently trading this way with a company  by  the name of Leeloo. So, if you want more information about that just check out my YouTube channel and my journal. I am documenting the entire process there.

 

Consistent Trading Is Universal

Once you learn how to trade the Futures product of your choice with consistency over an extended period of time in various market conditions, you will have all the skills and mentality required to trade anything you want. What I’ve learned by starting with Futures can be applied to stocks, options, forex, CFDs, cryptocurrency, long-term investing and anything else. As a matter of fact, what I’ve learned as a trader has made me a much better buy and hold investor. I can better pick my entries with better precision being familiar with how the price of financial instruments typically move. I would just need to be familiar with the language and nuances of the other markets, but the actual act of trading is universal to all markets.

 

Key Things to Know About Futures

 

Margin Requirements

So here is how I derive how much money is required to start. Each derivative of the Futures market has its own margin requirement. Futures margin is not the same as margin on stocks where you’re borrowing money from your broker to increase your buying power. Futures margin is the required amount of cash you must have in your brokerage account when you open a position.

There’s the initial margin requirement which is basically the amount you must have to open the position and decreases your buying power. Then there’s the maintenance margin requirement which is the amount of total funds you must have in your account to trade each Futures contract but does not affect your buying power. With many Futures brokers, if you close the position within the same trading day you only have to worry about the initial margin requirement. When you close the position the initial margin requirement is returned to your buying power plus or minus whatever you gained or lost on the position. You can pretty much look at it as an insurance fee for Futures trading.

These margin requirements are regulated by CME Clearing, but your broker can give you a discount on the margin requirement if you are day trading. Also, these margin requirements can fluctuate depending on market conditions and expected volatility.

That’s the basics of how they work. You can get the full scope by checking out cmegroup.com under the education tab.

So how does all this help you trade with a small account? My primary broker for trading Futures is AMP Futures. As of this writing, their initial margin requirement for micro e-mini Futures is as low as about $40. That $40 margin requirement is for the most popular micro E-mini S&P 500 Futures.

I trade the micro E-mini Nasdaq Futures which has an initial margin requirement of $100. So, if you decide to trade the micro S&P Futures with an initial margin requirement of $40 in a trading account with $1,000, that gives you pretty good wiggle room to trade about 1 to 3 contracts at a time depending on your strategy. Of course you will need a solid risk management plan. Some brokers will monitor your orders to make sure you are trading with a stop loss, showing that you are attempting to manage your risk.

 

amp-global-futures-margin-requirements
ampfutures.com

 

 

Contract Months and Expiration Date

Earlier, I briefly mentioned contract expiration. One thing that is important to keep track of is the expiration date of the Futures contract you are trading.

Futures are basically categorized by sector, such as the indices, metals, agriculture, and energy. The expiration date is usually set by the sector. For example, all index Futures usually expire on the same date. The metals have their own contract months and expiration dates collectively. Energy Futures have their contract months and expiration dates… and so on.

If you are day trading Futures you only need to keep track of the expiration date in regard to where the volume is. You want to trade the contract month where most of the volume is to make sure you have plenty of liquidity to get in and out of your positions. If you are swing trading Futures, it’s really important to keep track of the expiration date to make sure you don’t get an unwanted delivery of the commodity you’re trading. So going back to the coffee example, if you are holding contracts of coffee Futures when they expire, you could end up with 37,500 pounds of coffee per contract. I like coffee but not that much. I don’t have personal experience with this, but most brokers today will notify you beforehand that the contracts you are holding are about to expire and close them for you if you don’t roll them over to another contract month or close the position yourself.

There’s one more key thing you need to be aware of with Futures: ticks and points.

 

Ticks and Points

Basically, these terms are synonymous with pennies and dollars in the sense of how the price of each contract increments. These terms actually apply to stocks as well even though you don’t hear many people using them anymore. As an example, when QQQ (ETF for Nasdaq) changes from 100 to 100.01 that would be a change of 1 tick. QQQ changing from 100 to 101 would be a change of 1 point. It’s basically the same thing with Futures, with the exception that the increment of a Futures contract is not the same and varies based on the Futures contract.

For example, a 1 tick increment of Nasdaq Futures (NQ) is 0.25. A point increment is pretty much the same as the dollar amount of a stock, incrementing by the whole number. However, since a tick for NQ is 0.25, there are 4 ticks in 1 point for NQ, instead of the 100 ticks per point for a stock. Hope you’re still with me. It’s much more simple than it seems written out.

Just as an FYI, for Dow Futures the tick and point are the same. The DOW Futures only increment by the whole number, which is why I believe the media likes to use the DOW Futures whenever they are talking about big swings in “the market”. 500 points is more likely to trigger your emotions than 25 points. (Just a little conspiracy theory side note LOL)

 

Tick Value

Which takes us to the value of each tick and point. So, where you have a tick of a stock equaling a penny and a point a dollar, a tick for the Nasdaq futures has a value of $5 and a point value of $20 (4 ticks times $5 = $20). So, in terms of your profit and loss (PnL), for every contract you trade on NQ, you earn $5 for every tick that goes in your favor from your entry price. And of course, if the trade goes against you, you lose $5 for every tick that goes against your entry price.

Since we’re talking about the money of your trade, just a quick note on the psychology of trading. You haven’t lost any money until the position is closed. So be patient with your trades. You’re lucky if a trade immediately takes off in your favor after your entry order has been filled.

Alright, so back to ticks and points. To give another example, a gold Futures tick increment is 0.10, giving you 10 ticks in a point. The tick value for gold futures is $10 dollars or $100 dollars for a point.

All you really need to remember is the tick value and how it increments. Basic math can give you the point value.

 

What You Need to Trade Successfully

Psychology

Your thoughts control everything. What you focus on will become the reality. The reason why I make that point is once you start taking losses, if you spend too much energy focusing on those losses, guess what will follow?.. More losses!

Those losses turn into a losing streak. Most of the time the way out of this losing streak is just to take a break from trading for a while. However long it takes to clear that energy developed once you start to become emotional about taking a loss. If you’re not getting emotionally tied to your losses, and you’re being honest with yourself, you shouldn’t have much of a problem staying consistent to your strategy and getting back into the green.

You must be comfortable with seeing negative numbers in your account. Not all of your trades will work out and you have to be comfortable with that. Not to the point where you’re completely unfazed by a loss, but enough to where you know that your consistency will outweigh the losing side of your trades.

 

Experience

Much of the fear with trading comes from the unknown. This is what makes experience so important. The more you experience the various market conditions, the ebb and flow of the market, the more confident you are likely to be when you start to notice the trends that repeat themselves. Technical analysis allows you to visually see the trends of the market per the security or derivative you are trading. The experience you gain as you watch and interact in the market from day to day, with your perspective, will help you develop a plan around the trends you recognize most often.

 

Strategy

Having a strategy helps you develop your skill and execute with consistency. When you are starting, you want to find a strategy that you understand and resonates with your personality. If you are not a patient person, it may not be the best idea to trade with a strategy that requires a lot of patience. Your weaknesses can be improved later.

Your strategy and plan should take into consideration what triggers you to take a trade, how you place your entry order, how you plan on exiting the entry order, and how you will manage the risk of trades that do not work out.

Also, I recommend that your strategy is as simple as you can possibly make it. There’s honestly no need to have dozens of indicators on your chart. Once you develop the skill of reading price structure, price action (the energy of the market), trends and market conditions you will realize indicators are mostly a way of making it easier to see the story that the price is already telling you.

I am not going to go too deep into each of these for this article, but all of these work together towards your journey of trading. Your strategy simplifies trading that allows you to get the experience and work on any psychological blockage you may have. Experience helps you refine your strategy and builds your confidence which positively affects your psychology. Your psychology affects how well you execute your strategy and helps you fill in the holes to see the bigger picture of the market when smaller time frames become irrationally volatile.

Everything I explained here about Futures is only the tip of the iceberg. There’s more to it but it’s honestly not complicated at all. I had to remind myself of some of these terms because it’s not necessary to remember all of this in order to trade Futures well.

All this may seem like a lot to take in when you’re first introduced to the Futures market but it doesn’t take long before it becomes 2nd nature.

Now that you know the basics of trading the Futures market, get in the game. You got this!

 

Trade it easy,

Rob Will

Mv3 Trader

Great Trades Within

Get out there and crush it!

For real-time insight follow me on YouTube and Twitter! @Mv3Trader

Comment below with your opinions and questions.

trading-tools-trading-essentials

Trading Essentials: The Most Common Software, Platforms and Tools Explained

trading-tools-trading-essentials

There’s an endless list of trading tools and resources at your fingertips, from stock screeners, to charting software, news streams, chat rooms and trading platforms. As a beginner trader, it can be overwhelming to determine what you absolutely need and what is nice-to-have for getting started. Subscription-based software will give you the most features; but depending on your trading style, you may be just fine with free options.

Before spending all of your trading capital on complex contraptions, begin with the basics. If you’re simply investing, all you need is a search engine and a broker — one tool for researching trades, and another to execute them. However, the more detailed your strategy, the more benefit you will find with paid resources.

Once you’ve gotten comfortable with the fundamentals of how to find, analyze, buy and sell stocks, you will have more clarity on what tools you need to supercharge your trading.

Here are the most common trading tools explained.


A brokerage is your door to the stock market, connecting you to various exchanges and
executing transactions on your behalf.

Brokerage

What to look for

The best place to start when looking for a brokerage is your trading or investment strategy. After you’ve defined your trading goals, approach and technique, it’s time to identify a brokerage that aligns with your needs.

Access to charting tools: If you don’t have capital up-front to invest in trading software and platforms, you might consider a broker that offers free charting and analytics tools, like TD Ameritrade’s Thinkorswim. Thinkorswim also offers a free trading simulator so you can practice your trading strategy without risking real money.

A support team: Some brokerages offer investment consultants who analyze your trades and provide recommendations on how to organize your portfolio. If you’re a passive investor looking

to build a balanced portfolio long-term, you may find it helpful to have a brokerage partner who can provide ongoing support and ideas.

Mobile optimization: For the active trader, brokerages now offer mobile and desktop applications to keep you connected on-the-go. If you plan to trade via mobile, be sure to select a platform with minimum lag and maximum responsiveness.

Pay-to-play fees: Thanks to Robinhood, most brokers have removed commission fees for trading stocks. However, if you choose to trade futures or forex, commissions and exchange fees still remain. Depending on the volume of your trades, you can negotiate lower commission fees with your broker. Even with no commissions, you may be required to maintain a minimum account size; deposit an initial amount; or pay margin rates, data and exchange fees.

If you plan to day trade with a small account, consider an offshore broker due to the pattern day trader (PDT) rule that requires you to maintain a minimum $25,000 account size.

Before choosing a broker, do your research. Ask other traders what they use. Find the top five most popular brokerages and compare them. You can also open accounts with multiple brokers and test them out until you find the right fit.

Trading platform

Trading platforms, like brokerages, often allow you to trade the market directly. However, they also offer added bonuses by combining a number of tools, including scanners, watchlists, data and news streams in one platform.

What to look for

User friendliness: Learning how to trade is hard enough without the additional learning curve of a trading platform. Choose a platform that is intuitive, easy to use and offers hands-on customer service. You can always explore more features as you get comfortable with the essentials.

Low-latency and responsiveness: Many trading platforms execute trades through your broker. Manage your risk and minimize slippage by choosing a reliable platform with quick response times.

Notifications and alerts: If you’re managing many trades at once, desktop, email and mobile alerts can help you stay organized. Choose a platform that allows you to customize your charts so you receive alerts when indicators are triggered.

Simplicity: Platforms like Robinhood and Webull are simple to use and allow you to connect information from other sources.

Versatility: Choosing a platform that combines the most commonly used tools in one space can be efficient, convenient and cost effective. Thinkorswim, Interactive Brokers (a broker with their own charting platform), Tastyworks, TradingView, Sierra Chart (futures), and NinjaTrader are just a few all-in-one platforms to consider.

Charting software

Use charting software to analyze stock trends and make informed decisions about when to buy or sell stocks.

What to look for

Compatibility: While web-based platforms are easily accessible and can be used without downloading clunky software to your computer, desktop platforms have more complex software requirements that may be incompatible with some PC or mobile operating systems. Do your research to ensure compatibility between your preferred charting software and trading devices.

Speed and responsiveness: Your trading style will determine the requirements of your charting software. Time is of the essence for momentum traders who hold stocks for minutes or hours.

You’ll want a charting platform like TC2000 that enables real-time technical analysis on multiple time frames, with the flexibility of viewing several layouts at once.

News and analytics: A simple charting platform with access to earnings reports and news alerts may be more fitting for position traders who hold stocks for months to years and rely on fundamental analysis to make decisions.

Fundamental and technical analysis: Charting software that offers a combination of both fundamental and technical analysis is essential for swing traders holding stocks for days or months. TradingView is one option that provides technical indicators, along with a stock screener and watchlists. With the right broker, TradingView can also serve as a trading platform.

Stock screener

With thousands of stocks on the market, how do you choose the best trades? Stock screeners (or scanners) allow you to filter stocks for potential winners by setting specific parameters.

What to look for

Simplicity and ease of use: Most stock screeners follow the same simple setup; but not all are created equal. For a free, intuitive stock screener, you might consider Finviz or Yahoo! Finance. Some brokers and trading platforms also offer stock screeners as part of their service.

Complex screening criteria: Depending on your level of technical analysis, you may need access to more expansive screening criteria and indicators that go beyond price action, volume and volatility.

Watch lists: Some stock screeners , like Benzinga Pro, allow you to build personalized stock lists based on your criteria. This can be a helpful way to narrow your focus down to only a few key trades and save your favorite go-to stock picks over time.

Data feed

Data feeds provide real-time quotes and historical market data by the day, minute and tick. Make sure to check with your broker for complete details as access and possible fees vary for each broker.

What to look for

Newswire: Press releases, earnings and announcements can sway the momentum of a stock. Follow news streams to keep a pulse on real-world events that trigger trends in the market.

API integration: Stock news APIs can be integrated into your platform of choice, helping you stay up-to-speed with market news anytime, anywhere.

Additional Fees: Certain instruments, such as Futures, can have additional fees associated with data for charting. Data required to populate your favorite charting software for Futures is not the same as stocks. While some brokerages offer access to this data for free, you may be required to pay for this data via a provider, such as CQG or Rithmic.

Community forums

Chat rooms are a great way to stay in-the-know of trending trades. The more interest a stock generates, the more momentum it will have. Be careful to trust your own gut. Don’t jump into a trade on recommendation. Do your own analysis and research to make informed decisions that match your trading style.

What to look for

Free communities: Social media is a great place to start. Follow your favorite traders on Twitter and Facebook. StockTwits is a free chatroom that offers simple charts, trending stock alerts and real-time news feeds.

Continued education: Trading communities like Real Life Trading and Trappers Anonymous (Wallstreet Trapper) require a fee to join in exchange for online courses, stock reviews and strategy sessions.

Now that you’re familiar with the various tools and resources at your disposal, now it’s time to choose your adventure. Start by determining what you will trade, i.e. stocks, futures or forex. Then, choose the platform you like the most and are most comfortable with. If you’re unsure, request a demo and take it for a test drive. Be sure to pick a broker that supports your platform of choice, and vice versa. Pay attention to commissions and other fees for processing trades, depositing and withdrawing funds. Seek out top-notch customer support and check with other traders for credibility.

Remember; less is more. Don’t try to use all the tools and resources available. Take what you need and leave the rest. Keep it simple.

 

Get out there and crush it!

For real-time insight follow me on Twitter! @Mv3Trader

Comment below with your opinions and questions.