Futures For You
Inside The Futures World
Want to find out how the futures markets really work? Carley Garner is the senior strategist for DeCarley Trading, a division of Zaner Group, where she also works as a broker. She authors widely distributed e-newsletters; for your free subscription, visit www.DeCarleyTrading.com. Her books, Currency Trading in the Forex and Futures Markets, A Trader’s First Book on Commodities, and Commodity Options, were published by FT Press. To submit a question, post your question at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C.
In recent years, electronic trading platforms have added the capability to place iceberg orders. What are they, and are they helpful to the average retail trader?
The reference to iceberg stems from the idea that the tip of the iceberg is the only visible part of a large mass of ice emerging from a body of water. Accordingly, the term iceberg order is defined as the practice of breaking up an order to buy or sell a large quantity of contracts into multiple smaller orders through the use of automated software.
Should commodity option spread traders be placing limit orders as packages or on each individual option of the spread?
When trading option spreads, traders intend to execute legs of the trade simultaneously. But it doesn’t always happen that way. Aggressive or skilled traders may enter or exit a spread one leg at a time and attempt to time their optimal fill prices.
What are the option greeks and can they be applied to commodity options?
Collectively, the option greeks are a group of equations used to measure and identify the sensitivity of an option price to outside forces such as price changes in the underlying asset, the passage of time, or changes in market volatility. The greeks can be useful to option traders in many ways, but are most often used as a proxy for trade probability.
Should I focus on one market, or scan several markets for opportunities?
The answer to this question largely depends on the strategy used and the time frame you are trading in. For instance, a daytrader is likely to have developed specific technical trading guidelines to trigger entry and exit signals. However, not all markets are created equally — and what works in one may not work in another.
How can I practice trading in a realistic environment?
Anyone who has risked his hard-earned money in the markets knows that trading is a game of mental stability, not necessarily intelligence, or even skill. Most traders enjoy massive success in a paper trading account but fail to convert their experience into profitable live trading.