Add training workflow, datasets, and runbook
This commit is contained in:
@@ -0,0 +1,37 @@
|
||||
19FOr Beginners Only
|
||||
Spread
|
||||
a spread involves the simultaneous purchase of one futures contract against the sale of another futures
|
||||
contract, either in the same market or in a related market. in essence, a spread trader is primarily
|
||||
concerned with the difference between prices rather than the direction of price. an example of a spread
|
||||
trade would be: Buy 1 July cotton/sell 1 December cotton, July 200 points premium December.
|
||||
This order would be executed if July could be bought at a price 200 points or less above the level at
|
||||
which December is sold.
|
||||
such an order would be placed if the trader expected July cotton to widen
|
||||
its premium relative to December cotton.
|
||||
not all brokerages will accept all the order types in this section (and may offer others not listed here).
|
||||
Traders should consult with their brokerage to determine which types of orders are available to them.
|
||||
■ Commissions and Margins
|
||||
in futures trading, commissions are typically charged on a per-contract basis. in most cases, large
|
||||
traders will be able to negotiate a reduced commission rate. although commodity commissions are
|
||||
relatively moderate, commission costs can prove substantial for the active trader—an important rea-
|
||||
son why position trading is preferable unless one has developed a very effective short-term trading
|
||||
method.
|
||||
Futures margins are basically good-faith deposits and represent only a small percentage of the con-
|
||||
tract value (roughly 5 percent with some significant variability around this level). Futures exchanges
|
||||
will set minimum margin requirements for each of their contracts, but many brokerage houses will
|
||||
frequently require higher margin deposits.
|
||||
since the initial margin represents only a small portion of
|
||||
the contract value, traders will be required to provide additional margin funds if the market moves
|
||||
against their positions. These additional margin payments are referred to as maintenance.
|
||||
Many traders tend to be overly concerned with the minimum margin rate charged by a broker-
|
||||
age house.
|
||||
if a trader is adhering to prudent money management principles, the actual margin level
|
||||
should be all but irrelevant. as a general rule, the trader should allocate at least three to five times
|
||||
the minimum margin requirement to each trade. Trading an account anywhere near the full margin
|
||||
allowance greatly increases the chances of experiencing a severe loss. Traders who do not maintain at
|
||||
least several multiples of margin requirements in their accounts are clearly overtrading.
|
||||
■ Tax Considerations
|
||||
Tax laws change over time, but for the average speculator in the United states, the essential elements
|
||||
of the futures contract tax regulations can be summarized in three basic points:
|
||||
1. There is no holding period for futures trades (i.e., all trades are treated equally, regardless of the
|
||||
length of time a position is held, or whether a position is long or short).
|
||||
Reference in New Issue
Block a user