| I am frequently asked why a person would want to | | | | or to meet the margin call. To meet the margin call the |
| trade futures. I can think of numerous reasons. | | | | trader would need to send funds that would bring his |
| However it all boils down to hedging or speculating. | | | | account balance back up to the level of the "initial |
| For those of you who are not aware of the futures | | | | margin". On the other hand, profits from trades can be |
| market, a futures contract is an agreement between | | | | used as margin for newly established positions. |
| two people. The purchaser of the contract agrees to | | | | If you would like to trade futures contracts or options |
| take delivery of a standardized amount of a | | | | on those contracts, you need to open a futures trading |
| commodity at a specific price and by a specific date. | | | | account. This account can be opened with a Futures |
| The standardized commodity might be corn, gold or a | | | | Commission Merchant or an introducing broker for that |
| basket full of stocks. The seller of the contract agrees | | | | FCM. A "FCM" is a firm that is licensed by the U.S. |
| to make delivery of a standardized amount of a | | | | Commodity Futures Trading Commission to solicit or |
| commodity, at a specific price and by a specific date. | | | | accept orders for the purchase or sale of futures |
| Hedgers are people who are attempting to protect | | | | contracts. |
| themselves. For instance, farmers producing a crop | | | | Most FCM's and Introducing Brokers offer three levels |
| might consider selling a futures contract to lock in a | | | | of service. At Extra Mile Trading LLC we offer those |
| price for their crop. A plastics manufacturer fearful that | | | | three levels of service. |
| the price of petroleum might trade higher might | | | | 1. Full Service. This is where you would receive |
| consider purchasing crude oil futures as a way to | | | | assistance from a broker in identifying opportunities in |
| partially hedge his costs for raw materials. Or | | | | the market and placing your orders. |
| mortgage bankers, concerned that interest rates might | | | | 2. Self Directed or Discount online trading. This is |
| decline might consider buying 30-year treasury bond | | | | where you select your own trades and enter your |
| futures. The futures markets have many products and | | | | own orders. |
| contracts that might offer users and producers | | | | 3. Managed Accounts. This is where a Commodity |
| protection from price swings in the cash markets. | | | | Trading Advisor has power of attorney over your |
| People who anticipate a price swing in the markets | | | | account. He would identify opportunities in the market |
| and attempt to profit from it through the purchase or | | | | and enter and exit the trades for you. |
| sale of futures contracts or options on those contracts | | | | If you would like more information on opening a futures |
| would be speculators. For example, a person who | | | | trading account, on the futures markets or on Extra |
| thinks that inflation is rearing its ugly head might | | | | Mile Trading LLC, visit out website at Or call Les Jones |
| consider buying gold futures. A person who feels that | | | | at 1 (866) 553-5225. |
| the stock market is too high or too low might consider | | | | DISCLAIMER: FUTURES AND COMMODITIES |
| buying or selling any one of a number of stock index | | | | TRADING INVOLVES SIGNIFICANT RISK AND IS |
| futures. The futures markets offer an e-mini S&P, an | | | | NOT SUITABLE FOR EVERY INVESTOR. THIS |
| e-mini Dow Jones and an e-mini NASDAQ futures | | | | NEWSLETTER IS STRICTLY THE OPINION OF ITS |
| contracts just to name a few. The "e" in e-mini | | | | AUTHOR AND IS INTENDED FOR INFORMATIONAL |
| denotes that the contract is electronically traded on the | | | | PURPOSES AND IS NOT TO BE CONSTRUED AS |
| internet. The "mini" in e-mini denotes that the contract is | | | | AN OFFER TO SELL OR A SOLICITATION TO BUY |
| a smaller contract than the full size contract and | | | | OR TRADE IN ANY COMMODITY OR SECURITY |
| consequently it might have a smaller margin. Traders | | | | MENTIONED HEREIN. INFORMATION IS OBTAINED |
| should also note that there is a "mini" contract without | | | | FROM SOURCES BELIEVED RELIABLE, BUT IS IN |
| the "e" that is pit traded as is the case for instance | | | | NO WAY GUARANTEED. THE AUTHOR MAY |
| with the mini grains. | | | | HAVE POSITIONS IN THE MARKET MENTIONED |
| One of the main reasons people trade futures is | | | | INCLUDING AT TIMES POSITIONS CONTRARY TO |
| leverage. Futures contracts are bought and sold on | | | | THE ADVICE QUOTED HEREIN. OPINIONS, |
| margin. Traders are able to control a large amount of | | | | MARKET DATA AND RECOMMENDATIONS ARE |
| a commodity or cash instrument with a comparatively | | | | SUBJECT TO CHANGE AT ANY TIME. PAST |
| small amount of capital. Margins are determined by the | | | | RESULTS ARE NOT INDICATIVE OF FUTURE |
| futures exchanges. They look at the size of the | | | | RESULTS.eXtra Mile Trading, LLC wants you to know |
| contract, the volatility of the market and other things to | | | | that there are substantial risks involved in trading |
| try to determine the risk involved. Margins may rise | | | | futures. You should, therefore, carefully consider |
| and fall as the volatility increase or decreases. | | | | whether trading is suitable for you in light of your |
| When a trader buys or sells a futures contract, they | | | | circumstances and financial resources. Traders should |
| are required to put up the "initial margin" by the close of | | | | not rely solely on any one particular tool for investing |
| business. The following day the margin will revert to | | | | trading. Many unforeseen circumstances can occur |
| the "maintenance margin". As the price of a futures | | | | which affect investing/trading and their outcomes. |
| contract rises and falls, profits and losses are added or | | | | Investing, trading, and especially day trading carry with |
| subtracted from a traders account at the close of | | | | them substantial and significant risks. Investors/traders |
| business. This is called "marked to market". If a traders | | | | should be prepared to sustain a partial or COMPLETE |
| account balance drops below the "maintenance | | | | loss of their trading capital. In some cases, losses can |
| margin" level, at the close of business, then the trader | | | | exceed initial investment. eXtra Mile Trading, LLC does |
| is issued a "margin call". At that point the trader has to | | | | not guarantee any trading results. Past results do not |
| decide whether to accept the loss and exit the position | | | | imply future performance. |