0.00
9:05–1:00
2.5c/cwt.  $10.00
9:10–1:00
$1/ton  $10.005/100c/lb  $18.751/100c/lb  $5.00
7:30–12:307:15–12:329:30–1:40
5/100c/lb  $7.50
9:15–1:15
1/100c/lb  $11.2010c/1000 bd ft  $8.00
8:30–12:209:00–1:05
NoneNone3c/lb$15005c/lb$750None$10/1000bd ft
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Maintenance Margin 2
Exchange 3
Contract Size
Metal CommoditiesCopper
$1000
COMEX
25,000 lb
Gold
$1000
COMEX
100 troy oz
Silver
$1000
COMEX
5,000 troy oz
Platinum
$1600
NYM
50 troy oz
Crude Oil
$2500
NYM
1,000 bl
Heating Oil
$2500
NYM
42,000 gal
Unleaded Gasoline
$2500
NYM
42,000 gal
Natural Gas(Henry Hub)
$4200
NYM
10,000 MMBtu
$1600
CME
$250  index
Energy Commodities
Non-Commodity CandidatesGSCI
1 This is nowhere near an exhaustive list of every commodity contract available. It is a representative list to be usedin planning and paper scale trades. Most of the markets on this list have sufficient volume, but you must alwaysdouble-check this prior to trading any market.2 The margin amounts are representative. Keep in mind that this can change on a daily basis, depending on market conditions. Check with your broker, the Internet, or a financial newspaper for current figures of the markets you wish to trade.3 Futures contracts can be traded on more than one exchange. I consider the grains at the MACE to be the only exception for minicontracts; you use the exchange with the most volume in the commodity you are scale trading.Exchange AbbreviationsCBOT
Chicago Board of Trade
CME
Chicago Mercantile Exchange
COMEX
Commodity Exchange
CSCE
Coffee, Sugar, Cocoa Exchange
MACE
MidAmerica Commodity Exchange
NYCE
New York Cotton Exchange
NYME
New York Mercantile Exchange
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Daily Limit
Minimum Fluctuation
Trading Hours (Central Standard Time)
20c/lb$5000$75/oz$7500$1.50/oz$7500$25/oz$1250
5/100c/lb  $12.50
7:10–1:00
10c/oz  $10.00
7:20–1:30
0.5c/oz  $25.00
7:25–1:25
10c/oz  $5.00
7:20–1:30
$15/bl$1500040c/gal$1680040c/gal$16800$1.50/MMBtu$15000
1c/bl  $10.00
8:45–2:10
0.01c/gal  $4.20
8:50–2:10
0.01c/gal  $4.20
8:50–2:10
0.01c/MMBtu  $10.00
9:00–2:10
0.05 pt  $12.50
8:15–2:15
NoneTrading months
Months: JCornOatsSoybeansSoybean OilSoybean MealWheatLive CattleLean HogsCocoaCoffeeCottonFCOJSugarLumberCopperGoldSilverPlatinumCrude OilHeating OilUnleaded GasolineNatural GasGSCI
F
FFF
MHHHHHH
GG
H
MKKKKKK
JJHHHH
F
A
J
MMKKKKKK
N
JNNNNNNNNNNN
A
QQQ
SUUUUUU
QQ
O
N
XVV
ZZZZZZZZ
VVUUVUVU
DZZ
X
FHNXCurrent plus 23 monthsCurrent plus next 2 months plus Feb., Apr., Aug., Oct.Current plus next 2 months plus Jan., Mar., May, July, Sep., Dec.FJNVNext 30 plus 36, 48, 60, 72, & 84Next 18 monthsNext 12 monthsNext 30 months plus 30 monthsAll months
January = FFebruary  GMarch  HApril  JMay  KJune  MJuly  NAugust  QSeptember  UOctober  VNovember  XDecember  Z
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Sources for More Information
INFORMATION SOURCESUnited States Department of Agriculture, www.usda.gov: This isthe premier site for information on agricultural commodities. Youwill find over 300 releases, including crops and livestock reportsfrom the National Agricultural Statistics Service, outlook and situations reports from the Economic Research Service, world tradecirculars from the Foreign Agricultural Services, and supplydemand and crop weather reports from the World AgricultureOutlook Board.You’ll also find a month-by-month calendar of all reports andrelease dates. They will email you alerts and notices. It is the onestop ag info center. Check it out.Commodity Reference Guide from Hartfield Management, Inc.(141 West Jackson Blvd., Chicago, IL 60604, 312-786-4450,www.futures/research.com): Hartfield has two excellent productsof use to scale traders. The first is an annual almanac, calendar,encyclopedia, and yearbook all wrapped up in one. It has charts,ratios, fundamental analyses, technical analyses, reminders for allkey reports, outlook prognostications, and long-term charts. You’llrefer to it daily. Keep one handy wherever you do research andscale selections.The Hightower Report is a newsletter that updates theCommodity Reference Guide. These two tools will keep you on top ofthe markets you scale trade.209
Copyright 2001 The McGraw-Hill Companies, Inc. Click Here for Terms of Use.
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Futures Magazine and Annual Sourcebook. (250 South WackerDrive, Suite 1150, Chicago, Il 60606, 312-977-0999, fax: 312-9771042): At $39 a year (13 issues), you will find this publication valuable in helping you keep track of the futures markets. It is filledwith news on the exchanges and self-help stories on trading andanalysis.
SCALE TRADING CHAT ROOMwww.egroups.com/group/scalenet (To subscribe, email a requestto scalenet-subscribe@egroups.com): Join in conversation with fellow scale traders—ask questions, share experiences, second-guessideas. But as with anything on the World Wide Web, be cautious.Some traders speak before they think, some have bad information,and others have axes to grind. Trading is not a team sport.Nevertheless, some of the folks on the Net may have something toteach you.It is a not-for-profit, moderated discussion group on scaletrading, not to be used for solicitation. You must affirm you areaware of the risk of scale trading in order to participate.
WEB SITES OF INTERESTwww.SCI.com Sparks commodity services can keep you aheadof USDA. They do a great job of anticipating what futuresreports from USDA will say. Jim Weismeyer writes for thisWeb site and is one of the most knowledgeable reporters covering USDA and agricultural issues. Take a look.www.crownfutures.com This is a brokerage firm that specializesin scale trading. The site contains much interesting data.www.buffalo.com This is Paul McKnight’s scale trading Website; it has lots of good information. Mr. McKnight is a CTA(commodity trading advisor). You might want to request a setof account papers if you are considering a professionally managed scale trading account.
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OPTION WEB SITES (WWW.)SoftwareAiqsystems.comOption-all.comOptionscentral.com (Options Industry Association)Option-max.comOptionvue.comOptionwizard.comPmpublishing.comZeroDelta.comTechnical Analysis Web SitesBarchart.comBigCharts.comFutures.tradingcharts. comManaged Futures Associates (www.mfainfo.org)Tfc-charts.w2d.comGeneral Webzines/Financial News SitesABC NewsBarronsBloombergBusiness WeekCNBCCNNfnDow JonesEconomistFinancial Newsletter NetworkFinancial TimesFortuneFox Market WireKiplinger OnlineMoney.com
www.abcnews.comwww.barons.comwww.bloomberg.comwww.businessweek.comwww.cnbc.comwww.cnnfn.comwww.dowjones.comwww.economist.comwww.financialnewsletter.comwww.ft.comwww.fortune.comwww.foxmarketwire.comwww.kiplinger.comwww.pathfinder.com/money
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Motley FoolNews AlertReutersThomson Investors NetworkUSA Today MoneyWall Street JournalWorthYahoo! FinanceZacks Investment Research
www.fool.comwww.newsalert.comwww.reuters.comwww.thomsoninvest.netwww.usatoday.com/moneywww.interactive.wsj.comwww.worth.comwww.yahoocom/financewww.zacks.com
BOOKS OF INTERESTBerstein, Jake. Seasonality: Systems, Strategies, and Signals. New York: John Wiley &Sons, 1998.Chance, Don M. An Introduction to Options and Futures. Chicago: The DrydenPress, 1989.Chicago Board of Trade Commodity Trading Manual. Board of Trade of the City ofChicago. (Updated and revised approximately every other year. Check forlatest edition.)Dewey, Edward R. Cycles, Selected Writings. Pittsburgh: Foundation for the Studyof Cycles, 1970.Fontanills, George A. Trade Options Online. New York: John Wiley & Sons, 2000.Hafer, Bob. The CRB Commodity Yearbook. New York: Bridge Commodity ResearchBureau, (Annual).Herbst, Anthony F. Commodity Futures: Markets, Methods of Analysis, and Management of Risks. New York: John Wiley & Sons, 1986.Hieronymus, Thomas. Economics of Futures Trading for Commercial and PersonalProfit. New York: Commodity Research Bureau, 1977.Jiler, William L. How Charts Can Help You in the Stock Market. New York: Standard& Poor’s, 1962.Kaufman, Perry J. Handbook of Futures Markets: Commodity, Financial, Stock Index,and Options. New York: John Wiley & Sons, 1984.Kolb, Robert W. Understanding Futures Markets. (2d ed.). Glenview: Scott Foresman,1989.Labuszewski, John and Jeanne C. Singuefield. Inside the Commodity Options Market.New York: John Wiley & Sons, 1985.Luft, Carl F. The Investor’s Self-Teaching Seminar Series: Understanding and TradingFutures. Chicago: Probus Publishing, 1991.McCafferty, Thomas A. All About Options. (2d ed.). New York: McGraw-Hill,1998.———. All About Futures. Chicago: Probus Publishing, 1992.———. All About Commodities. Chicago: Probus Publishing, 1992.
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———. Winning with Managed Futures. Chicago: Probus Publishing, 1994.Natenberg, Sheldon. Option Volatility and Pricing Strategies. Chicago: ProbusPublishing, 1988.Petzel, Todd E. Financial Futures and Options. New York: Quorum Books, 1989.Roche, Julian. Forecasting Commodity Markets: Using Technical, Fundamental andEconometric Analysis. Chicago: Probus Publishing, 1996.Samuelson, Paul A. and William D. Nordhaus. Economics. New York: McGrawHill, 1998.Schwager, Jack D. A Complete Guide to the Futures Markets: Fundamental Analysis,Technical Analysis, Trading, Spreads, and Options. New York: John Wiley &Sons, 1984.———. Market Wizards: Interviews with Top Traders. New York: Simon & Schuster,1989.———. The New Market Wizards: Conversations with America’s Top Traders. NewYork: HarperBusiness, 1992.———. Schwager on Futures: Fundamental Analysis. New York: John Wiley & Sons,1995.Shaleen, Kenneth H. Volume and Open Interest. Chicago: Probus Publishing, 1991.Siegel, Daniel R. and Diane F. Siegel. The Futures Markets. Chicago: ProbusPublishing, 1990.Sklarew, Arthur. Techniques of a Professional Commodity Chart Analyst. New York:Commodity Research Bureau, 1980.Teweles, Richard J., Charles V. Harlow, and Herbert L. Stone. The Commodity FuturesGame: Who Wins? Who Loses? Why? New York: McGraw-Hill, 1974.
COMPLIANCE ASSISTANCEThe following organizations regulate the futures and securitiesindustries:Commodity Futures Trading Commissionwww.cftc.comVoice: (202) 418-5498Fax: (202) 254-6265Federal Reserve Boardwww.federalreserve.govVoice: (202) 452-3204National Association of Securities Dealerswww.nasd.comVoice: (202) 728-8884Fax: (202) 728-6993
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National Futures Associationwww.nfa.futures.orgVoice: (312) 781-1300Fax: (312) 781-1467Securities & Exchange Commissionwww.sec.govVoice: (202) 942-7040Fax: (202) 942-4050Here’s a list of futures exchanges. Each has a public informationdepartment and will send information on request.Chicago Board of Trade141 West Jackson BoulevardChicago, Illinois 60604-2994www.cbot.comVoice: (312) 435-3500Fax: (312) 341-3306Chicago Mercantile Exchange30 S. Wacker DriveChicago, Illinois 60606Voice: (312) 930-1000Fax: (312) 930-3439Kansas City Board of Trade4800 Main StreetSuite 303Kansas City, Missouri 64112Voice: (816) 753-7500Fax: (816) 753-3944MidAmerica Commodity Exchange444 West Jackson BoulevardChicago, Illinois 60606www.midam.comVoice: (312) 341-3000Fax: (312) 341-3027
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Minneapolis Grain Exchange150 Grain Exchange BuildingMinneapolis, Minnesota 55415www.mgex.comEmail: info@mgex.comVoice: (612) 321-7101Fax: (612) 339-1155New York Board of Trade4 World Trade Center8th FloorNew York, New York 10048www.nybot.comEmail: webmaster@nybot.comVoice: (212) 742-6000Fax: (212) 748-4321Coffee, Sugar & Cocoa Division (CSCE)New York Commodity Division (NYCE)New York Futures Division (NYFE)Cantor DivisionFinex DivisionNew York Mercantile ExchangeOne North End AvenueWorld Financial CenterNew York, New York 10282-1101www.nymex.comEmail: exchangeinfo@nymex.comVoice: (212) 299-2000Fax: (212) 301-4700COMEX DivisionPhiladelphia Board of TradePhiladelphia Stock Exchange Building1900 Market StreetPhiladelphia, Pennsylvania 19105www.phix.comEmail: info@phix.comVoice; (215) 496-5000Fax: (215) 496-5460
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GLOSSARY*
Abandon The act of an option holder to let his or her option expire worthless,neither offsetting nor exercising.Actual The physical or cash commodity, as distinguished from commodityfutures contract.Administrative Law Judge (ALJ) A CFTC official authorized to conduct a proceeding and render a decision in a formal complaint procedure.Aggregation The policy under which all futures positions owned or controlledby one trader or a group of traders are combined to determine reporting statusand speculative limit compliance.Allowances Discounts for grade or location of a commodity due to not meetingcontract specifications.Arbitrage The simultaneous purchase of one commodity against the sale ofanother in order to profit from distortions resulting from usual price relationships.See also Spread, (or/Straddle).Arbitration A forum for the fair and impartial settlement of disputes that theparties involved are unable to resolve between themselves. NFA’s arbitration program provides a forum for resolving futures-related disputes.Asian Option An option whose payoff depends on the average price of theunderlying asset during some portion of the life of the option.Associated Person (AP) An individual who solicits orders, customers, or customer funds on behalf of a Futures Commission Merchant, an Introducing Broker,a Commodity Trading Advisor, or a Commodity Pool Operator and who is registered with the Commodity Futures Trading Commission (CFTC) via the NationalFutures Association (NFA).At the market See Market Order.At-the-money An option whose strike price is equal—or approximately equal—to the current market price of the underlying futures contract.* This glossary is included to assist the reader. It is neither a set of legal definitionsnor a guide to interpreting the Commodity Exchange Act or any other legal instrument. For all legal assistance, please contact your personal attorney.217
Copyright 2001 The McGraw-Hill Companies, Inc. Click Here for Terms of Use.
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Audit Trail The trail of an order, with appropriate time-stamps, for inceptionthrough execution.Award See Reparations Award.Back Months Future delivery months furthest in the future.Backwardation A market condition in which futures prices are progressivelylower in the more distant delivery months. The opposite of contango.Basis The difference between the cash or spot price and the price of the nearbyfutures contract.Basis Grade The standard grade of a commodity for delivery.Basis Point The measurement of change in the yield of a debt security. One basispoint equals 1⁄100 of 1 percent.Basis Quote The offer to sell a cash commodity based on the difference above orbelow the futures price.Bear Market (bear/bearish) A market in which prices are declining; a marketparticipant who believes prices will move lower is called a “bear.” A news item isconsidered bearish if it is expected to produce lower prices.Bear Spread The simultaneous purchase and sale of two futures contracts in thesame or related commodities with the intention of profiting from the decline inprice while limiting the loss potential if the profit does not materialize.Beta Coefficient The measurement of the variability of rate of return or value ofa stock or portfolio of stocks to the overall market.Bid An offer to buy a specific quantity of a commodity at a stated price.Black-Scholes Model A popular options pricing model developed by professorsBlack and Scholes. Initially developed for stock options and later revised foroptions on futures.Board of Trade Any exchange or association of persons who are engaged in thebusiness of buying or selling any commodity or receiving the same for sale onconsignment. Usually means an exchange where commodity futures and/oroptions are traded. See also Contract Market or Exchange.Booking the Basis A forward contract that locks the current basis until sometime in the future for a buyer or seller.Box Transaction An option position in which the holder establishes a long calland a short put at one strike price and a short call and a long put at another price,all of which are in the same contract month and commodity.Break A rapid and sharp price decline.Broad Tape Term commonly applied to newswires carrying price and background information on securities and commodities markets, in contrast toexchanges’ own price transmission wires, which use a narrow ticker tape.Broker A person paid a fee or commission for acting as an agent in making contracts or sales; floor broker in commodities futures trading, a person who actually executes orders on the trading floor of an exchange; account executive (associated person), the person who deals with customers and their orders in commission house offices. See Registered Commodity Representative (RCR).
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Brokerage A fee charged by a broker for execution of a transaction, an amountper transaction or a percentage of the total value of the transaction; usuallyreferred to as a commission fee.Bucket, Bucketing Illegal practice of accepting orders to buy or sell without executing such orders; also the illegal use of the customer’s margin deposit withoutdisclosing the fact of such use.Bucket Shop A brokerage establishment that books customers’ orders, meaningtaking the opposite side of a trade, but without actually executing the orders onan exchange.Bullion Bars or ingots of precious metals, normally in a standard size.Bull Market (bull/bullish) A market in which prices are rising. A participant infutures who believes prices will move higher is called a “bull.” A news item is considered bullish if it is expected to bring on higher prices.Bull Spread The simultaneous purchase and sale of two futures contracts in thesame futures with the expectation of controlling risk while profiting.Buying Hedge (or Long Hedge) Buying futures contracts to protect againstpossible increased cost of commodities that will be needed in the future. SeeHedging.Buy or Sell on Close or Opening To buy or sell at the end or the beginning ofthe trading session.C&F Stands for cost and freight.Call (option) The buyer of a call option acquires the right but not the obligationto purchase a particular futures contract at a stated price on or before a particulardate. Buyers of call options generally hope to profit from an increase in the futuresprice of the underlying commodity.Called See Exercise.Car(s) This is a colloquialism for futures contract(s). Came into common usewhen a railroad car or hopper of corn, wheat, etc. equaled the amount of a commodity in a futures contract. See Contract.Carrying Broker A member of a commodity exchange, usually a clearinghousemember, through whom another broker or customer chooses to clear all or sometrades.Carrying Charges Costs incurred in warehousing the physical commodity, generally including interest, insurance, and storage.Carryover That part of the current supply of a commodity consisting of stocksfrom previous production or marketing seasons.Cash Commodity Actual stocks of a commodity, as distinguished from futurescontracts; goods available for immediate delivery or delivery within a specifiedperiod following sale; a commodity bought or sold with an agreement for delivery at a specified future date. See Actual and Forward Contracting.Cash Forward Sale See Forward Contracting.CCC Stands for Commodity Credit Corporation.CEA Stands for Commodity Exchange Authority.
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Certificated Stock Stocks of a commodity that have been inspected and found tobe of a quality deliverable against futures contracts, stored at the delivery pointsdesignated as regular or acceptable for delivery by the commodity exchange.Changer A clearing member of both the Mid-American Commodity Exchange(MCE) and another futures exchange who, for a fee, will assume the opposite sideof a transaction on the MCE by taking a spread position between the MCE and theother exchange which trades an identical, but larger, contract. Through the service, the changer provides liquidity for the MCE and an economical mechanismfor arbitrage between the two markets.Charting The use of graphs and charts in the technical analysis of futures markets to plot trends of price movements, average movements of price volume, andopen interest. See Technical Analysis.Churning Excessive trading of the customer’s account by a broker, who has control over the trading decisions for that account, to make more commissions whiledisregarding the best interests of the customer.Circuit Breakers A system of trading halts to provide a cooling-off period whenmarkets overheat.Clearing The procedure through which trades are checked for accuracy afterwhich the clearinghouse or association becomes the buyer to each seller of afutures contract, and the seller to each buyer.Clearinghouse An agency connected with commodity exchanges through whichall futures contracts are made, offset, or fulfilled through delivery of the actualcommodity and through which financial settlement is made; often it is a fully chartered separate corporation rather than a division of the exchange proper.Clearing Member A member of the clearinghouse or association. All trades of anonclearing member must be registered and eventually settled through a clearingmember.Clearing Price See Settlement Price.Close (the) The period at the end of the trading session, officially designated bythe exchange, during which all transactions are considered made “at the close.”Closing Range A range of closely related prices at which transactions took placeat the closing of the market; buy and sell orders at the closing might have beenfilled at any point within such a range.Commercial Grain Stocks Domestic grain stored in public or private elevatorsat key market, and grain afloat in lake and sea ports.Commission (1) A fee charged by a broker to a customer for performance of aspecific duty, such as the buying or selling of futures contracts. (2) Sometimesused to refer to the Commodity Futures Trading Commission (CFTC).Commission Merchant One who makes a trade, either for another member ofthe exchange or for a nonmember client, but makes the trade in his or her ownname and becomes liable as principal to the other party to the transaction.Commodity An entity of trade or commerce, services, or rights in which contracts for future delivery may be traded. Some of the contracts currently traded are
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wheat, corn, cotton, livestock, copper, gold, silver, oil, propane, plywood, currencies, and Treasury bills, bonds, and notes.Commodity Exchange Act The federal act that provides for federal regulation offutures trading.Commodity Futures Trading Commission (CFTC) A commission set up byCongress to administer the Commodity Exchange Act, which regulates trading oncommodity exchanges.Commodity Pool An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts and/or options onfutures. Not the same as a joint account.Commodity Pool Operator (CPO) An individual or organization that operatesor solicits funds for a commodity pool. Generally required to be registered withthe Commodity Futures Trading Commission.Commodity Trading Advisor (CTA) An individual or firm that, for a fee, issuesanalyses or reports concerning commodities and advises others on the value orthe advisability of trading in commodity futures, options, or leverage contracts.Complainant The individual who files a complaint seeking a reparations awardagainst another individual or firm.Confirmation Statement A statement sent by a commission house to a customerwhen a futures or options position has been initiated. The statement shows thenumber of contracts bought or sold and the prices at which the contracts werebought or sold. Sometimes combined with a Purchase and Sale Statement.Congestion A period during trading when prices have difficulty advancing ordeclining.Consolidation A pause in trading activity in which price moves sideways, setting the stage for the next move. Traders evaluate their positions during periodsof consolidation.Contango Market situation in which prices of succeeding delivery months areprogressively