$10,000. Winner Takes All

Think you can trade? Prove it. Arc Capital Management is giving away $10,000 to a single winner in the Tournament of Champions, futures edition. Arc Capital Management is an Independent Introducing Broker providing institutional clients, professional traders and financial investors with the means to help you achieve your goals. Go here for details.

December trading has often been the thorn to many market speculators. But once you realize that market action during the holiday season will be different than the rest of the year, there may be plenty of opportunities to take advantage of.

Rule #1: The rules do not apply.

Traders need to understand how the underlying cash activity of most markets either changes, or halts entirely, in late December. In many of the commodity markets, packers, grain marketers, mining companies and drilling companies, much of the usual day to day business that effects pricing comes to a stand still. At the same time volume in the futures markets drop as well. If we can agree that underlying cash activity slows down and volume drops, then we can assume that the sporadic market action we sometimes see in December will be short lived and opens the door for short term trading opportunities based on both the technicals and fundamentals that existed before the abnormality.

In the financial markets, both futures and foreign exchange, we can find the same type of opportunities. Once the US and other major governments shut down for the year as we rap up December, we can usual count on no policy or Fed changes. At the same time, many proprietary trading desks, hedge funds and firms are closing up their books for year end accounting. This removes two things from the market, expected fundamental changes and volume. During December it’s not unusual to see US bond futures move a point on no news at all over a very short time period only to see it self correct in an even shorter time. The S&Ps are notorious for this activity as well. Last Friday the S&P futures dropped about 20 points on no news and of course retraced the full amount just as quickly.

Rule #2: Know the ‘fair value’.

‘Fair Value’ is a term that has always existed to show a futures index price compared to the underlying index. It is a term that we also use for any market that has underlying cash or OTC activity. If you know where a market ‘should’ be you may be able to take advantage of market action that was caused by a hedge fund rolling their December Aussie futures to March on a Friday afternoon in December or an automatic trading program that decided the basis in hogs broke resistance and decided to plow through the market. These are activities that will have very short term market price implications. To catch them it may be as simple as being in the right place at the right time.

$10,000. Winner Takes All

Think you can trade? Prove it. Arc Capital Management is giving away $10,000 to a single winner in the Tournament of Champions, futures edition. Arc Capital Management is an Independent Introducing Broker providing institutional clients, professional traders and financial investors with the means to help you achieve your goals. Go here for details.