Occasionally, I come across questions from customers or things that may be important to share.
As a trader, it’s important to know that futures orders can be rejected. Let’s explore some of the reasons why trade may be rejected.
Orders may be rejected because you don’t have enough funds to trade a futures contract or because you placed an order too large.
You want to hold an ES contact overnight but do not have enough initial margin.
You wish to hold 20 MNQ (Micro Nasdaq) and 20 MES (Micro S&P) for day trading but do not have enough funds for your broker day trading margins.
The solution is to have more funds when establishing an account or reduce your positions.
If you place orders far from the markets, the exchanges may reject them. The exchanges have price practices in place to prevent price manipulation.
Avoid trading during the last trading day or first notice day. You may get an order rejected in such periods. Also, liquidity will be poor for trading, and you may get assigned. Therefore, if you are trading physical commodities and deliverable Futures, pay attention to delivery dates (crude oil, gold, currency, etc.)
Futures brokers may prevent you from trading certain markets due to a lack of liquidity. Focus on markets that are actively traded and trade only liquid contracts. Also, you may trade a current liquid contract, but further months could be illiquid. Check volume and Open Interest before trading.
Stop orders may be rejected.
You can’t place Buy Stop Orders below the market. They must be above the markets.
You can’t place Sell Stop Orders above the market. They must be below the market.
The API/data provide a certain number of orders per second. If you exceed these orders per second, you may be rejected by the API.
I’d be happy to answer any questions or discuss certain examples further.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
The placement of contingent orders, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts since market conditions may make it impossible to execute such orders.