At AquaFutures, our commitment is to shield our traders from the risks associated with market volatility and extreme price swings. To safeguard your capital, we enforce a policy that prohibits trading within 2% of a CME price limit. This approach ensures that you are not exposed to abrupt market movements that could result in substantial losses.
A price limit represents the maximum allowable price fluctuation for a futures contract during a trading session. When the price limit is reached, various actions may occur depending on the contract: markets may pause until the limits can be adjusted, stay within the limit, or even halt for the day based on regulatory guidelines.
How to Identify CME Price Limits for Your Contracts?
Price limits are determined by the end-of-day settlement price and differ depending on the product, contract month, and the time of day (with different limits for overnight versus regular trading hours). Price limits are updated daily at 5:05 PM EST and can be accessed on the CME Price Limits page.
How to Avoid Trading Within 2% of a Price Limit
For equity products like ES, MES, NQ, MNQ, RTY, M2K, YM, and MYM, overnight price limits have been extended from 5% to 7%.
To ensure you stay within safe trading parameters, monitor the % Net Change for the contract you’re trading on your platform’s quote board.
Example: If the price limit is set at 5% up or down, you can calculate the 2% threshold to identify levels where you should stop trading to avoid breaching the limit. This simple step helps you navigate the market with greater security.
What’s the purpose behind AquaFutures’ prohibition on this conduct?
At AquaFutures, we enforce this policy to safeguard both our firm and our traders from the risks associated with extreme market conditions. Trading within 2% of a price limit exposes traders to significant risks, and to mitigate those.
Furthermore, as a trader, it's essential to have a deep understanding of the markets you participate in. Knowing the contract specifications and price limits for the products you trade is vital to making informed decisions and managing risk effectively.
For more detailed information on the products you trade, we encourage you to visit the CME Group website. Simply select your product from the homepage to access comprehensive details.