Daytrading Soybeans

The first thing you must know to day trade soybeans is the contract specifications.

 

The important specifications you should know and understand before day trading the soybean market are detailed below.
The soybean futures contract is for 5,000 bushels of soybeans.

 

The soybean tick size and its value is important to know. A tick is the minimum movement permitted in the contract price. For soybeans it is 0.25 cents per bushel, which equates to $12.50 per contract.

 

Soybean prices are quoted in cents per bushel (example, 927.25).

 

Soybeans have futures contracts for September, November, January, March, May, July and August each year. When day trading, you are only interested in trading the contract with the highest daily volume. This is normally the next contract due to expire, or front month.

 

The last trading day for a soybean contract is the fifteenth calendar day of the contract month. For example, the November soybean contract would stop trading November15th. You should stop trading that contract well before the 15th of November. A good rule to follow is to change over to the next available soybean futures contract on the first Monday of the expiration month.
There are two different contracts associated with the commodity soybeans. One is the traditional floor-traded version. The other soybean contract is the electronic version. Day traders should trade the electronic version. The symbol for the electronic soybeans is ZS. The fill response time for electronically traded soybeans is much quicker.

 

The electronic contract has extended hours compared to the floor-traded soybeans. It is best to avoid day trading soybeans outside the traditional floor trading hours because volume is much lower. The traditional trading hours for soybeans is 0930 – 1315 US Central Time, Monday thru Friday.

 

You should know the lock limit information for soybean futures. This tells you what happens after large price moves. The soybean commodity price is locked fifty cents/bushel above or below the settlement price on the previous day.
You should know the margin required to day trade the commodity soybeans. This is the amount of money which must be deposited with the exchange to open, and maintain, positions. It is best to get this figure from your commodity broker. Normally, the margin to day trade commodities is less than the margin required to hold a position overnight.

 

It is absolutely essential that you truly understand all of the contract specifications for the commodity soybean, as well as, any other pertinent information about the soybean market before you begin day trading the commodity soybean. Day trading the soybeans can be very profitable, but also can be very costly if you do not understand exactly, the soybean commodity contract specifications.

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