Futures 101 - Chapter 19: Position Limits

Article Index
Futures 101
Chapter 2: Futures Markets What, Why And Who
Chapter 3: The Market Participants
Chapter 4: What is a Futures Contract?
Chapter 5: The Process of Price Discovery
Chapter 6: Gains and Losses on Futures Contracts
Chapter 7: The Arithmetic of Futures Trading and Leverage
Chapter 8: Margins
Chapter 9: Basic Trading Strategies
Chapter 10: Position Limits
Chapter 11: Minimum Price Changes
Chapter 12: Regulation of Futures Trading
Chapter 13: Establishing an Account
Chapter 14: What to Look For in a Futures Contract
Chapter 15: The Contract Unit
Chapter 16: How Prices Are Quoted
Chapter 17: Minimum Price Changes
Chapter 18: Daily Price Limits
Chapter 19: Position Limits
Chapter 20: Understanding (and managing) the Risks of Futures Trading
Chapter 21: Choosing a Futures Contract
Chapter 22: Liquidity
Chapter 23: Stop Orders
Chapter 24: Spreads
Chapter 25: Options on Futures Contracts
Chapter 26: Buying Call Options
Chapter 27: Buying Put Options
Chapter 28: How Option Premiums are Determined
Chapter 29: Selling Options
Chapter 30: In Closing
All Pages
Page 19 of 30

Introduction to Futures Trading 101
Published By: National Futures Association

Although the average trader is unlikely to ever approach them, the exchanges and the CFTC establish limits on the maximum speculative position that any one person can have at one time in any one futures contract. The purpose is to prevent one buyer or seller from being able to exert undue influence on the price in either the establishment or liquidation of posi-tions. Position limits are stated in number of contracts or total units of the commodity. The easiest way to obtain the types of infor-mation just discussed is from your broker or from the exchange where the contract is traded.