I'm in the hole on a single micro nasdaq contract by -$1,500 but I plan on rolling it over to the next contract, is this possible? Someone mentioned that rolling over will settle that contract and it's losses which is just as good as selling MNQ for a -$1,500 loss...... Would like some clarification if you guys could help, I'd appreciate it. Might be in some trouble here...
greystone-I want to briefly point out that based on your example, you have already lost money, you have just not realized it. All futures are market to market. Rolling or not rolling will only extend your risk, not avoid the past.
what is your max STOP LOSS as per your trade plan? If it is say US$5000, then you can consider rolling it to the next quarter contract. If your trade plan doesn't mention the max STOP loss, you should flatten your position immediately, and stop trading for the next few weeks/months.
Robert & Max - it's unrealized -$1,500 I still have not sold. I'm still long that single MNQ contract and have plans to roll it over and over again until It's profitable to sell. I believe the nasdaq is going to come rallying back. Max stop loss is $4,000. My issue is I could be wildly mistaken thinking I can roll over a contract thats -1,500 unrealized. I.e. I figured my CB and losses will just switch to the month. Sounds like I'm wrong hence contracts our 'cash settled' ? This sucks. Also should note I have had/continue to have enough cash in futs account to cover all margin and further more if that matters.
Assuming you are in March contract, the LTD for your contract is in 2 weeks and a day, basically. You are going to book losses on the March contract if it is at current level when you close the position in two weeks. The sucky thing is, is buying the June contract when you roll March could also lead to huge losses if the June contract continues to go down by June expiration. This concept of rolling futures is not the same as rolling options expirations. There really is no "roll" in futures. You take the mark-to-market loss or gain at the time of expiry, and continue along in the same direction. Same thing can happen next quarter. I'm in the same boat now. It sux.
It's amazing to me. The "answer" to your question has been obfuscated in the form of trading "advise" for whatever reasons. Rollover involves CLOSING an existing position, and if desired, opening the same type/size/risk position with a further out expiration. Since futures are mark-to-market (already mentioned), The CLOSING of the existing position creates a REALIZED debit or credit in your account. Yes, closing, ie settling the position whether rolled over or not, will cause a profit or loss to be REALIZED.
If I dm'd you no need to respond, its clarified now. My strategy of just casually rolling it over month by month and selling when I'm finally profitable was never even doable.. Unreal. Obviously my fault for assuming. I'm going to book this loss and clear my mind & thank you to all who cleared this up for me.
How does a realized debit differ from a realized loss? It has been years since I taded futures (day trading) and for tax purposes I recorded a debit as a loss on a long position.
It doesn't. A realized debit is a realized loss. @deaddog Are you one of those crazy options folks, who are so off the rails with complicated flies and diagonals and condors that you forgot the basics? You options people are bat-shit crazy.
I might be bat-shit crazy but I don't trade options. Could never figure them out. Too many people trying to convince me that it was easy money and thats a red flag. Why would anyone want me to make money??