Futures Order Placement - How To Place Futures Orders With Your Futures Broker and Where They Go After Your Broker Has Sent Your Order to the Futures Trading Floor.

By placing your futures order properly you will save time getting your order to the futures trading pit and reduce the possibility of making and error, which can cost you money.  The proper placement of a futures order can also help you get the fastest and best possible fill on the futures exchange floor.

What Goes Into A Futures Order

There are several important components that make up a futures order that every futures broker, futures trader, speculator and hedger should know before trading a futures contract. 

These components are:

• What makes up the contract unit.
• How the prices for each futures contract are expressed - dollars, decimals or fractions.
• What the minimum price fluctuation is for the futures contract being traded.
• What impact the minimum price fluctuation will have on the futures contract position.
• Understanding how to enter orders properly and the consequences of not following the rules.

Each futures exchange provides information about the futures contracts that are traded by that exchange such as, but not limited to:

• Basic futures contract specifications
• How many units make up the futures contract
• The minimum price fluctuation
• Price quotations on individual futures contracts. 

For a detailed explanation of each of the components of a futures contract, please go to our page on What Makes Up A Futures Contract

What Makes Up A Futures Order

Each futures clearing house sets their format for commodity order tickets to best suit the needs of the firms accounting department and other requirements.  Even though they have their own requirements, all futures order tickets must have the following information:

• If the futures order is a Buy or Sell order
• How many futures contracts are being bought or sold
• What futures contract is being traded
• What futures exchange the futures contract is being traded on
• Specific commodity delivery months and year
• The specific entry price and other conditions to be met for trade entry
• Account number or other relevant information
• Futures order entry duration if not a Market Order

For a more information about the different types of futures orders, please go to our page on Types of Futures Contract Orders and How They Are Used for Best Results

Once the futures order has been properly filled out, it is sent to the futures exchange that particular commodity is traded on for trade execution.  The Commodity Futures Trading Commission (CFTC) requires that a futures order be time and date stamped at each stage the order goes through.  The futures order stages are:

• When the futures order is received from the customer
• When the futures order is transmitted to the futures exchange for execution
• When the futures order is reported as being filled on the floor of the futures exchange

The CFTC time stamping rules are in place to create an audit trail for each stage of the futures order process. The audit trail is used in case of a dispute over the length of time the order took to be executed, the time at which the order was executed, and / or the price that the order was filled at.  On the electronic futures exchanges, or on electronically traded futures contracts such as the E-Minis, the stages of the order process can be timed to a fraction of a second.

Duration of a Futures Order

All orders are considered to be active only for the trading session that is specified at the time the order is placed.  The exception to this is if at the time the order is placed it is specified that the order is one of the following types:

• GTC - Good Till Cancelled
• GTW - Good Through the Week
• GT Date - Good Through a Particular Day or Date

If an order is not filled on the day specified it is not carried over to the next day, it is cancelled.

Trading the Futures Markets - Long or Short?

There are only two ways to trade futures - you can be Long the market, or you can be Short the market.

If you Buy a futures contract because you think the price of a commodity is going to go Up, you are going Long, or you are Long the market.  This also referred to as being Bullish since you think that your futures contract will go Up in price and you will make a profit from the positive price move of the futures contract..

If you Sell a futures contract because you think the price of a commodity is going to go Down, you are going Short, or you are Short the market.  This also referred to as being Bearish since you think that your futures contract will go Down in price and you will make a profit from the Negative price move of the futures contract.