At Alpha Futures, we prioritize protecting our traders from high volatility and hazardous market conditions. To achieve this, we enforce strict guidelines to prevent trading when a product is within 2% of a CME price limit. This policy ensures our traders are not exposed to extreme market fluctuations that could lead to significant losses, or run the risk of their trades being open while markets are halted.
A price limit is the maximum price range permitted for a futures contract in each trading session. When markets hit the price limit, different actions occur depending on the product being traded. Markets may temporarily halt until price limits can be expanded, remain in a limit condition, or stop trading for the day based on regulatory rules.
This prohibited conduct is enforced on ALL Alpha Futures Accounts, not just Evaluations.
How do I know what the CME Price Limits are for the contracts I trade?
Price limits are calculated based on the end-of-day settlement price and vary by product, contract month, and time of day (i.e., overnight price limits differ from the price limits used during business hours).
The price limits are updated at 5:05 PM EST after each trading session and can be found on the CME Price Limits page.
Equity Products ES, MES, NQ, MNQ, RTY, M2K, YM, and MYM overnight price limits are 7%.
One of the most effective ways to ensure you are not trading within 2% of any price limit is to monitor the % Net Change for the contract you are participating in via your trading platform's quote board.
For example, if you are trading one of the assets above or any other with a price limit up or down of 7%, it would be time to stop trading if that asset reach a 5% net gain or loss on the day, because any larger net change would be within 2% of a Price Limit.
How to find the % Net Change for the contract I am trading?
Your trading platform’s quote board/radar screen not only displays the “Net Change” on the day as prices move but can also display “Net Change” as a percentage or “% Net Change.” If the “% Net Change” is not currently displayed on your quote board, simply add that column to display how close your product is to the price limit.
Example:
In this picture taken on August 4th, 2024 directly on CME Price Limits Page we see that the reference price is 18,556.00 and the 7% limit is up and down are said to be 19846.75 and 17265.25. So, for the 2% price limit rule calculation is done on these premises.
Stop trading when market priced above: 18556 x (1 + 0.07 - 0.02) = 19483 (+5%)
Stop trading when market priced below: 18556 x (1 - 0.07 + 0.02) = 17628 (-5%)
Why is this Prohibited Conduct at Alpha Futures?
To protect our firm and our traders, we do not allow market participation when a product is trading within 2% of a price limit. This could run the risk of an order being filled then getting "trapped" in a halt. This prohibited conduct is enforced on all Alpha Futures Accounts.
Moreover, all speculators assuming risk in a market should have intimate knowledge of that market. It is crucial to be aware of the contract specifications and price limits for any product you trade.
For more information about your favorite products, please reference the CME Group website. Click on your product from the home page for detailed information.