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Coach's Playbook Posted by Team Topstep December 1, 2020

[VIDEO] Day Trading Rollover - The Coach's Playbook


One thing that sets futures apart from stocks is that futures contracts have set expiration dates. Suppose you’re planning to hold a position in the futures markets for an extended period. In that case, you will most likely need to move your position from a contract month nearing expiration to a contract month with an expiration date further. This is known as “rolling a position,” and the Topstep coaches are here to explain the benefits and possible pitfalls traders can face during a rollover.

Here’s What Our Coach’s Have To Say

Funded Trader Shout-Out!

Funded Trader Joseph C. put up more than $1,700 trading the Micro E-Mini S&Ps earlier this week. Let’s take a second to put this into perspective. CME micro contracts are 1/10th the size of regular mini contracts, so if a full point in the E-Mini S&Ps is worth $50, then one full point in the Micro E-Mini’s is worth $5. So, if Joseph made more than $1,700, that means he capitalized on more than 340 S&P points. That’s impressive trading!

Getting Out and Rolling

More than 90% of futures positions are closed or rolled to a future month before the contract expiration date arrives. When a trader closes a position, they are merely offsetting an open trade by buying or selling an equal amount of contracts to flatten their position and either realize a profit or accept a loss.

If a trader chooses to roll a position, they intend to hold on to the trade for a more extended period and must offset the trade in one contract month before expiration and reenter the trade in a contract month further in the future.

Watch the Volume

The easiest way to know when to roll a position is by watching the volume. When you see the volume in the front-month contract begin to drop and the volume in a back-month contract begins to grow, you will want to consider rolling your position to another contract month as soon as possible.

For example, the simplest form of rolling a position would be if a trader is long 2 June Nasdaq futures contracts nearing the expiration date, they will need to sell 2 June Nasdaq contracts and buy 2 September Nasdaq contracts to roll their position successfully.

How To Know When The Roll Is Coming:

  • Check in at the CME Group Website.
  • Sign up for Topstep’s Weekly Kickoff newsletter.
  • Simply watch the volume for each product month-to-month.

Of course, the process of rolling a position can become exponentially more complex, depending on the products you’re trading and the size of the positions you’re holding. Pay close attention to what the Topstep coaches have to say; they’ve been doing this for a long time.

Trade Well!