Contract Rollover - what is it?

All commodity contracts are short term. Therefore, you may be in the market with a contract that is drawing to a close. You will want to know what to do about your position.

If you are following your system, you should be in the market otherwise your system would have made an exit. So your task is how to stay in the market the best way.

Rolling over your contracts is what you can do and this is a straightforward process. Just find the heaviest traded contract – it will be the one that pushed your present contract out of the limelight. Then, when you are comfortable to close your present contract, simply do so and take the same number of contracts immediately at the market price in the superseding contract.

There are no qualifications to this method and no need to find a good price or whatever.

Does it sound straightforward? It is.

Your rollover should not be regarded as urgent and should be carried out well ahead of contract expiry. If you are in a good trade and the market is moving well in your favour, you will not want to miss the fun, so carry on until things become less exciting and then complete the rollover.

Traders think a lot about this subject and don’t agree how you should do it. The more people you ask the more answers you will get and the more confused you are likely to become.

 

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