Continuous Contracts

S

slarabee

This is a newby question as I have just started learning about futures etc...

When looking at historic price data on Crude Oil futures I found charts labeled as:

NYMEX Crude Oil Futures, Continuous Contract #1 (CL1) (Front Month)

I found the defintion for front month but what is the meaning of Continuous Contract?

TIA just trying to learn the basics, begin at the beginning.

Sean
 
Quote from slarabee:
----historic price data on Crude Oil futures....
----Continuous Contract....
More...
1) The chart data is presented in such a way that the expiring contract, i.e. the present front month, "feeds into" the next contract, i.e. the next front month, and on and on. :cool:
2) The larger the price differential between the expiring contract and the next contract, the greater the likelihood of "seeing" something on the chart that didn't really occur in the market when looking at that type of chart. :eek:
3) Try to focus on one month at a time to avoid getting "bogus" trade signals. :)
 
Quote from slarabee:

I found the defintion for front month but what is the meaning of Continuous Contract?
More...

A continuous contract is a long series of price data constructed from a sequence of futures contracts. You need it for backtesting, market/volume profiling, long-term S/R levels and whatnot.

Read Back-Adjusting Futures Contracts and all your questions will be answered.
 
I see so it is continuous for charting and past data representation purposes only. So there is no such thing as a "Continuous Futures Contract" which explains why I could not find the definition lol

Thank you for your help. Much appreciated.
 
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