Introduction To Futures Trading

0:03 [Music] all right welcome everyone uh my name is advent or Desi if you know me in real life um today we're going to be talking about Futures uh let me actually bring this over so this will just be the agenda for today uh briefly going to be talking about you know what Futures are what the risks are uh tick point value point value Etc uh margin requirements and you know where you can trade futures um as always I'm not a financial adviser so anything that you guys see or hear here is not Financial advice trading does have its risks so please do your

0:48 research before you engage in trading um for those who are here live with me um all I ask is that hold most of your questions towards the end after I finish each like uh section I'll just ask you guys if you have any questions on that before I continue just so we can keep it streamlined and not be like all over the place cool so uh with all that being said well I guess I'll just keep it on this screen for now so what are Futures uh to keep it super simple I'm not going to really give you the the actual definition since all that all those resources are in the group or online uh but essentially Futures are just another instrument another uh trading product that you can trade on the markets uh similar you know

1:33 like options uh Forex crypto Futures crypto Etc Futures is just another instrument that you can use uh to trade now when it comes to uh the risks of Futures uh one thing that's very different for those who may be used to trading uh like stocks like regular stocks or um like options and specifically like when you go long on options not when you short it because that's that's like on margin which we'll talk about in a bit um so for futures it's it's uh you're pretty much using margin to trade uh meaning that you can lose more than you put in the account for

2:20 example um let's say you have 500 bucks in your account and then the position assuming the broker or the platform that you're on doesn't Auto liquid you you can go into negative and then you know you you'll have to pay that back and bring your account back to zero before they'll let you trade again and if you don't pay that back as far as I know I could be wrong I think they take you to collections cuz you know you owe that money to them to the to the platform or the broker uh but generally at least from what I know usually they'll margin call you or Auto liquidate your position if there's a risk of you going negative of course of course you should never count on that because you always want to practice proper risk management and all

3:06 that good stuff any questions on those things before I continue no not at all my boy cool so uh when it comes to tick Value Point value monthly expirations and such um I'll just go over the main indices that people usually trade so the there's ES and then there's mq and then there's ym es for those who are not familiar that's that's the S&P 500 futures NQ is NASDAQ futures or Tech and I can't spell today apparently and then ym is the Dow Jones

3:56 Industrial so uh for ES and actually before I continue so uh every index or Futures you know product or whatnot has different tick values Point values Etc the monthly expirations tend to be the same I think uh like oil I think they have different ones if I recall correctly but I'll show you guys an example in a bit so for ES uh it moves in increments so the ti value in this this case is $12.50 and then when it comes to Futures they are um you know when you see Futures when people talk about you know like the S&P is at uh it it went up

4:43 10 points today or whatever it may be so it's different than if we're looking at a regular stock that we'll say oh you know Apple went up a dollar but when it comes to Futures everything is generally uh spoken in in terms of point value so one point in es equals four ticks and then and then we'll go into the specifics so with end actually before I continue I'm not sure the the word that I would use for this but uh tick it increments there we go increment would be 25 cents or you know a quarter point

5:30 so one point in es is the equivalent of you know there's four ticks in a point so every 25 cents that it moves you'll make or lose $12.50 so if we go to um es now you can see that let's say if we zoom in you can see the different tick value so there's uh you know 5322 25 Cent 50 Cent 75 then you know the next point so this move Moves In in 25 point or uh quarter increments for the tick increment and then in that tick value like I mentioned you make you make or loose $12.50 so for every point that es moves

6:16 for or against you you're going to make $50 and so this be 50 bucks for ES for those who may be coming from this from an options uh I guess point of reference the simplest way that I can explain this is think of an option contract with a fixed Delta of 50 and with Futures compared to options there's no Theta so let's say if you open up a position let's go back to the Chart let's say I got in at uh 5324 and then my stop my take profit is up here

7:02 and my stop loss is down here this can chop for 5 hours in a row and I'm not going to lose value just because time is passing by I'm only going to lose value if um you know it hits my stop loss or if it goes if it goes under from where I got in whether you're buying or selling so uh some things that I like about futures compared to options like I just mentioned you know there's no Greeks or Theta nothing like that you're literally just buying and selling for those who came from Forex pretty much the same thing you're either buying or you're selling and that's it um in case this question does come up later I'll just mention it really quickly uh I prefer Futures Trading over

7:48 Forex because you don't have to worry about spreads and things like that and you can trade uh let me just bring this up real quick actually so also for those in the group there's an entire future section so keep that in mind let's go here so people who trade Forex you know you can trade the pairs here there's you know British pound uh Japanese Yen so on and so forth people like to trade Euro USD just trade Euro FX or E6 as a ticker symbol uh but again I'm biased because I just find Futures way more efficient than Forex of

8:34 course there may be some perks like lower margin requirements and things like that but um yeah just little tangent so for NQ very similar to es um it has four tick is it four tick I haven't traed in a while let's see what the internet says so I'm not here talking out of my behind yeah the same thing there's a four ticks in uh one point of NQ and you make $5 per tick and 20 bucks per point now even though the point value is less than

9:19 es NQ is a lot more volatile um in my experiences so es moves relatively slow NQ moves pretty fast so um if I were starting out with Futures I will start with uh Mees which is the micro which I'll go over in a bit um NQ can be super super volatile so if you are not ready for those pullbacks definitely just paper trade it or you know ease yourself up into there and then um like I was mentioning earlier with the different tick and point values so for NQ it's similar to es the main difference is like I was just mentioning just now the tick value is

10:05 $5 and then the point one point is 20 bucks now for ym it doesn't move in any like um tick increments one tick is one point for ym and one point is five bucks that you make per point in in your favor or against the your favor I personally like trading ym it moves pretty quickly similar to NQ but the pullbacks aren't as uh violent in my experiences so um if you want to try it out definitely do and see how you like it uh

10:51 but I tend to prefer that after I traded in Q for a while and then of course you know there's a bunch of other ones for people like trade go like like trading gold and stuff there's a gold futures um you know all these other ones and with Futures you could really trade a lot of different Commodities you can trade uh you can trade cattle Hogs milk literally whatever you want honestly that's on this list uh what's another one that people usually go for uh energies yeah people like trading oil which is CL I trade oil here and there um

11:36 definitely paper trade it if you want to get into it but yeah these are pretty much just the main ones uh that I mainly see people talk about uh for those who are coming here from Forex this is just the Forex equivalent or actually it'll be a it'll be either SPX 500 or it'll be us 500 NQ uh Nas 100 or us whoops or us 100 and then ym as everybody knows is us or you should know anyway it's us30 for those who come from the Forex land any questions before actually I forgot uh one other thing

12:23 so when it uh for the last part for monthly expirations uh similar to option in the sense of you know there's an expiration date but it's different in the sense of it's just monthly contracts so show you an example real here uh real quick and let me actually bring uh this up real quick so each month has a different contract code and you can tell what month or contract you're trading by you know the letter in the name and I'll show you guys an example uh the generally the first two or three digits are going to be the contract or the first one to three digits are going to be the contract symbol uh the expiration month and then the year so if we go to trading view let's

13:11 just say we go to es and I just expand this so there's esm for June ESU September December so on and so forth so these are the expiration and the current contract that we're on the monthly one is M for June and then the year obviously 2024 since that's what we're in right now you can if you want to trade the other ones but you never want to do that because the the volume is very very low you always want to focus on the current contract CU that's where all the volume is and the and you know you'll get a lot more wider spreads if you're on the later contracts than the current one so

13:56 definitely try to avoid that if you can if you trade um on trading view you could just do ES1 exclamation that'll just give you the current contract that you can trade on if you don't want to pick the specific one uh last I checked any questions on that before I continue that's the same thing for NQ too right you just trade the NQ uh contract yeah so and NQ basically whichever one you know it's all going to have like the monthly cont contracts you go to ym same thing if you go to uh gold they all have the different contract but you can just trade gc1 exclamation I think they added that

14:43 recently uh sometime this year where you could just trade The Continuous contract and go from there which is great because what I the issue that I had when I was trading Futures on um trading view before is that you can only trade the specific ticker symbol for that monthly contract so I would draw all my levels or Etc and then have to redraw them all over again for the next one as opposed toed yep exactly instead of just continuing with the continuous contract that'll show you past data okay any questions before I continue cool

15:29 so a question that I tend to get is people always ask me like hey how much does like one es contract costs cuz you know if you're coming from options we're paying whatever the premium is for that specific contract strike price expiration Etc um but for futures is different like I mentioned earlier you know Futures Trading excuse me you're using margin so um depending the platform or broker that you're using the margin requirements are very very different I tend to use trade ofate since the margin requirements are very low compared to um other platforms and I'll show you an example here uh like on thinker swim with

16:17 Schwab um the margin requirements are very high so for one contract of es you need to have at least 17.7k in the account to trade one contract and this price here fluctuates with Market volatility I think like two weeks ago it was at like 12,000 and you can see it it got it went up by 5,000 um compared to let's say uh let's go to let's go to trade ofate so trade ofate for example let's go to es it's only 500 bucks uh that you need to trade for the initial for the day

17:02 margin where is this yeah so that's that's the amount of money you can um add to your account to trade yes however uh people usually say to at least put in three to four times that amount cuz you again you don't want to get margin called and you don't want to get Auto liquidated because remember you need at least you need minimum 500 to trade one contract if you get into position and you go under 5 00 they're going to Auto get you out of the trade okay so you always want to have at least three to four times the amount of the day margin you may be looking at initial margin here initial margin is if you want to hold the position overnight and overnight for futures is from 5:00 p.m.

17:48 Eastern to 6:00 p.m. so Futures is open from 600 p.m. Eastern to 5:00 p.m. you know the following day so if you don't close that position you're going to need at least this much to carry that position overnight which is an hour the Market's close on uh Friday evening and Saturday and then it reopens back up on Sunday at 6 p.m. so always make sure to close your position before 4:59 p.m. if you're using a prop firm uh generally they would autoc close your position some of them some don't and if you don't close your position they they'll they'll fail you so keep that in mind um one thing that I was going to mention

18:33 um before I got into this I forgot was um there's also the let me organize this a little better there's also the micro contracts so like the micro contract of es would be Mees which is micro es it's pretty much a tenth of the value of a mini contract so this will be like you know you can say this is uh the mini contracts why they call it mini I have no idea but uh so the micro like I mentioned is a tenth of the value of the mini contract so for mes it you know just divide it by 10 and

19:21 then you'll get your prices so instead of being 12.50 will be 1.25 and then you'll make $5 instead of $50 per point now if you have a smaller account you know you can always start off with the micros and then slowly build yourself up um some people I see them trade like 10 contracts which I guess it makes sense if they want to scale out but just keep in mind you'll be paying more commissions and fees because you're opening up more contracts if you do go the micro route when I first started I started off on the micros and then once I understood it more and then I went to The Minis and went from

20:07 there cool uh any questions on margin requirements before we continue and I just realized something some people may have asked questions in the chat all right cool no questions in the chat yeah any questions before I continue no that would be all bro cool so uh where can you trade Futures like I mentioned earlier uh you can use trade of eight margin requirements are pretty low the hold on let me log in here real quick can't have the internet seeing my

20:57 password cool so for trade of8 uh there's a desktop version this is just the web version cuz I'm lazy to bring that up but um I I personally love trade of eight the I main well I chart on think or Swim on my other screen and then I'll have trade of eight up to execute my trades on um the platform is super efficient really easy to use once you understand it it probably took me maybe like a day or less of like understanding it fully like sitting down for an hour or two and like 3 4 hours um but one of the things that I love is the ATM settings or features that it has ATM settings are just like I think it's like automated trade management you may know that as like you

21:43 know ay like you can set bracket orders actually speaking of which I have to reenter a trade 15 minute so let's say here I'm going to place this trade um so I have this trade set up it already has my my stop loss and my take profit already set based on the ATM setting that I have this specific one I have it set to take profit at 50 points or stop me out at 30 points and I

22:30 have I pretty much have the trade automated almost entirely so as soon as it goes 20 points in my favor it's going to bring my stop loss up from 30 points to break even plus five points so if it does come back it'll just take me out at Five Points and then I have a auto Trail which every 10 points that it moves after 20 points it'll move my stop loss up 10 points until I either get stopped out or until I hit my takeprofit so I don't have to babysit this trade at all everything's already program programmed into the system which is super convenient so one thing I personally love about trade of eight uh you know all the different ways you can automate

23:16 your trades and stuff like that um another one that I use here and there is thinker swim but like I mentioned earlier what I don't like is that their margin requirements is super high so for me to trade uh one ym contract I need uh 13 almost 4K to trade one contract as opposed to trade of eight where uh for one ym contract I just need 500 bucks it's a no-brainer and if you want to hold overnight the margin requirements less uh but remember keep in mind that the margin requirements can change at any given time the platforms have the right to up it or lower it whenever they want so I think like what 2 3 weeks ago

24:03 when there was like something happened like overseas um and like the market was like tanking somebody asked me why they couldn't open up the same position size and when I told them I'm like hey you're trying to open up you know it's like four NQ contracts it went from a th000 per contract to 4,000 per contract because of the volatility so they can change that whenever they want so keep that in mind if you're trying to trade during volatile times and then you know you get like order rejected message or something like that um but yeah thinker swim is cool I might try to do all my trades here anyway just to keep it like in one place but um in terms of efficiencies I find trade of8 uh much

24:49 more efficient for me and their order entries like their Advanced orders like ATM is a lot more advanced uh than thinker swim like this retracement one that I have I can't set that up they don't have it yet for thinker swim I'm hoping they do in the future but you know um for those who like trading View and trading on it you can't necessarily trade futures from Trading view but you can connect your broker to trading view so let's say if you want to tra uh take like you know put in your trades on trading view you just have to log into your Trader baate account and keep in mind if you're going to do that you have to pay I think like $10 a month to connect your trade debate to uh trading

25:35 View and there's other ones uh they have a bunch uh let's see what are the other ones uh yeah trade station is another one I used trade station for like a month and then I discovered trade ofate and went with them uh but yeah there's like a bunch of different Brokers uh that you can use more than likely with the people who are watching this video uh we're going to be either using trade station or trade debate but more than likely trade station if you use a prop firm you can uh log in through your prop prop firm if they allow it into trading view as far as I know most of them allow it uh Apex which is what I use they allow it uh I used to use Elite Trader funding

26:21 they allow it too uh takeprofit Trader as well and then some other I think like I forget the the names of some other ones but those are the ones that come to mind you can connect your trading view to them and then just take the trade on the chart one thing that I would say that I didn't really like when I used to trade through trading view with tradate is uh when you go to execute your trade it can be a little laggy sometimes and it could be like a little delayed so uh let's say if I'm going to go place a trade for this I have to every single time as far as I know I have to manually click on my takeprofit and stop loss and if you don't click these boxes and then

27:08 get into the trade it will not allow you to uh add the stop loss and take profit after the fact you can you know you can manually like let's go to bitcoin real quick so I I can show you guys a quick example uh not Futures I want to go to Bitcoin itself so let's say I get into this trade just add that so it has my takeprofit and stop loss and you know I can move it around on the chart modify the order so on and so forth um but when you're trading Futures like through a broker if I get into trade just like this even though on my screen here it shows me that I can just you know add it

27:55 um when you're trading with a live broker it will not allow you to use this feature here and just place it on the chart and like modify it so you'll have to set like a manual take profit and stop loss like let's say I go long here and then you put like a buy stop and this will be your stop order for this trade and then if you wanted to sell you'll have that but keep in mind these are two separate orders so if one of them hits you have to manually l cancel out the other one what uh one of my mentors uh Brown does so he'll have like trading view up

28:41 I'm going to make it boag just because I don't want to make it perfect right now but he'll have the Doom up here with his ATM settings set to whatever you know whatever ATM it is and then he have his chart like this so he can still execute the trade on trade ofate which is basically instant and then he could just manage it on trading View and since you already have your ATM settings it'll just translate to this screen here so something to keep in mind up or in mind about you said when you say ATM settings what you mean by that like that's the bracket orders that I just mentioned here okay so for example the one that I just opened up here I have my setting

29:28 preset 50 take profit 30 stop loss but I have other ones so I have uh like this one stop loss 15 points takeprofit 20 points so as soon as I get in this trade as soon as I let's say I'm going short it already puts my stop loss on take profit I don't have to manually enable it every single time okay it's preset exactly you're presetting everything all you have to do is just get into the trade and let the system do its thing okay so you can just do that here when you get in those trades and then just manage it on the screen if you want it that way if you prefer trading view okay but yeah uh that's pretty much it for today wasn't going to be a too long

30:13 of a class uh any questions you guys have yeah oh sorry go go ahead sorry thank you um it's moonay so other than the data the K that doesn't have with Futures like what are the some other benefits like why does some people choose to trade Futures versus options uh so the tax benefits are different Futures get taxed at a different rate um okay so there's tax benefits to that uh keep in mind if you if you use a prop firm it's not taxed at the regular Futures uh like the way they calculate it because you're you're like a contractor for the prop firms but if you're trading Futures yourself

30:59 uh the uh the way the taxes are handled for like capital gains or profits is different um compared to options or regular stocks and things like that so that's a benefit that people like yeah that's a good one also uh you know it's it's a very very liquid um product so you can never you never need to worry about uh IL liquid um like when you're trading it's not going to be a liquid it's going to be very very liquid cuz this is you know a lot a lot of people trade this okay what were you going to say Mike I was gonna ask you so uh on trading view you see the Oco bracket how you could just like slide you can't do

31:46 that on think or Swim right you could do that I love thatat do do a like bring up the ooco bracket on TR so you just hit stop loss take profit get in there and then just you know move it on the chart you could do that on on think or Swim just like that like move it like that yeah hold on let me open up uh paper trading instance of thinker swim so I'll show you it's just not as you saw how fast I did it on on trading view MH it's not as quick um on think or Swim kind of and I and I'll show you an example like we were talking the other

32:31 day about like the template the templates on thinker swim is the equivalent of like ATM settings on uh what do you call it on a trade of8 let me just bring this up real quick all right cool let's go [Music]

33:17 to ym let's bring up the active Trader and so if you want want to just keep it simple um so with the template like we were messing around with before let me just keep it single so when you first bring up your active Trader or the Doom for thinker swim where says template you can you know you can edit that so you could do like um not ocl you'll do uh I think it's trade with bracket so my stop loss let's say if I want to make this um 15 points take profit or stop loss

34:04 and then let me go to how do I save this oh right here so after you set up your uh bracket setting you're going to go to little like file here save order custom template whatever and just name it whatever you want 15o test so as soon as I let's say I want to get in Market with this bracket order already there send that and now as we can see it has my levels here and then I can just move them on the chart and then I just drag and drop and modify them so you could do it the same way and where's your uh St your buying I just did market so I just bought in at Market but your faill price it'll be your average price so I got in at

34:51 39158 as we can see here and I'm down two points because it's at 56 so I'm down 10 bucks as we were talking about before MH now keep in mind let me actually test something since I haven't used this like this so I'm long let's go short sell one yeah something to keep in mind as we just saw here I sold Market to get out of that trade but my bracket orders are still there so make sure to flatten if you want to cancel everything so if I bring in my bracket order again and buy

35:37 Market that buy has these trades attached to it but if I'm selling Market you know there's no bracket orders attached to that or anything so you want to make sure that if you're going to if you want to just get out or like you know sell Market or whatever it may be that you flatten the trade so I'll show you an example what may happen I'm going to sell market so I got out of that trade my position is zero I'm flat I don't have any open I don't have any open trades but let's say I move my stop up let's do it uh here and then let's move my stop loss here and let's see which one fills first

36:25 I want to see if it does what I think it's going to do and hopefully it doesn't take a million years while we're here live any second all I has to do is just move one point that's it just one

37:11 point all right let's move this down so as you can see when I got in that sell limit it canceled the stop that I had from the initial buy but but now I'm I'm uh short of position right now with no bracket order set so if you're going to get out of the trade whatever that may be just make sure to flatten so it can cancel all the pending OC orders as well so you can either I can either buy Market in this case since I don't have any other extra orders I could just hit flatten to just cancel get me out and cancel everything and questions on

38:02 that are any questions period really so are you using um the straat method when trading Futures no I don't use the Strat when I'm trading Futures I use fibs and some ICT Concepts okay like um in the Playbook section in the group you'll see like that W setup that I talk about a lot we can see it right here so we get the move down the retracement the push back down and we get a three up so what I'll do is if I see it's about to become a three I'll open up a stop order I'll open up a buy stop order so as soon as it becomes a three it gets me in automatically that's the only that's uh yeah the only trade uh for futures

38:49 that I use like with a strat entry otherwise I'm just using fibs to get in and some ICT concept here and there okay in my experiences um and from what I've seen from other people ICT Concepts uh are super efficient for futures uh I do know people who trade the Strat for futures um you know you can make it work I just personally find ICT and fibs a lot more efficient than the Strat for futures but again I know people who trade the Strat for Futures and it works perfectly for them it's it's very similar to well it's you know if you're trading options using Strat on

39:36 like spy it's the same thing if you're trading es you just have to be ready because you know on a stop loss on an option might be like 50 bucks or you know 200 bucks or whatever it may be depending on your position but for futures you know that could be very very different so let's say as an example let's say I took three up I can either use you know actually let's not use that as an example let's say let me go on trading view so it be a little easier to see so let's say I took this uh two uh two down reversal so this two down right here once it breaks that low so strp

40:22 wise I'm going to get in here my stop loss will be above that candle and then you know my take profit would be down there at the wick or the body whatever you want so in this case for futures my stop loss is 17 points on this specific setup however of course that can vary you know let's say if I took this two down right here uh that could be very different than you know the stop loss here would only be seven points so you're going to get a lot of inconsistencies where your stop loss um if you're trading Strat with Futures but again the Strat yes does it work for futures absolutely I just prefer um using fibs and using some of the ICT

41:09 Concepts that I use um to help out but that's just me if you know if the Strat works and everything else that you guys may use more power to you do not let me dissuade you there are many ways to trade the market and these are just the ways that I trade it make sense yep any um any other questions you guys

41:54 have CU that's it for me cool let's do 90 whoever's watching this and you trade Futures these are trades that I'm getting into which will hopefully at least one of them will trigger overnight I'll be canceling these if they don't fill hopefully because that's what right now we're at 100 I highly doubt it's going to go up 400 points but I I like to just keep them pending there anyway since these setups I just have to wait for them to fill I don't need to babysit it yeah that makes sense all right what price is this because this thing is not giving

42:43 me uh 395 you still be doing one on ones right buy yes sir let's do trement there we go cool so yeah these are just some trades that I have here for uh ym some shorts anyway if that's all for today thank you guys for coming out of course any other questions that pop up just let me know in the group or if you're watching this on YouTube and you're not in the group you know post a comment in the chat and I'll get back to you um for those in the group like I said I have a whole Futures guide section so go over all the material in there if you want to look into prop firms there's that stuff ICT

43:28 stuff is in here um and you know a lot of other things that you guys can benefit from other than that that's all I got for today again appreciate you guys for coming out and enjoy your Memorial Day weekend and the rest of your Sunday you welcome later y'all thank d