Learning to Trade
the
S&P 500 E-Mini
TOS Symbol
/ES
Steve Fought
Version 1-28-12
File – Beginning Emini 1-28-12
DISCLAIMER
• The following is not an investment or trading
recommendation.
• The losses in investing and trading can be very real, and
depending on your investment vehicle , can exceed your
initial investment.
• I am not a licensed trading or investment adviser, or
financial planner.
• You should make your own trading and investment
decisions based off your own research, and tolerance
for risk.
This is mainly just reference tool if you are
thinking about trading the ES.
If you see anything you like,
all this will be saved on Brian’s web site
XSProfits.com
XS Profits.com
WHAT is the S&P 500 E-Mini ?
The S&P 500 E-Mini
Is the most popular equity index
FUTURES CONTRACT in the world.
ES was created in 1997
by the CME because the value of just one S&P contract was over $500,000.
Too large for most traders.
OTHER EMINI PRODUCTS
Following the success of the /ES,
the exchange introduced other E-minis like :
/YM the Mini Dow Jones
/NQ the E-Mini Nasdaq 100
/TF the E-mini Russell 2000
WHY
TRADE the S&P 500 E-Mini ?
SIMPLICITY
Simplicity in this case is a relative term.
ES trading is simple compared to the analysis I used to do with Options.
But , over all , the ES is a simple but Very difficult trade
High LIQUIDITY
Less slippage , easier to get in and out of trades
HIGH PROFIT POTENTIAL
The knife cuts both ways
See next page
PROFIT POTENTIAL EXAMPLE
The FOMC Announcement 9:30 Pacific (12:30 Eastern) Wed 1-25-12
“Fed pushes out low rate pledge to late 2014”
13 point move
3 contract is $1950
13 point move on 3 contracts is $1950
ES is 12.50 per contract per tick
3 contracts
37.50 per tick
150 per point
3 contracts on a 13 point move = $1950
Daily ATR on ES now is around 15
1.5 hour
From my research,
here is good site for starting your Emini Education
Emini Watch. Com
Barry Taylor’s web site
Recorded its one millionth visit last Nov 2011
http://emini-watch.com/emini-trading/why-trade-emini-futures/
The video has a good summary of the ES good and bad and why so many people trade it
Other ES Trading Education Sources
http://www.tradingacademy.com/
http://www.investools.com/
( ONLINE TRADING ACADEMY by the John Wayne Airport)
INVESTOOLS
http://electronicfuturestrader.com/jeffs-blog/ (Jeff Quinto)
http://donmillereducation.com/journal/ (Don Miller)
http://www.lbrgroup.com/
(Linda Raschke)
http://www.dangramza.com/ (Dan Gramza)
http://www.ireallytrade.com/ (Larry Williams)
Others:
http://www.proactivefutures.com/
http://www.eminiacademy.com
http://www.unitedfutures.com/emini.html
http://www.tradingconceptsinc.com/
http://www.daytradingcourse.com/
http://www.easyeminitrade.com/
http://www.daytradeemini.com/
http://www.daytradingradio.com/
http://emini-watch.com/
Note - The above sites probably can reduce the amount of time it takes to become profitable.
But costs can run from $300 to $20,000+ for the education
HOW to trade the S&P 500 E-Mini ?
The million dollar question
The following slides show some good
sources of HOW others trade the emini
And then at the end ,
I will show you my current strategy
ProfessionalTraderMentoring.com
Jeff Quinto web site
Click on the
FREE tab
Page down and click into the
FREE CME VIDEOS
Watch all 3 videos starting with DEVELOPING YOUR TRADING
STRATEGY
Or here is the link
http://www.professionaltradermentoring.com/free/
THE CME GROUP
and
DAN GRAMZA
Go to the CME web site CMEGROUP.COM
The videos are on the EDUCATION tab
Here is the link to the videos
http://www.cmegroup.com/education/interactive/emck/index_content.htm
TOS chat archives
Just click here on your Live Trading account
(Archived Seminars not available on the Paper Trade account)
Click Seminars
Put in key words here to
search archived seminars
Linda Raschke
Linda is one of the MARKET WIZARDS in Jack Schwager’s book
Just enter her name in the search field
One of my favorites is the SEPTEMBER 1, 2010 seminar
John Carter
of Trade the Market.com and the book “Mastering the Trade”
Just enter his name in the search field
One of my favorites is the August 17, 2011 seminar
Denise Shull
Recent book release “Market Mind Games”
3 hours of interesting seminars on general trading Psychology
Learn to use the TOS Active Trader
Most use the Active Trader on TOS for ES trading
Here are 3 hours of video education
Just enter ACTIVE TRADER in the search field
DON MILLER
Don’s blog is dedicated to trading the ES
http://donmillereducation.com/journal/
800 pages of
Blog
discussions
about trading
the ES
SHOULDER TO
SHOULDER
Also, check out
this TRADING
after DARK link for
some actual
trading sequence
samples which are
also similar to my
trading style.
Current Trading
WEEKEND Routine
Get 3 perspectives on the upcoming week
Charlie’s Report
Charles Kirk from the Kirk Report
http://www.kirkreport.com/membersonly/
Weekend Chart show video
2. Tom’s Report
Tom Soznoff and the team at TOS TD Ameritrade
TOS live account seminars
WALL STREET WRAP UP from Friday afternoon
Same seminar is at the Investools web site each weekend
3. Peter’s Report
Peter Reznicek
http://shadowtrader.net/archives-main/
Click the WEEKEND UPDATE box.
Current Trading
Daily Routine
•
Up at about 5 am - Bfast , coffee and read the news.
•
Macro market news links :
– KIRK REPORT
• http://www.kirkreport.com/membersonly/
•
$100 per year
– SHADOW TRADER DAILY UPDATE
• http://www.mytrade.com/shadowtraderproswing
– MARKET WATCH
• http://www.marketwatch.com/
– Then, I go into the Shadow Trader CHAT ROOM by 6:10
– Be ready to trade at 6:30
Shadow Trader chat room
Free to all with an active TOS account
Everyday, there are roughly 2500 people in this chat room
Just click this WATCH button to get the video
Shadow Trader
• Catch the Macro market overview at 6:15.
• ShadowTrader Squawk Box Moderators:
•
Brad Augunas, Senior Market Strategist
Brad does the daily chat
Peter Reznicek, Chief Strategist, Founder
– Peter does the weekend update videos
• They also day trade stocks on the chat
Brad watches this “Quad” or “Internals”
See the next slides for the video link on what are the internals and how to set them up on your TOS platform
SHADOW TRADER INTERNALS
AND OTHER EDUCATION
•
The next slides show how to get the educational videos which describe
what are the INTERNALS and how to set them up on your screen.
•
Plus the links provide other education on how to get up to speed with the
trading logic of the Shadow chat room
•
First . go to this link
http://shadowtrader.net/archives-main/
Then see the next slides
http://shadowtrader.net/archives-main/
Click here for the
Education videos
This is also where
you can find the
weekend Updates
each Sunday night
Shadow Trader free educational video series.
View these videos to help understand the daily Shadow Trader trading logic.
The Shadow Trader also has a free User Guide with more
in depth explanation of the terms and trade set ups
• Just go to this link for the User Guide
• http://www.shadowtrader.net/images/SHADOWTRADERPRO_SWI
NG_TRADER_USERS_GUIDE.pdf
Comments on the Shadow
Shadow (Brad) mainly trades the ES but will also day trade some stocks.
Brad has been working this chat room since 2007. Peter did it before that.
The Education videos provide background as to what Brad is talking about during the
trading day.
It takes a fair amount of time to watch all the Shadow education videos, set up the
screens on your platform and then paper trade for awhile to learn the logic behind the
Shadow trades.
Shadow uses the internals to increase trading success probabilities
Brad takes the RB3 trade frequently in the morning. See Bill’s presentation link later
Shadow also uses an “80% rule trade” which is 5 for 7 so far in 2012.
See the Shadow education video on this subject
Shadow Trader notes:
Brad frequently moves up stops to breakeven to take risk off the table.
For me, this reduces risk but also reduces profits.
Brad normally waits for 15 to 45 minutes after the market opens before
he entering his first trade
They say the INTERNALS help show which way the wind is blowing.
Shadow discusses entering trades with the wind to your back.
My stress is a tad higher trading the ES verses Options. But they say
some stress is healthy. Trick is the balance
Shadow Trades uses the VALUE AREA
Market Profile
Monkey Bars
From my research, a good book
for more info on Value Areas is
Markets in Profile:
Profiting from the Auction
Process
by James Dalton in 2007
Here is another good source of education on Value
areas or MONKEY BARS
Here is the Shadow on You Tube. On 1-24-12, Peter filmed some live trading. From my experience
so far, this pretty much shows what is it like to trade the ES.
See the links are on the next slide
Links to the Live You Tube Shadow Trading Videos 1-24-12
•
PART 1
•
http://www.youtube.com/watch?v=40FJQxG7X84&feature=context&context=G2b43644FAAAAAAAAAAA
•
Part 2
•
http://www.youtube.com/watch?v=3WDwikG5kFg&feature=g-all-u&context=G2b43644FAAAAAAAAAAA
• To fully understand the 2 above videos, you might find it helpful to
view and understand the key Shadow educational videos. And then
as you paper trade with the Shadow each morning, the logic will
become easier to understand.
Shadow Trader frequently uses an
Opening Range Breakout (ORB) trade.
See Bill’s presentation
XS Profits.com
11-5-11 - Reference Bar 3 Trading, Bill Heimerdinger,11/5/11
Just from some quick google
searching, it seems like Tony
Crabel’s book from 1990 was
one of the first books on the
ORB (Opening Range
Breakout) trade
Notes on my Current trading plan
•
Fire up the Shadow Trader at about 6:10
•
Get the Shadow (Brad ) market overview from 6:15 to 6:30
•
At 6:30 I generally just sit back and wait for market to establish itself
•
Most mornings, I will look for the RB3 trade at 7 am.
–
–
•
RB3 - See Bill’s presentation on Reference Bar 3
RB3 is essentially an ORB trade
Shadow Trader is also looking for a 15 or 30 minute ORB trades.
–
ORB = Opening Range Breakout trade
•
Brad will also take bounce trades depending on internals
•
Shadow is essentially a trading coach and I am still testing his ideas.
•
Will get back with you later with a summary of trading performance.
So, if you would like to try trading
the ES ….
• Check out the educational links and Videos in this presentation.
• Start trading on a simulator (Paper trade)
–
–
–
–
Don’t trade live until you get consistent Paper Trading success.
Live trades is really different from Paper Trading.
Especially psychologically.
Live trades won’t fill as fast as Paper Trades. You have to wait in line.
• Trade every day – Get in a lot of practice
• Manage distractions – probably the #1 trader killer.
• Develop your own style of trading … of course
Note on Margins and Commission
• TRADING FUTURES OUT OF AN IRA
– TOS requires a minimum of $25,000 if you trade from an IRA.
• Just email to TOS and they will give you a link to the paperwork you need to
fill out.
• MARGIN REQUIREMENT
• Different brokers have different requirements
• TOS requires $5000 per contract margin from regular accounts
• And $7031 per contract when trading from an IRA
• COMMISSIONS
– Different brokers have different commissions.
– TOS charges $3.50 a trade or $7.00 round trip
Example, If you buy 1 contract of ES, it costs 3.50
If you buy 2 contracts , it cost 7.00
Same charges to exit trades
Other stuff
The next slides list some
interesting movies on trading
Margin Call
A 2011 thriller that revolves
around the key people at a
investment bank over a 24hour period during the early
stages of the financial crisis.
FLOORED -
A free internet movie about Futures Traders
Linda Raschke is interviewed a few times in these videos
Just go to
http://www.babelgum.com/floored
INSIDE JOB – THE MOVIE
• This is sort of the
movie version of THE
BIG SHORT book
• Academy Award - Best
documentary movie of 2010
•
Inside Job provides a
comprehensive analysis of the
global financial crisis of 2008,
which at a cost over $20 trillion,
caused millions of people to lose
their jobs and homes in the worst
recession since the Great
Depression, and nearly resulted in
a global financial collapse.