2.0. Learning to Profit from Futures Trading with an Unfair Advantage! Trading Essentials Framework What Are the E-Mini Futures

Transcription

1 2.0 Learning to Profit from Futures Trading with an Unfair Advantage! Trading Essentials Framework

2 What Are E-Mini Futures? E-mini futures track the most popular broad-based stock index benchmarks in the financial world. Launched between 1997 and 2005, E-mini futures are among the fastest growing products in the industry. The four most popular E-Mini futures consist of the following: E-Mini S&P 500 futures contract E-Mini NASDAQ-100 futures contract E-Mini Dow Russell 2000 Index Mini futures All E-mini futures contracts are traded completely electronically via electronic order management software on a PC or through a registered commodity futures broker over the telephone. E-mini futures are appealing because of their excellent liquidity and around-the-clock availability. At one-fifth the size of their standard counterparts, these contracts have found an audience among professional and individual investors alike. Trading Concepts, Inc. 2

3 What Are E-Mini Futures? (Continued) E-Mini futures are contracts to buy or sell the value of a specific stock index at a specific price on a specific date in the future. Businesses and individual traders trade E-Mini futures for different reasons, but primarily to try to profit from or protect themselves from changes in the price of the underlying indexes. Financial professionals, such as pension and mutual fund managers, typically use E-Mini futures for managing risk and hedging portfolios against adverse price moves. Others, such as day traders or position traders, trade these products to speculate on the price fluctuations of the stock market. E-Mini futures closely follow the price movement of their respective indexes, typically referred to as the underlying or cash indexes. If in trading futures you buy an E-Mini futures contract, you hope to gain from future price increases when you offset your trade by selling the contract. Correspondingly, if you initially sell (sell SHORT) an E-Mini futures contract, you hope to gain if the price of the contract declines. The rapid price changes associated with stock indexes and E-Mini futures create continuous trading opportunities. Trading Concepts, Inc. 3

4 What Is the E-Mini S&P 500? The E-Mini S&P 500 futures contract is traded via the Chicago Mercantile Exchange (CME) and was created to track the Standard & Poor s 500 Index, the key benchmark for large-capitalization U.S. stocks. E-Mini S&P 500 Futures Ticker Symbol: ES Contract Size: $50 x E-Mini S&P 500 futures price Minimum Price Fluctuation (Tick Size): 0.25 index points = $12.50 per contract E-Mini S&P 500 futures are the world s most actively traded stock index futures contracts, with over 2.2 million contracts traded on average per day. Trading Concepts, Inc. 4

5 E-Mini S&P 500 Futures (ES) Minimum Price Fluctuation (Tick Size): 0.25 index points = $12.50 (1.00 index point = $50) per contract 5

6 E-Mini S&P 500 Futures (ES) Minimum Price Fluctuation (Tick Size): 0.25 index points = $12.50 (1.00 index point = $50) per contract 6

7 What Is the E-Mini NASDAQ-100? The E-Mini NASDAQ-100 futures contract is traded via the Chicago Mercantile Exchange (CME) and was created to track the NASDAQ-100 Index, a key benchmark of technology, telecom, and biotechnology issues. E-Mini NASDAQ-100 Futures Ticker Symbol: NQ Contract Size: $20 x E-Mini NASDAQ-100 futures price Minimum Price Fluctuation (Tick Size): 0.25 index points = $5.00 per contract E-Mini NASDAQ-100 futures offer diversification potential with underlying index holdings that span major industry groups including computer hardware and software, telecommunications, biotechnology, and more with over 310,000 contracts traded on average per day. Trading Concepts, Inc. 7

8 E-Mini NASDAQ-100 Futures (NQ) Minimum Price Fluctuation (Tick Size): 0.25 index points = $5.00 (1.00 index point = $20) per contract 8

9 What Is the E-Mini Dow? The E-Mini Dow futures contract is traded via the Chicago Mercantile Exchange (CME) and was created to track the Dow Jones Industrial Average Index, a price-weighted index of 30 blue-chip U.S. companies. E-Mini Dow Futures Ticker Symbol: YM Contract Size: $5 x E-Mini Dow futures price Minimum Price Fluctuation (Tick Size): 1 index point = $5.00 per contract E-Mini Dow futures represent nine economic sectors including financial service, technology, retail, entertainment and consumer goods with over 130,000 contracts traded on average per day. Trading Concepts, Inc. 9

10 E-Mini Dow Futures (YM) Minimum Price Fluctuation (Tick Size): 1 index point = $5.00 per contract 10

11 What Is the Russell 2000 Index Mini? The Russell 2000 Index Mini futures contract is traded via the Intercontinental Exchange (ICE) and was created to track the Russell 2000 Index, one of the major benchmarks for small-capitalization U.S. stocks. Russell 2000 Index Mini Futures Ticker Symbol: TF Contract Size: $100 x Russell 2000 Index Mini futures price Minimum Price Fluctuation (Tick Size): 0.10 index points = $10.00 per contract Russell 2000 Index Mini futures represents the most widely accepted measure of small-capitalization stocks trading in the U.S., with over 175,000 contracts traded on average per day. Trading Concepts, Inc. 11

12 Russell 2000 Index Mini Futures (TF) Minimum Price Fluctuation (Tick Size): 0.10 index points = $10.00 (1.00 index point = $100) per contract 12

13 Trading Hours Chicago Mercantile Exchange (CME) E-Mini S&P 500 futures, E-Mini NASDAQ-100 futures, and E-Mini Dow futures CME E-Mini futures contracts begin trading each week on Sundays at 5:00pm CT (Central Time) and continue until close of business on Friday at 3:15pm CT. Each day the market closes for a 15 minute break at the close of business at 3:15pm, re-opens at 3:30pm, and continues trading until 4:30pm with a daily maintenance break until 5:00pm when the market re-opens. CME normal trading hours are Monday through Friday 8:30am to 3:15pm CT. During normal trading hours, these E-Mini futures experience increased volume and increased volatility, offering great trading opportunities. Trading Concepts, Inc. 13

14 Trading Hours Intercontinental Exchange (ICE) Russell 2000 Mini Index futures ICE Mini Index futures contracts begin trading each week on Sundays at 8:00pm ET (Eastern Time) and continue until close of business on Friday at 6:00pm ET. Each day the market closes for a two hour break at 6:00pm ET. Market settlement time each day is at 4:15pm ET. ICE normal trading hours are Monday through Friday 9:30am to 4:15pm ET. During normal trading hours, these E-Mini futures experience increased volume and increased volatility, offering great trading opportunities. Trading Concepts, Inc. 14

15 Contract Months E-Mini futures trade in quarterly time frames, with March, June, September, and December expirations. Trading can occur up to 8:30am on the 3 rd Friday of the contract month; however, traders switch to the next contract on the 2 nd Thursday of the expiration month. Trading Concepts, Inc. 15

16 Why Trade E-Mini Futures? E-mini futures are among the fastest growing products for a number of reasons. The E-Mini futures markets are highly liquid and active markets: Market participants include institutional traders, investors, and individual traders so there is large open interest and volume (substantial liquidity). ENTER and EXIT trades easily. Tight bid/offer spreads, which reduce trading transaction costs. The E-Mini futures markets are volatile markets: Wide enough daily trading range of offset transaction costs. Trading Concepts, Inc. 16

17 Why Trade E-Mini Futures? (Continued) The E-Mini futures markets are traded via electronic access: One central marketplace (CME and/or ICE) that offers market integrity and fully integrated clearing that matches and settles all trades and guarantees the creditworthiness of every transaction that takes place. Trades electronically virtually 24 hours a day so you literally can trade from the comfort of your own home. An easy and cost-effective way to access the financial markets. Millisecond response time for speed and ease of execution so you will receive immediate fills. The E-Mini futures markets provide the use of leverage: Use of leverage provides the individual smaller trader with more flexibility. Brokers offer day trading margin requirements as low as $500 per contract. Trading the E-Mini futures also offers: The equivalent of broad market exposure to a variety of major stock indexes at one-fifth the size of their standard counterparts. The ability to employ a variety of trading strategies, such as hedging and spreading. Trading Concepts, Inc. 17

18 Why Trade E-Mini Futures over Stocks/ETFs? If you are new to trading E-mini futures, you will find it helpful to understand the differences between trading E-Mini futures and trading stocks/etfs. Trading E-Mini futures is a more efficient use of capital: Significantly lower margin requirements via a performance bond Compared to stocks/etfs. A trader has only to put up a fraction of the amount of margin. No SEC minimum equity requirement of $25,000 to day trade Compared to stocks/etfs. Your futures trading account is Mark-to-Market. No T+3 (stocks/etfs). Your futures trading account is credited or debited based on that day s profits or losses vs. the date of transaction plus three days (T+3). No payment of margin interest Compared to stocks/etfs. A trader will have to pay margin interest on money borrowed to purchase stocks/etfs. No inventory required for a SHORT position. Trading futures, it is just as easy to go SHORT as it is to go LONG. No payment of SHORT position interest Compared to Stocks/ETFs. A trader will have to pay interest to SHORT stocks/etfs. Trading Concepts, Inc. 18

19 Why Trade E-Mini Futures over Stocks/ETFs? (Continued) There are tax advantages to trading E-Mini futures: Futures: The 60/40 rule 60% profits are taxed as long-term capital gains. 40% profits are taxed as ordinary income. Stocks/ETFs: Profits are taxed as ordinary income (up to 35%). Trading Concepts, Inc. 19

20 E-Mini Futures (ES, NQ, YM, TF) E-Mini S&P 500 (ES) E-Mini NASDAQ-100 (NQ) E-Mini DOW (YM) Russell 2000 Index Mini (TF) 20

21 E-Mini Futures (ES, NQ, YM, TF) E-Mini S&P 500 (ES) E-Mini NASDAQ-100 (NQ) E-Mini DOW (YM) Russell 2000 Index Mini (TF) 21

22 No claim is made by the Trading Concepts, Inc. that the futures trading strategies shown here will result in profits and will not result in losses. Futures trading may not be suitable for all recipients of this Training Program. All comments, trading strategies, techniques, concepts and methods shown within our Course are not and should not be construed as an offer to buy or sell futures contracts they are opinions based on market observation and years of experience. Therefore, the thoughts expressed are not guaranteed to produce profits in any way. All opinions are subject to change without notice. Each futures trader/investor is responsible for his/her own actions, if any. Your purchase of the Trading Concepts Comprehensive EMINI SUCCESS FORMULA 2.0 Mentoring Program constitutes your agreement to this disclaimer and exempts Trading Concepts from any liability or litigation. Trading Concepts, Inc. 22

23 All rights reserved. This Training Program, or parts thereof, may not be reproduced in any form without the prior written permission of Trading Concepts, Inc. Trading Concepts, Inc. 23