Micro vs E-Mini Futures Contracts | Barbara Armstrong | 11-12-19 | Getting Started with Futures

The different we. What's a grear cover we've got half an hour together this morning. All righty as you can see from my screen all the coaches including myself have joined the Wonderful World of Twitter in addition to the world of futures. So you follow me in the twitch your community by following me my handle is eight at bar Armstrong. At B. Armstrong underscore TDA my name is Barbara Armstrong and I am I delighted to be a coach here with TD Ameritrade so hello to visit if you were with me why this morning feel free to type a greeting into the chat let us know where you're- tuning in from it's always great to see. How we're coming in from all over the country. Get through our important information and then we'll get right out to the website to look at our objective and our agenda for this morning. The following presentation is for educational purposes are not a recommendation or endorsement of any particular investment. Or investment strategy so although use real symbols on the thinkorswim platform to demonstrate the functionality of the platform and to introduce you to the concepts that's not to be construed as a nation on the part of TD Ameritrade or myself. Any investment decision you make in your self directed account is solely your responsibility no that futures and futures option trading is speculative and is it suitable for all investors- you also have to apply for futures trading privileges in those are subject to review and approval. And not all will qualify know that what we cover technical analysis other approaches including fundamental analysis can provide a different perspective also know that the paperMoney application is for educational purposes only successful virtual trading during one time period. Doesn't guarantee successful investing of funds during a later time period OK so let's go over to the thinkorswim platform. And good morning to- Terence could tuning in from Seattle and markets from the bay area and Eric from San Francisco we have a lot of. And one lone Texas big Davis coming in from Houston so- thank you all for participating in the chat if you have any questions as we go along. Don't hesitate to ask okay SO two days our objective is to look at the difference between micros any minis last we placed a trade on a micro E. mini. Eight on the S. and P. five hundred so we're going to look at that and how we might choose to manage that. And then we're going to do a comparison and we're going to this week we're going to use the net dak one hundred index futures as our example. So we're going to. Come over our objective here is just to introduce you to the difference between the micros in the email minis give you an understanding of how to find what these differences are on that one form I'm so that your more comfortable in making decisions even trading in your paper money and that you'll know where to find Imation so if we come to our monitor tab and we come down to. Our futures will cap. Group here you can see that we have one eight placed and we were a long or bought one contract of the more pro E. mini S. and P. five hundreds. That are do you INDA's so this is the December rations we bought it at thirty six fifty now trading at thirty nineteen nine. And so we're up eleven point. You have to keep in mind with futures these aren't dollars these are points in every point has a value what's the value will get into that in just a minute. Our profit and loss on this were up sixty two fifty in total because this is a micro. Feel free to type into the chat if this was an- Indian might- how much would we be up instead of sixty one fifty. Or sixty one twenty five how much would we be. And how can we tell what we should be in multiplying. Our point value by- it to get a value. So I know that there's a bit of a lag so let's go to look at the chart will you guys are typing this yeah and so if you would like to. Follow me. I feel a little bit like Mister Rogers I don't know I saw his documentary last year but- we're going to come. Out to the big chart and I've got the- micro E. mini S. and P. five hundred futures up and this is a trade that we place last week so I have a nine month chart up. But as you may know. If you come over and we look here we've got June it doesn't quite go back nine months and why is that because the micro. Yes if you were just launched in may of this year so but we see that you know right out of the gate it started up trending well had a bit of a pullback started to uptrend and then we had this big long dated pennant pattern happening for the technicians in the room and we see this happening- A technician might be looking for it to break even either to the up for the day. Don't know is this starts to coil in which way it's going to break until it does as we all know it broke to the upside and last week we put in a conditional order because when we met. It was a day that were pulling back. So we just bring so it was a day here that was pulling back and we said well you know this could be a bull flags at the overall trend is bullish so we didn't want to place a bearish trade so we place a conditional order and said if this goes a Bob- today's high then get A sand so we got in on the seventh. And that's how we have the small profit now if we wanted to back up and take a look at. This brought. S. and P. five hundred we can't go back past may on the micros but we can come over to our friend sorry. The S. and P. minis which have been around for a very long time we can certainly come out and look at a longer time frame and we can pick any time frame this is a two year time frame so over all the trend has been not steep. But overall uptrending and we can see from- of last year- pretty significant up trend here. After for those of you who were trading last year in the fourth quarter- a pretty significant pullback in the market. So let's now come and look at the nasdaq so if we want to bring up our nasdaq. And we're looking at the minis we can see here you know again I'm we're only going to get let's close that I. Only going to get data from may when they- launch but again a similar type of pattern is it not. So we're looking at. You know up trend here. Bit of a pennant pattern setting up. Broke came back this resistance level becoming new support and today we're hitting a new high. So if we wanted to place a trade and look at the differences and say well do I want to. Place a trade if I wanted to trade the nasdaq do I want to use the micros or the E. minis and what difference good question. So let's come back to this screen. Okay yeah I'm going to bring this down a little bit. And I kind of pre set up a chart for us to fill it. And this is something new on the S&P five hundred. Our our sorry on the all futures contracts we can now. All eyes top and I have the micro nasdaq futures man and we can see- we can see a lot of information here that wasn't as easily. Accessible before so this is kind of a night. If we want to start with the nasdaq which many are familiar with so the E. mini nasdaq one hundred index futures to use the full name if we come down we say here well first of all. The checkers ticker symbol for the E. minis it's- our forward slash and Q. the minimum tick size is a quarter of a point so we're live in the market right now so you'll notice that this goes from fifty to seventy five. To around number. Two twenty f. Back on the minis well it's five dollars does any body. Our remember what it was worth on the S. and P. we did that last week so the tick value in that scene dollars is five dollars. Sorry. So what's the point worth well it's got to be worth four times what works. So when actually eight eight point is worth twenty dollars a point is also what the multiplier areas so the point. Now is the multiplier so if I wanted to figure out the notional value of this contract how would I do that well I would take the current price. Which is eighty two eighty eight and I'm going to do this on my handy dandy little calculator here which. Saves me having to change my screen. So I'm going to say eighty two fifty hi many times the multiplier so the notional value one contract on this is a. 1-006-500-0700 and seventy dollars and so some people when they first. Futures they might say wow that's a little ritual room for my blood- in Terence's taking E. minis have a tick minimum of a quarter of a point. At a point is fifty dollars. Correct now this is so on the S. and P. five hundred D. R. forward slash ES a point is worth fifty dollars- the mark is five. So a point is worth five it's twenty on the on the nasdaq A point is worth twenty dollars. So you know if we come over here to slash ES. You've got it the multiplier which is a point is worth fifty and then the enemy asks the micro. E. mini S. and P. five hundred the multiplier is five so it's a ten. Now when we come over to the nasdaq what we're seeing so let's just in a shop on- the nasdaq so if you hadn't- note this before and everything else is kind of laid out in the chart at the beach yeah right up at the top except for initial margin. In the initial margin we're gonna find we're here is the seventy nine twenty number. So that's our initial margin and that was the last thing we had to fill lan seventy nine twenty. Now when we come to the micro E. minis. Ticker symbol. Hi Ian Q. M. and Q. rather am and Q. the minimum tick size is the same. The tick value is now if we come over to M. and Q. the tick value is now fifty cents instead of five dollars so again. You know it's a tabs. The size and so a point is worth two dollars. Which is near the same as the multiplier which is too and so when we multiply that S. and you know it's going to be just slightly different because we're live in the market. But she's call AT T. ninety. Times too. One sixteen five eighty now if we had done this at exactly the same time it would have been sixteen out. Five seventy seven right. Just exactly. Half the amount are sorry attempt the amount I can't speak this morning so you know with the point value is a tenth the notional value is tat the tick value attack it's all a tenth and so why have these gain popularity so quickly well if you're newer to investing and you have a smaller account and you wanted to head count because you have a lot of bullish positions. For you to see or have a you know an idea technically speaking or whatever that you saw a potential pull back coming in the market and wanted to protect yourself to the downside. If your account size is small. To use arm of an E. mini contract to hedge your account might be too bad. But these might be perfect or if you wanted. To go into the field of trading futures but you don't want to take the rest that comes with trading. Regular E. mini contract. Might choose to start even in their paper money you know when I always always always recommend asked you your skills in the paper money. Get in before you are going to have a cat so our initial margin requirement here is again attacked. Ninety two. And with these they're both cash settled and access the E. minis are option. Then the micro E. mini are not. The micro E. minis are not optionable. So let's go out and again if we're looking at the chart hitting a new high today on this and you know some might say well. You know do you really a place a trade when it it's hitting a new high but you know one might amass that self that question. You know when it broke out and hit a new high. Let me just make a sideways line. Send out that we're not counting on my on my- on this day. So I go it's hit a new high so did pause for two three days but it and it's continued to move to the upside but we're just practicing in our paper money account. So let's go to the trade tab we had a you know we've had a one day pullback moved up one day pullback moved up one day pullback. Hasn't moved up for three days one pull back it maybe that's all we get. And you know and we're moving up again so if we came to trade tab this is the actively traded contract we can see. Volume of seventy six thousand contracts on these micro E. minis. Pretty similar actually. To the volume it was a little bit later on the micro E. S. and P. five hundred futures and the S. and P. five hundred. E. mini these are the- most heavily traded. In the world so if we come to the ES and this is just during the regular trading day almost half a million contracts in the market just opened at nine thirty. Eastern so very traded so the micros you know they're not as heavily traded but for a product that just was launched a few to go it's gaining gaining traction and we can see that what we call our bid ask spread. You know it's a- one tech or a quarter of a point. So the bid ask spread is about is. That right. So if we wanted to buy one contract being bullish we would buy a single. Here we are at thirty one hundred confirm. I put this into our futures bucket and if we wanted to just see you know. The difference between the S. I just traded the MES we just. And we met to do the nasdaq that's OK. We are in paper money good thing. So we're going to come back to an end you and your product on the nasdaq. The nasdaq micro E. minis. Confirm and send and then if we want to compare the is. We can also do one contract so we want to buy one contract of the micro in. A step back one hundred futures at. Eighty to ninety five to open there are transaction fees associated with this- and it will lower are paying. A fact by help I seven hundred ninety two what number is that the same as well that's our initial margin requirements on the micro. E. minis now does this mean. As it is when we buy an option on a stock. That the most we can lose is seven hundred ninety two dollars that that is not correct I want to be really clear about that because some people think well I'm buying an options contract I'm buying a futures contract and they think because they're both. Contracts that the rules are the same and that is not the case you can lose more than your initial margin requirements- so be aware of that it's important that you understand- that what your risk is when you're trading futures so there can be really nice gain and you know you've got a lot of leverage but that leverage really cuts both ways. There can be pretty substantial losses and a lot of leverage on the downside also so you've got to be aware of that. And then if we wanted to do one that for comparison on the nasdaq. Again this is our active contract it's now the nasdaq this is the one that expires in December. Thirty eight days from now you know up forty eight points on the day. And we would buy a single and then when we come down here you know we're looking this is our current price again bid ask spread. You know one check- you know very close together and you know we put this in our few years class. And again there's a transaction fee associated with this there's a commission and a fee we want to buy one contract the Z. nineteen means it's that December eighteen that's- what that means. And what is it require of us. Seven thousand nine hundred and twenty dollars. Which is the initial margin requirement for the E. mini nasdaq contracts. So you know a pretty big difference ten times. Okay. Looks like a terrace the Sam might have it back Terence he had most of it correct. But it's important you know that we understand this and it's a good thing to double check so you'll notice that I read this out loud and this is something that- I'm doing not just because I'm talking to all of you today. So because- often people will catch miss aches. Often people will catch mistakes when they hear themselves saying so when they get to that confirmation screen. Some investors will actually read their trade out loud to themselves and they'll go oh that's the S. and P. I meant to be trading the nasdaq. Oops and at thousand corrected before they put the trade in. So I just want you to be aware of that also in the in the chat we just posted a link to a survey. And if as the class and you wouldn't mind clicking on that there are five questions it just like pick a number and- and click it'll take about twenty seconds but we'd appreciate your feedback on that- unfortunately if you're listening to the archive you don't get to participate in the chatter the survey but- other than that. The experience should be pretty similar so when we come down and we look at it we look at the nasdaq we've looked at- whoops the. Let me just correct. The micro at the S. and P. five hundred there are now also micros on the Russell ticker symbol M. two K. on the Dow and on gold. So you know my challenge to you is to just familiarize yourself with this go to the analyze tab and look at the additional new micros and just see what the differences between a micro on gold. And the gold contract. And place a couple of example trades so that you just become more for it with how to use the platform more familiar with- the difference in margin requirements in the difference and take values and all of that so if you're new to options- I challenge you. To practice this strategy and then to practice how you're going to manage these trades once you're in. Because these are trades that you were going to look at daily and we can see that gold is really get I had a great rise and is now really pulling back as the market pulls up and we often see this with. With gold that as the market rises gold will fall and vice versa and it's not always that way but historically we've seen that kind of- balance between the two. So guys that's a wrap for today- our time goes by so very quickly no futures and futures options trading is speculative and it isn't suitable for all investors- if you found this class helpful today I would encourage you to hit the like button below if you haven't already subscribe. To our channel hit subscribe would love to have you as part of our community- forget to join me in that Twitter. Community as well you can see like red. Me out over here. I'm doing everything the reverse in that bottom bar my Twitter handle is there so feel free to me on Twitter I if you're part of the Twitter community and if not I can I can set. Whatever you can to there's a lot. Trade information and information on the markets posted each and every day. Lastly number that- in order to demonstrate the functionality of the platform we use actual symbols we looked primarily at- the S. and P. five. Hundred micro and mini futures contracts and those on the nasdaq we place a couple of example trades we haven't had a quick peek at gold- however none of this. Construes recommendation any investment decision you make in your self directed account. Is solely your responsibility and let me just come back to the desktop. To bring these up again for your re viewing pleasure. So guys it's been a delight to be with you again today. Our success in your investing in these last beautiful days of. And I will look forward to seeing you in a webcast coming up soon take care everyone bye for now

Channel: Trader Talks Webcasts from TD Ameritrade

Views: 6,135

Rating: 4.878788 out of 5

Keywords: TDA, TD Ameritrade, futures, trading futures, futures trading for dummies, futures trading, TOS, ThinkorSwim, begin trading futures, intro to trading futures, futures market, futures trading explained, emini, trading futures on ThinkorSwi, basics of trading futures, futures basics, trading futures for beginners, getting started with futures, Barbara Armstrong, Micro Emini Futures, /NQ, /ES, /MES, Micros, /GC, /MNQ

Id: ZwF4Cv00FpY

Length: 26min 16sec (1576 seconds)

Published: Wed Nov 13 2019