Complete Guide on Futures Contracts (Orderflow Full Cou… — Transcript

Comprehensive beginner to advanced guide on futures contracts and order flow trading to boost trading edge and profits.

Key Takeaways

Order flow trading provides a more objective and precise view of market movements than traditional price action.
Futures contracts are essential derivatives that allow trading of underlying assets like currencies, stocks, and commodities.
Understanding market mechanics and order matching algorithms is crucial for mastering order flow trading.
Using order flow tools can significantly improve trade accuracy and profitability.
Most retail traders neglect order flow concepts, giving those who master it a competitive edge.

Summary

Introduction to order flow charts and how they provide deeper market insight compared to traditional price action charts.
Step-by-step course designed to teach order flow from zero knowledge to advanced interpretation and backtesting.
Explanation of how order flow offers a significant advantage by revealing market mechanics unseen by most retail traders.
Comparison of price action trading to order flow trading using analogies like bows and sniper rifles with night vision.
Detailed coverage of futures contracts, underlying assets, and how different asset classes like stocks, currencies, and commodities are traded.
Discussion on the importance of understanding CME algorithms, order matching, and auction processes in futures markets.
Introduction to tools like footprint/order flow candles, heat maps, and liquidity zones for better trade entries.
Clarification on differences between CFD trading and futures trading, especially in Forex markets.
Overview of best platforms, brokers, and prop firms suitable for order flow and futures trading.
Encouragement to subscribe and follow the full video series for a complete education on order flow and futures contracts.

Full Transcript — Download SRT & Markdown

Speaker A

These are trading charts how you've always seen them. These instead are trading charts how you've always dreamed you could see them. It's basically like having X-ray vision and seeing the anatomy of market movements. These are order flow charts.

Speaker A

video course series I'm making on this channel I will take you step by step from knowing literally zero about orderflow to being able to read it and interpret it correctly and after back testing it properly boost your Edge and

Speaker A

In this order flow video course series I'm making on this channel, I will take you step by step from knowing literally zero about order flow to being able to read it and interpret it correctly. After backtesting it properly, boost your edge and your profits.

Speaker A

setion strategy to optimize the daily bias The Zone refinement process and the entry trigger reading orderflow can give you an almost unfair advantage on all price action Traders showing you information that 90% of retails are not even aware of this stuff I'm about to

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I will also give you a simple but effective trading strategy based on an order flow manipulation pattern that you can start backtesting right away, and some other logics that you can apply or implement in your price action strategy to optimize the daily bias, the zone refinement process, and the entry trigger.

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instead using price action is like trying to hit the target with a normal bow and arrow orderflow instead is like having a ballistic bow in both of these cases you have to be the one who shoots properly and the ballistic one can be

Speaker A

Reading order flow can give you an almost unfair advantage on all price action traders, showing you information that 90% of retail traders are not even aware of. This stuff I'm about to show you is usually not used, completely neglected actually, by retail traders.

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normal sniper rifle and a sniper rifle that also has a night vision heat scanner that shows you enemies in the dark in both of these cases you have to be a nice sniper but there are some things that you will only be able to see

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But if you take a look at how day traders or scalpers are mostly trading in the professional environment, in the institutional side of the market, they will most likely use these charts.

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all actually orderflow patterns and while yes with price action you can figure them out with a fairly good accuracy with real orderflow you can have 100% objectivity on them you don't have to guess that this is a stop run

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Instead, using price action is like trying to hit the target with a normal bow and arrow. Order flow instead is like having a ballistic bow. In both of these cases, you have to be the one who shoots properly. The ballistic one can be kind of more expensive and maybe takes a little bit more time to learn the basics.

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guess that the fair value Gap is from one Wick to the next one you can be actually way more accurate and draw it where there's an actual Gap in Fair Value you don't have to guess hey and probably this candle there is an order

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But once you've mastered the ballistic option, you have a higher chance to hit the target, be more precise and more accurate. Or it's the same as using a normal sniper rifle and a sniper rifle that also has a night vision heat scanner that shows you enemies in the dark.

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for your entries so buckle up take paper and pencil and subscribe to the channel to be notified as soon as the next episode is coming out cuz this is a series of videos anyway I will link the whole playlist for this course down

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In both of these cases, you have to be a nice sniper, but there are some things that you will only be able to see with night vision.

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Mechanics Work in depth how the single orders are matched by the CME algorithms and how the auction of these order works then we will see how footprint or orderflow candles work how heat Maps work how to identify and use actual

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Let's say you're using price action concepts like ICT or smart money concepts. Using real order flow is literally like putting those concepts on steroids.

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or in a purely volume-based strategy as well and last but not least we will learn about the best platforms the best brokers and the best prop firms so now let's start with the basics so when we're talking about order flow we're

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You probably heard of order blocks or fair value or liquidity grab or stop hunts. These are all actually order flow patterns.

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we're talking about volume usually we refer to the total transaction between supply and demand usually with order flow we can be more specific about who is more aggressive but what you need to understand is that in order to see order

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And while yes, with price action you can figure them out with fairly good accuracy, with real order flow you can have 100% objectivity on them. You don't have to guess that this is a stop run.

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exchange that Nvidia is traded in and access it through a data feed but with stuff like euro dollar or GBP JPY these are Forex payers these are currencies and they are not traded in the same place when we're talking about Forex

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You can literally see stop orders being triggered and sweeping the book. You can see if there's a lot of small stop losses or it's one big stop order from a hedge fund or a bank. You don't have to guess that the fair value gap is from one wick to the next one.

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between underlying asset and contract or derivative so the underlying assets usually are subdivided in asset classes so you have stocks or equities you have currencies you have bonds you have Commodities you got cryptos these are all asset classes in stocks you got

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You can be actually way more accurate and draw it where there's an actual gap in fair value. You don't have to guess, "Hey, probably this candle there is an order block," which is a block of orders, because with order flow you can actually see every single one of those blocks of orders.

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these things physically which is not necessarily the best way Brokers and Banks created derivatives so you got cfds you got Futures you got options and so on and so so forth so let's say we're taking a currency pair like euro dollar

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In other words, you can make these concepts way more objective and very often have a more reliable confirmation for your entries.

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six you will see that all the currency Futures has a six at the beginning and then the first letter Euro British pound Japanese Yen Australian dollar Canadian dollar Swiss frank New Zealand dollar and that's pretty much it so you only

Speaker A

So buckle up, take paper and pencil, and subscribe to the channel to be notified as soon as the next episode is coming out, because this is a series of videos.

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Futures volume traded in currencies is really low in fact in the latest report of the bank of international settlements if you go to the PDF at page six you will see Foreign Exchange Market turnover by instrument and you will see

Speaker A

Anyway, I will link the whole playlist for this course down below. Now, this course will work something like this. In this first introduction lesson, we will go deep, deep into what order flow is, what are futures contracts, and the advantages of using these contracts.

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Traders are a very small percentage of that 5% and also usually cfd Traders are not even trading in this interbank market they're actually trading against their Brokers or against their prop firms so stating that in the euro dollar

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In the next videos, we will take a look at how real market mechanics work in depth, how the single orders are matched by the CME algorithms, and how the auction of these orders works.

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fund like an SNP 500 which always remember is an index so the underlying asset actually can't be traded other than with derivatives like with ETFs or futures or options or cfds so usually the cfd will be something like us 500

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Then we will see how footprint or order flow candles work, how heat maps work, how to identify and use actual liquidity zones.

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Trader I mean if you're using meta Trader 4 and cfd prop firms or a Forex broker you are trading cfds you're a cfd Trader not a currency Trader if you are a currency Trader you could also use Futures not necessarily cfds so let's

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Then we will learn how to interpret different order flow patterns and different order flow types of action.

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they are regulated they're more transparent there is no spread markup from the broker the cons are that margin requirements are actually a little bit higher you need to pay for the data feed so to access the order flow of the

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And then we will learn how to give all of this a context and how to implement it in a price action strategy or in a purely volume-based strategy as well.

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later on this video cfds instead are traded in a decentralized Network so you don't have a single exchange where you can take the volume and the data hence they're not that transparent they're non-regulated they're banned in a lot of

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And last but not least, we will learn about the best platforms, the best brokers, and the best prop firms.

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probably end up paying more in commissions so Futures especially if you're a long-term Trader are much more convenient then it's also true that swap can be positive but in most cases if you're following a trend the the swap is

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So now let's start with the basics. When we're talking about order flow, we're talking about a flow of orders, and we're talking about buy and sell orders, aka the supply and the demand.

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but it also means that newbies and uninformed Traders can open an account so easily with 50 with one to 2,000 leverage because I forgot to write leverage can be way higher so if you are a Ludo Maniac like most of you are you

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So seeing order flow means seeing the supply and the demand interacting with each other. These are also known as volumes.

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you're paying with your spread with your commission and with your losses or in case of social medias and porn with your attention and yes prop firms are more competitiv but as we saw exactly because rules can be too easy the financial

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So when we're talking about volume, usually we refer to the total transaction between supply and demand. Usually, with order flow, we can be more specific about who is more aggressive.

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algorithms finds you a counterparty in the market so the exchange finds you a counterparty confirms the order to the broker which gives you back the contract with cfds instead you're sending your order to your broker and most likely the

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But what you need to understand is that in order to see order flow, you need access to the exchange.

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be offering you ecn prices your order might go also straight through a process your order might actually be processed straight through but not straight through the liquidity providers straight to the b-book no dealing desk Brokers which are very few the only one I'm 100%

Speaker A

So if you want to see all the volume, all the transactions traded in the Nvidia stock, in order to see the order flow of the market participants in Nvidia, you need to go to the NASDAQ, which is the exchange that Nvidia is traded in, and access it through a data feed.

Speaker A

is if they put you in the aook cuz then in the ecn which is the electronic communication Network they will match your order with a liquidity provider which is usually a bank and by the way the same goes for prop firms but I think

Speaker A

But with stuff like Euro Dollar or GBP JPY, these are Forex pairs, these are currencies, and they are not traded in the same place.

Speaker A

so their interest is that you trade as frequently as with highest size as possible in cfds the conflict of interests is commissions spreads eventually swamps if there's a markup also there and counterparty gain because being your counterparty the broker is

Speaker A

When we're talking about Forex, currencies are mostly traded in the interbank spot market, and unfortunately, we don't have any data on this volume for order flow.

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so in Futures you have clear advantages like yes you don't pay a spread to the broker there's no swap you can have access to the order flow and it's a bit more more romantic if you want because you can access the market you could be

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You need a centralized exchange whether it is for stocks or for futures contracts.

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the day you just need to be profitable but what are Futures as we discussed Futures are derivative contracts they were originally born in the field of Commodities in fact the cftc still holds the name of Commodities Futures Trading

Speaker A

And it's also important to clarify the difference between underlying asset and contract or derivative.

Speaker A

contracts instead were originally created for hedging purposes because let's say you're a company you're Ikea and you use a lot of wood and because of a problem in the supply chain of wood you expect the price of wood to get

Speaker A

So the underlying assets usually are subdivided in asset classes. So you have stocks or equities, you have currencies, you have bonds, you have commodities, you got cryptos. These are all asset classes.

Speaker A

which can be three 6 months one year to buy that big pile of wood at this price so they were created for hedging purposes some of you may have heard about the coot report that's the reason why in the coot report which is the

Speaker A

In stocks, you got individual stocks or index funds. With currencies, you have majors and minors. With bonds, you have treasury bonds and corporate bonds. In commodities, you have precious metals, energy, materials, and so on and so forth. These are asset classes.

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purposes for commercial purposes not for speculation so as I said you buy the Futures now because you think that in the future is going to go up so you want to cover yourself you want to head yourself from future price movements so

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So unless you want to day trade all of these things physically, which is not necessarily the best way, brokers and banks created derivatives.

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the Euro futures for the gold Futures they have an expiry date usually of 3 months in fact if I write es and I open the menu you'll find that I have March 2025 contract June 2025 September 25 December 25 and so on and so forth for

Speaker A

So you got CFDs, you got futures, you got options, and so on and so forth.

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is for March and so on and so forth let's open the Euro Futures also here you have J which is April K which is May m which is June n which is July and so on and so forth so every one of these

Speaker A

So let's say we're taking a currency pair like Euro Dollar. You can choose to use the CFD, which usually is named exactly Euro Dollar, or you can choose the futures, which is 6E. That's a slightly different name.

Speaker A

contract and you move on to the next one cuz this one is about to expire so every 3 months the futures of the S&P 500 expires just like with options every single month on Friday options stop trading and they expire on Saturday this

Speaker A

With GBP USD, you're going to have 6B. If you click here on TradingView and you press six, you will see that all the currency futures have a six at the beginning and then the first letter: Euro, British Pound, Japanese Yen, Australian Dollar, Canadian Dollar, Swiss Franc, New Zealand Dollar, and that's pretty much it.

Speaker A

same time that Futures also expires you can see some weird market movement and volatility now if I zoom in in the contract you will notice price is moving only 0.25 points at the time 50 75 81 8125 50. 75 0 and so on and so forth so you

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So you only have futures of some currencies but just paired with a dollar. You don't have a lot of currency pairs.

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you calculate risk in Futures every tick usually has a value which is called tick value for S&P 500 is $12.5 per tick for the micro es contract which is the mees The Tick value is $11.25 per tick so if you're starting

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And even though, as you can see, these futures are traded in the CME, which is the Chicago Mercantile Exchange, their volume is really low.

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risk better another important thing about Futures Contract is that you can't open multiple positions in the same contract let's say price is here you have no open trade your position is flat or zero if you buy one contract your

Speaker A

The futures volume traded in currencies is really low. In fact, in the latest report of the Bank of International Settlements, if you go to the PDF at page six, you will see foreign exchange market turnover by instrument.

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not going to have two different one contract positions both of these will be mediated will be averaged into one single position of plus two so these two will go and you'll be left with a single operation exactly in the middle of plus

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You will see the spot market is around 30%, the outright forwards are around 15%, most of the volume is in Forex swaps. Currency swaps are just 2%. Options and other products, which includes CFDs, constitute a very small part of it.

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you going to do let's say you're going to sell one contract so your position will be minus one right here but as you press the sell button you're not going to have a sell a new sell position here

Speaker A

So CFD Forex traders are a very small percentage of that 5%, and also usually CFD traders are not even trading in this interbank market. They're actually trading against their brokers or against their prop firms.

Speaker A

like you imagine it in your mind is if say you open long on the es and then you short the micro contract so in the sing contract you can't hedge and you cannot have multiple different positions in different contracts yes you can also

Speaker A

So stating that in the Euro Dollar there's been a liquidity sweep of retail traders' stop-loss is complete, and this is not an opinion, this is based on data, this is facts.

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I said we're just working on numbers of contracts so since you're long one this will equal minus one and this also would equal minus one so if you think about it if you're buy here and selling here and

Speaker A

All right, let's say gold. The classic CFD is XAU USD. The future is going to be GC.

Speaker A

is instead will be a breakout order so it will be a sell stop so in Futures there's actually no stop loss or take profit these are cfd names in Futures you will just put a sell limit and a

Speaker A

For an index fund like an S&P 500, which always remember is an index, so the underlying asset actually can't be traded other than with derivatives like with ETFs or futures.

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let's say price is here this will be a buy limit and this will be a breakout order so a buy stop as an example this is the order flow platform I'm using to trade Futures and as you can see you can

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buy market sell Market betas we will see in the next part so say I'm opening a market contract right now so let's make an example on a simulated account to make you understand exactly what I mean now these candles are a little bit

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different than the one you're used to I know we will discuss the in the next video but let's say we want to sell we're going to set the quantity for example five contract we're going to sell the contract as you can see I have

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five contracts open right here in order to place myself a stop- loss I will have to put a buy stop let's say Above This High let's see if it's going to be taken okay seems like price is going lower so

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let's put ourself a take profit how we're going to do it with a buy limit of five contracts right here perfect our take profit has been taken but as you see + 5 equals 0 my position is flat but

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this this order is still a stop order that I placed myself to cover myself but now I have to remember to remove it which is kind of annoying that's why we use Oco strategies which means one cancels other where I can say okay five

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dicks below or above you put my stop so we're adding the first bracket and then another Target say 10 ticks below so we're adding this bracket we give a name test we save it and now it's here so now

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if I sell Market I will put the stop above here the target below here will let the price go to whichever of those perfect as you see it hit the stop loss and the takeprofit didn't stay there it

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was canceled because one cancels other so as you can see it can be a little bit more complicated to get used to these kind of things at first as with everything it just takes a little bit of time to learn then you set up yourself

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an ooco strategy and it's done so this was an overview of future contracts how they work what they are in the next video we're going to get deep into what order flow actually is how is it structured in extreme detail and we will

Speaker A

fully understand Market mechanics how the market actually works not some weird interbank algorithm no how Market actually work okay so I hope you really understood the power of orderflow and how Futures Contract work if you have any question feel free to comment leave

Speaker A

a like if you enjoyed this video And subscribe to the channel so I'll see you in the next video you're welcome by the way ciao

Topics:order flowfutures contractstrading strategiesmarket mechanicsprice actionliquidity zonesfootprint chartsheat mapsCME algorithmsCFD vs futures

Frequently Asked Questions

What is order flow trading and why is it important?

Order flow trading involves analyzing the actual buy and sell orders in the market to gain a clearer and more objective understanding of price movements. It provides insights that traditional price action charts cannot, giving traders a significant advantage.

How does futures trading differ from CFD trading?

Futures trading involves contracts based on underlying assets like currencies or commodities and is executed on regulated exchanges like CME. CFD trading is typically done through brokers or prop firms and does not involve owning the underlying asset, often resulting in different market dynamics.

What tools will this course teach to improve trading?

The course covers footprint or order flow candles, heat maps, liquidity zones, and understanding CME order matching algorithms, all designed to help traders interpret market data more accurately and optimize trade entries.

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