The Only Futures Trading Video You Will Ever Need (Beginner to Expert)

Comprehensive guide on futures trading from beginner to expert, focusing on S&P 500 futures, margin, leverage, and trading strategies.

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Key Takeaways

Futures allow trading with smaller capital and greater leverage compared to stocks.
No pattern day trading restrictions make futures ideal for active day traders with small accounts.
Understanding margin requirements and tick values is crucial for managing risk and leverage.
S&P 500 futures are the most liquid and beginner-friendly futures market.
A structured approach using top-down analysis and timing improves trading success.

What the video covers

Futures are contracts to buy or sell commodities at predetermined prices and times, with examples like oil and S&P 500 futures.
Futures trading offers more leverage than stocks, allowing trading with smaller accounts starting around $1,000.
Unlike stocks, futures do not have the pattern day trading rule, enabling unlimited day trades on small accounts.
Margin requirements differ between intraday and overnight trading, with some platforms offering low margin options as low as $500.
Futures prices move in ticks and points, with the ES futures tick valued at $12.50 and a point worth $50, enabling significant leverage.
Micro futures contracts provide smaller exposure for traders uncomfortable with high leverage.
The S&P 500 futures market is highly liquid and recommended for beginners due to its tradability and scalability.
Successful futures trading involves a top-down analysis approach, using multiple timeframes to identify trends and entry points.
Traders can profit from both rising and falling markets by identifying strong reversal signals and resistance levels.
Timing entries precisely, such as waiting for candle formation on smaller timeframes, improves trade accuracy.

Chapters

What are futures contracts?

Futures contracts are agreements to buy or sell a specific commodity or financial instrument at a predetermined price and time in the future.

Why are futures better than stocks for day trading?

Futures offer greater leverage, allowing trading with smaller accounts, and they are not subject to the pattern day trading rule that restricts frequent stock trades under $25,000.

What is margin in futures trading?

Margin is the collateral required to control a futures contract. It varies for intraday and overnight positions and can be as low as $500 on some platforms for intraday trading.

Full Transcript — Download SRT & Markdown

Speaker A

Futures are the best day trading instrument there is. Futures are a contract agreement to buy and sell a specific commodity at a predetermined price and time. An example of this is oil futures, where you're saying, "I will buy a hundred barrels of oil at 400 a barrel in three months." There are also other markets, such as the S&P 500 futures that I trade a lot, that are just settled in cash.

Speaker A

hundred barrels of oil at 400 a barrel in three months there are also other markets such as the S P 500 futures that I trade a lot that are just settled in cash now that can sound a little

Speaker A

Now, that can sound a little daunting. You don't want to have 400 barrels of oil show up at your front door, but when it comes to practically trading futures, all you're doing is really the same thing as buying a stock or trying to buy it low and sell high for a profit. Because to get those 400 barrels of oil to show up at your house, you actually have to let the contract expire and have all this other stuff go wrong in your favor. In reality, you're never going to have 400 barrels of oil show up at your front door. All you're going to be doing is just buying and selling and settling everything by buy cash, and so it ends up being exactly like buying and selling stock.

Speaker A

for a profit because to get those 400 barrels of oil to show up at your house you actually have to let the contract expire and have all this other stuff go wrong in your favor in reality you're never going to have 400 barrels of oil

Speaker A

But why futures are better than trading stocks is because you have way more leverage when it comes to trading futures. What this allows you to do is start trading with a small account. You can start trading futures with a thousand dollars compared to stocks. To get actual movements of money in the market, you have to have a lot of money to start with, and not everyone can do that.

Speaker A

is because you have way more leverage when it comes to trading Futures what this allows you to do is start trading with a small account you can start trading Futures with a thousand dollars compared to a stocks to get actual

Speaker A

Now, if you have looked into day trading stocks, you will have heard the pattern day trading rule. And so all this rule basically does is it doesn't allow you to day trade consistently unless you have over 25,000 in your account. And futures, they do not have this rule. And so with a small account like a thousand dollars, you can make as many day trades as you want, allowing you to start with a really small account and day trade whatever strategy you want.

Speaker A

basically does is it doesn't allow you to day trade consistently unless you have over 25 000 in your account and Futures they do not have this Rule and so with a small account like a thousand dollars you can make as many day trades

Speaker A

And so the futures market I'm going to focus on in this video is the S&P 500 futures. Now, this is the futures for the S&P 500 index, which makes it the most liquid and tradable market. And so if you're looking to start trading futures, I would highly suggest starting with this market.

Speaker A

Index which makes it the most liquid and tradable market and so if you're looking to start trading Futures I would highly suggest starting with this market now when it comes to buying a Futures Contract think of it like buying one

Speaker A

Now, when it comes to buying a futures contract, think of it like buying one share of a stock in a practical sense. When you buy a contract, it goes up, you make money, and when it goes down, you lose money. And all the difference is that you're buying with something called margin. And all margin is, is think of it like collateral. You're putting up a certain amount of money to gain control of this contract, and then as you hold that contract, it'll go up and down in value, increasing or decreasing your account.

Speaker A

it like collateral you're putting up a certain amount of money to gain control of this contract and then as you hold that contract it'll go up and down in value increasing or decreasing your account now there's a few different

Speaker A

Now, there's a few different things with margin because futures trade 24 hours a day. You have something called intraday margin and an overnight margin. Now, generally, the stock market as a whole trades from 9:30 Eastern Standard Time to four o'clock Eastern Standard Time. During that time, futures are considered intraday, and so the margin requirements for that can be a lot smaller. Generally, it's around at the base it's seven or eight thousand for the ES or S&P 500 futures, and then the overnight margin can be double that.

Speaker A

during that time Futures are considered intraday and so the margin requirements for that can be a lot smaller generally it's around at the base it's seven or eight thousand for the es or S P 500 futures and then the overnight margin

Speaker A

And so seven or eight thousand for one contract is still a lot of money. And what a lot of brokerages have is something called low margin requirements. So for one contract of the ES futures in intraday, you can get requirements as little as 500 per contract. And so this allows you to trade with that small account that we were talking about. Some good platforms that do this are NinjaTrader or Tradovate, and what they do is they just allow you to trade futures with that low margin requirement, and their account minimums are very low, allowing you to easily get access to trading futures.

Speaker A

get requirements as little as 500 per contract and so this allows you to trade with that small account that we were talking about some good platforms that do this are ninjatrader or tradovate and what they do is they just allow you to

Speaker A

Now, another big difference between futures and stocks is stocks trade on a dollar basis. So if you have a thousand dollar stock and it goes up one dollar and you have one share, you've made one dollar. But with futures, they have what is called a tick and a point. Now, a tick is the smallest amount of movement that the market can move. And so with shares, usually this is one penny. Usually, the stock can go up pennies at a time at a minimum or even more. But with futures, they have different increments. So one could be 0.25 or one could be 0.1.

Speaker A

and it goes up one dollar and you have one share you've made one dollar but with Futures they have what is called a tick and a point now a tick is the smallest amount of movement that the market can move and so with shares

Speaker A

Now, with the ES futures, the minimum movement or the tick value is 0.25, and a point is one. So tick is essentially a quarter of a point. And so you can see when you're actually looking at the market moving real time, it is going up and down in one tick increments or 0.25 or a quarter of a point. And so because of this, they are not valued at a dollar each. Different futures commodity has a different tick value. So for the ES, one tick or the smallest price movement it has is 12.50, and so a point is worth fifty dollars.

Speaker A

or the tick value is 0.25 and a point is one so tick is essentially a quarter of a point and so you can see when you're actually looking at the market moving real time it is going up and down in one

Speaker A

And so this is where you actually see the leverage that the market has. In reality, all you need is five hundred dollars to start getting movement on one futures contract. And in general, in just a few minutes, the ES can move up 10 points. That is 500 in just a few minutes. And so you can start to really see the leverage that you can get with these contracts.

Speaker A

12.50 and so a point is worth fifty dollars and so this is where you actually see the leverage that the market has in reality all you need for is five hundred dollars to start getting movement on one Futures Contract and in

Speaker A

Now, if that's too much leverage to deal with, what futures have is something called the micro futures. And what this is, is it's a contract of the same commodity. So for the S&P 500 futures, you're still trading the same thing, but it is one tenth of the size. The ticker symbol for the S&P 500 futures is ES, and the ticker symbol for the micro smaller version is MES. And so this one point is worth five dollars, and the margin requirement is also fifty dollars.

Speaker A

much leverage to deal with what Futures have is something called the my micro Futures and what this is is it's a contract of the same commodity so for the S P 500 futures you're still trading the same thing but it is one tenth of

Speaker A

And so you can trade with an extremely small account size by doing this. And again, it allows you to start really, really small, and then of course, it is really easy to scale up your account as you start to grow it because all you have to do is buy more contracts. And because the ES futures is the biggest, most liquid market in the world, you are never going to have a problem with trading as many contracts as you want.

Speaker A

dollars and so you can trade extremely small account size by doing this and again it allows you to start really really small and then of course it is really easy to scale up your account as you start to grow it because all you

Speaker A

Now, when it comes to actually trading futures, it is best to day trade them using technical analysis. And what I've actually found over years is the most profitable way of doing this is looking for reversals in the market. Now, a lot of times you'll hear that the trend is your friend, but what I have found is that reversals give you a lot higher risk reward. You don't have to be right very often, but when you do, you get paid really well for it, making you profitable in the long run.

Speaker A

Futures it is best to day trade them using technical analysis and what I've actually found over years is the most profitable way of doing this is looking for reversals in the market now a lot of times you'll hear that the trend is your

Speaker A

Trading isn't about being right every time; it's about consistently making money over many trades. And when you have a good risk reward ratio like risking one to make three, you only have to be right a third of the time to be break even. And if you're right half the time, you are profitable. And reversal trades do that very well.

Speaker A

being right every time it's about consistently making money over many trades and when you have a good risk reward ratio like risking one to make three you only have to be right a third of the time to be break even and if

Speaker A

But to do it consistently and profitably, to where you're not just reversing randomly in a strong trend, there is a powerful checklist that I have found to help find these opportunities. Now, the first one of these is top-down analysis. What you want to be doing is looking at multiple time frames. You want to be looking at a larger time frame for the trend and the overall structure of the market, and then zoom into a smaller time frame to actually enter in on the trade.

Speaker A

have found to help find these opportunities now the first one of these is top down analysis what you want to be doing is looking at multiple time frames you want to be looking at a larger time frame for the trend and and the overall

Speaker A

So for me, I look at a 15-minute chart for looking to where the support and resistance are, and then I zoom in to a one-minute chart to actually enter in on the trade. I like to draw support and resistance zones based on what the market is telling me. So what I mean by that is you can see these highs up here. Worthy Mark has topped a couple times. I just like drawing off of those and dragging it to the right and seeing where the market bounces off of that.

Speaker A

actually enter in on the trade I like to draw support and resistance zones based on what the market is telling me so what I mean by that is you can see these highs up here worthy Mark has topped a couple times I

Speaker A

And so as the market comes up to this level and bounces off up here, there's probably a high likelihood that the market's going to reverse off of here. And then once it gets to that area in real time, I jump into a one.

Speaker A

going to reverse off of here and then once it gets to that area in real time I jump into a one minute chart and look for a few specific patterns to get in on a trade now that's the awesome thing

Speaker A

about Futures is you can bet the Market's gonna go up and make money and you can also bet that the Market's gonna go down and make money that way as well if you can find the right spot and so

Speaker A

that is the number one thing is we want to see the market get to our resistance area or our area of high probability the market is going to reverse because a big mistake a lot of people make when

Speaker A

they're trading is having the mindset of always be in the market they want to spot every move in the market and try and profit from it instead of just looking at Key areas in the market and consistently profit I mean off of one

Speaker A

pattern and being patient until that pattern shows up then once we see the market get up to that level the number one thing when counter Trend trading is you have to make sure that that uptrend is broken because you don't want to be

Speaker A

trying to bet that the market is going to go lower in any of the pullbacks that the market has when it's just that's a normal pullback in the market and it's just going to keep going higher and so

Speaker A

what we need to be looking for is a nice support level that the market has confirmed and it's bouncing off of and you want that to be broken because that is a big key that hey the market is breaking its uptrend and

Speaker A

that's adding on to the strength of a potential reversal that is all these are doing is it's stacking on top of each other things that increase the probability that the market is going to go down number one is that resistance

Speaker A

number two is that break of our downtrend and then what I found that really increases the likelihood of the market reversing is waiting for the market to make a pullback that gets rejected in the market essentially all it's doing is making a lower high than

Speaker A

the previous one showing you that the market is done making higher highs and it could start shifting into lower lows and lower highs which is a downtrend and that's what you want to be looking for when you're counter Trend trading and

Speaker A

then the final thing is a Candlestick pattern there's a lot of different Candlestick patterns that you can use then my favorite one is some kind of engulfing candle or you can see with these three or four candlesticks is the

Speaker A

market kind of was moving up slowly and then all of a sudden it just ripped back lower closing below the last Candlestick and almost the one before that it's a massive red candle showing you that there is Big sellers coming into play

Speaker A

and it has started to make the potential of that swing back lower and so as it finishes I like to get in on the close of this Candlestick when you're trading you want to wait for the Candlestick to

Speaker A

finish forming so if you're on a one minute chart make sure you have a timer somewhere that shows you how long until the candle is formed and then when you see that coming to an end then jump in

Speaker A

on a trade then there's a few different types of orders you can use you can use a limit order which just gets you in at an exact price so let's say if I want to get in exactly at 37.39 if the price

Speaker A

hits that and it fills me I will get in on a trade betting that the Mark is going to go lower but if the market moves too quickly and blows past that order I might not get filled with the

Speaker A

market order if you put it in at 37.39 it could move down and fill you at 37.38 now that's not a big deal in the big picture when you're looking for the market to give a massive reversal back

Speaker A

lower and so use whichever one you find that works best for you now let me show you what it's like to actually trade Futures in real time and so I trade this strategy that I just showed you every

Speaker A

day all I do is look for those patterns every day and if you can see here we have our uptrend that is starting to break and then up here is that resistance Zone from a higher time frame and then the last thing we look for is

Speaker A

some kind of reversal pattern or large rejection bar and so right here this current massive bar that's going crazy you can see it punches higher and then punches back lower order that is a really good signal because if you read a little bit more in the

Speaker A

Candlestick of what it's telling you is just analyze what the chart's doing here we see the markets go going up going up going up sitting around chopping a little makes a massive attempt to go higher and gets reversed on and so

Speaker A

that's a really strong key to go back lower and so I got in on that you can see here is the current amount I'm up and then I put my stop loss above the extreme of that high because you want to have your stop loss

Speaker A

protected by the structure of the market that is the biggest thing about technical analysis is understanding hey we're an uptrend we're in an uptrend and if it decides to go lower it's going to make lower lows and lower Highs but if

Speaker A

it keeps going up it's just going to continue breaking those highs and so that is the whole idea of having that stop loss up there initially is that if that high gets broken hey we're wrong the Market's actually going to continue

Speaker A

higher and that's totally okay now for me I like to manage these trades more aggressively and so I actually moved my stop to break even here as the market started to move lower in my favor I like to capture some of those profits now I

Speaker A

would suggest having a more fixed profit Target when you first start out but as you get better and better at trading you can add on managing the trade and so once the market gets going and I've moved it to break even I then like to

Speaker A

move it down with the pullbacks and so here you can see we had a pullback and I put my stop above that because again going with the idea of trading with the trend and sticking with the trend I'm

Speaker A

going to only move my stop loss down with those swings to stay with it now when it comes to trading I only trade a couple hours in the day the Futures do trade about 24 7 but the first few hours

Speaker A

in the day are generally the best in terms of volatility and potential profit in the market now you can see I the market had a little pullback here and I moved the stop down again and I actually have a video that talks more about

Speaker A

trailing stops and how to use those if you're interested in that the Leverage is what allows you to really use this as a beginner and then a big thing here as well as you can see I have a support

Speaker A

Zone from a large time frame down here and of course what are we going to expect down there the Market's probably going to reverse up and so because I'm in a trade betting that the Market's going to go down I want to be aware of

Speaker A

that and get out of the trade once it gets close to that and so here we can see that the market is in a really tight downtrend and once it breaks that I want to look to get out of the trade because

Speaker A

the same thing with up here the market broke this at our resistance level well if we have a downtrend down here into our support level and it breaks that it's likely that the market will find support here and I want to

Speaker A

just get out of my trade and take my profits and run so here you can see we're starting to get strong bullish bars here and as we make kind of the final pullback in this move down I'm gonna move my stop loss down above those

Speaker A

candles because if the market decides to you know of course continue back lower and keep going that's great if not or I can close out right here up about 600 and that is a great great trade to profit from and looking forward so you

Speaker A

can see the market pretty much bottomed right there now if you want to learn more about this strategy and Futures check out this video right here and if you want to just learn everything I know about trading I do have a course that I

Speaker A

link in the description below

Topics:futures tradingS&P 500 futuresday tradingleveragemarginmicro futurestrading strategiestick valuepattern day trading ruletrading platforms

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