 Welcome traders, it's 2pm GMT and we are going to get going here. My name is Patrick Munley and today I'm going to be introducing you to the E-mini and E-micro S&P contracts. In today's session I will demonstrate the instrument structure and advantages along with highlighting some unique market mechanics that enhance the trading information for these products. I will also introduce you to my core strategy for trading E-minis and demonstrate how you can consistently use my pre-market analysis to reach consistent returns. Before I get going, can I just confirm you can hear me loud and clear and you can see my screen if you type a Y into the chat box, that will be useful and so I know we are good to go. So for those of you who are here for the first time, a brief introduction to myself. After I graduated from King's College London, I joined a city PLC consulting firm. I left with some colleagues and went on to successfully co-found and exit a consulting startup focused on C-suite executive search for technology businesses. Having had a front row seat to the dot com bubble, witnessing people make and lose a fortune in the market I decided to explore my curiosity for markets with some capital to play with and some time on my hands. I studied day trading the S&P 500 or probably more appropriately day gambling. After some early beginners luck, I racked up some pretty solid gains. However, as is often the case, my beginners luck went out. As the market phase changed, I began to average down, giving back all my gains and ultimately experiencing a significant six figure financial hit. To say this was a gut wrenching and sobering experiences and understatement. I really had to stand back and figure out if it was feasible for me to make a living from the market. So I decided to get serious about trading and sought out a mentor with an excellent trading track record. Working with my mentor for 18 months to two years. It was a time during which I had not just my technical game. I researched, developed, since we back and forward tested strategies that crucially suited my personality. All of which were underpinned by a rigorous risk management approach. Most importantly though, during this period of mentorship, I significantly developed my mental game. And probably most importantly of all, I made the watershed shift from being a highly goal orientated individual focused on financial gains to becoming purely process orientated. So what does that actually mean? Well, it means I had to stop focusing on what I could make from the markets and start focusing solely on managing my mindset to allow me to consistently execute my trading strategy. Oftentimes in the face of negative feedback from the markets in the form of losing trades. But once you become process orientated and you have a professional trading mindset and you understand the true nature of trading being really a numbers game in which you're simply playing the probabilities, you really lose the emotional investment and that hellish emotional rollercoaster of living and dying by the outcomes of individual trades and no longer concerned with the outcomes of individual trades or even a small string of trades. My focus is on the next 100 trades because I know by focus on excellence in execution my edge will demonstrate itself over an extended series of outcomes. My multi-strategy approach has delivered profitable annual returns since 2008. Since 2013, I've also been managing investor capital through a managed account service delivering annual positive returns. I'm currently responsible for managing a multi-million dollar portfolio. Since 2010, I've mentored hundreds of private traders of all experience levels from complete novices to former CME floor traders in developing the technical and mental skills to reach consistent returns from the markets. In addition to my fund management and mentoring, I'm engaged in other market-orientated projects such as being a resident market expert exclusively providing market and trade analysis to Tick Mill providing an in-depth daily market outlook breaking down fundamental and technical drivers for the day ahead. I also provide daily technical trade setups for three to five markets that I'm tracking on a daily basis. I also now run Tick Mill's rapidly growing E-mini strategy group where I provide a daily specific trade plan for the regular trading hours cash session of the New York Stock Exchange and also the head trader for Tick Mill's new futures trading telegram channel in which I provide exclusive institutional insights from tier one investment banks and their trading desks and strategy teams market perspectives. This also allows for an opportunity to take a look behind the curtain and see how institutional players are positioning. Telegram channel members also receive regular market bulletins within depth positioning and sentiment analysis. Actionable real-time chart analysis for a full range of E-mini and micro products covering daily setups and trading updates for E-mini micro stock market indices, commodities, currencies and crypto contracts. I also share real-time trade alerts from my automated trading models that are active daily in the E-mini S&P and Gold futures markets. You'll also get access to live stream trading sessions providing an opportunity to look over the shoulder of an experienced money manager and watch in real time as I dissect the markets and identify asymmetric trading opportunities. These live trade sessions will also act as a platform for helping you to develop a professional consistent approach to navigating the markets and the mental mind games that must be mastered to make it as a profitable market operator. I'll provide more information with respect to the strategy group which is here. You are welcome to join that. I'll post the link into the chat and you can just request membership and I'll give you access to that where I post the daily trade plan prior to the market open. For those of you who have a Tick Mill funded futures account you can join me in the Telegram channel where I provide all those intraday updates and alerts. There's a link to request access there. So, back to today and let's focus firstly now on the E-mini micro S&P futures contracts. The E-mini or E-mini or ES or the minis or the spools is the futures contract that tracks the S&P 500 stock market index. It is traded on the Chicago Mercantile Exchange or the CME by their Globex electronic trading platform. Trading is 23 and a half hours a day, five days a week using the contract symbol ES. E-mini contracts are available on a wide range of US stock market indices and commodities. However, when traders refer to the E-mini or the spools they are generally referring to the most important contract and that's the futures contract that tracks the S&P 500 market index. E-mini futures were originally launched in September 1997 to attract non-professional investors into trading index futures. Previously the only game in town had been the large S&P contract but it had become too expensive for the little guides trade. So, the CME created the E-mini contract which was one-fifth the size of the large S&P futures contract and required one-fifth of the margin to trade. E-mini became a huge success not only with non-professional traders but with professionals too. The micro E-mini futures contract is the same as the regular S&P 500 E-mini contract in every respect except it is one-tenth the size. That is, each one point move in the S&P 500 index is worth $5 per micro E-mini contract compared to $50 for the E-mini. And the margin to trade a micro contract is also one-tenth of the size. So, what are some of the additional benefits to trading this product? Well, it's equally easy to go along with short you either buy or sell the current E-mini contract and there is no uptick rule. It's a 24-hour trading venue which makes the E-mini attractive to traders around the world overnight moves in related index in equity markets like the DAX or the FTSE can be played through one trading vehicle. Electronic trading platforms mean that your orders are entered instantaneously and when executed you are notified instantaneously. Changing and cancelling orders is trivial no phone calls to brokers required and you know exactly where you are every second of your trade. It's a level playing field in terms of the fact that the Globex electronic trading platform means that large and small traders have equal access to the market and trades are executed in the order they are received and like the pit-traded futures or equities there are no back-room gains being played. The tight bid are spread because there's so much volume is traded through the E-mini the difference between the bid and the ask price is only ever one-tick or 0.25 index points which is the minimum price movement. Large depth of market, again the E-mini market is so liquid there's plenty of volume either side of the last traded price for large orders to be filled with minimum slippage. It's volatile yes but not unmanageable. The E-mini is active every day which gives the trader plenty of opportunity to trade. Remember it's really difficult to trade at a sleepy market but the E-mini volatility is manageable except maybe around some key news events like for example tonight's FOMC release. Now importantly low brokerage rates and broker commission for trading E-minis continue to fall. This excludes exchange clearing of regulatory fees and when you factor this in your round-trip or in and out brokerage commission is very attractive. It's got a low margin requirement so to open a day trading position with tick mill you only require 1,000 US dollars to open a micro-accounts. Remember these are absolute minimums you should be trading with more capital behind your positions. Also it offers a lower tax rate than before X or stocks. I think from trading E-mini futures it's taxed as a capital gain. No trade-by-trade accounting either. Another advantage really is that tax treatments in so far as you don't have to account trade-by-trade it's only the net profit or loss for the full year is required. So now we understand the trading instrument and the trading venue. I want to demonstrate some of the unique aspects. The fact that the E-mini is a derivative of the S&P 500 allows us to access some unique information commonly referred to as market internals. Market internals are often compared to the instrument dashboard on the car giving indication of performance and alerting the driver to any issues occurring under the hood. So let's take a look a bit more closely at what market internals are and how we can incorporate them into a consistent trading strategy. The volume as a unique feature of trading on exchange trading derivatives as opposed to CFDs or forex volume data which is incomplete at best as there is no central forex exchange and the banks who dominate forex trading don't share volume data in real time. However, we get a true reflection of actual volume which is shared directly by the CME available to all market participants in real time. I use volume as a tool to confirm breakouts and opportunities to fade the market. Spikes in volume will often be accompanied by intraday profit taking. The next internal that I pay very close attention to is the New York Stock Exchange tick index. This gives us the relationships of stocks ticking up versus stocks ticking down. Tick is an extremely useful tool for intraday traders. If there are 3,000 stocks trading on the New York Stock Exchange and 1,500 trade higher from their previous price and 500 trade lower than their last price the tick will read plus 1,000. But wait, what about the other 1,000 stocks? Well, their price was probably unchanged from their last print. When using the tick we are looking for extremes to enter or exit a trade. Tick readings of plus 1,000 or minus 1,000 are considered very strong as we typically trade between 500 most of the time on the New York Stock Exchange. Tick readings within the 400 bracket indicate chart and so we ignore them. On a range day we can look to fade tick extremes. I apply a moving average to make it easier to see the trend of the tick and note that extreme tick readings for the day are very important. When we get a high tick and a high in price of the exact same prints this could indicate the high of the day. When a high tick prints without a simultaneous high in price we can continue to make new lows until a new tick is reached. The reverse obviously being true for low tick followed by new lows in price. Next we have the advanced decline line or the AAD line for short. It's one of the most important internals. This indicates to tell us the net some advancing stocks minus declining stocks. There are roughly 3,000 stocks listed on the New York Stock Exchange and 3,000 on the NASDAQ. An AAD line reading of plus 1,500 is very bullish and a reading of over 2,000 is extremely bullish. On the flip side readings of negative 1,500 and below are very bearish and readings below 2,000 are extremely bearish. These extreme readings are indicative of trending days when once the market opens it just continues to trend all the way into the close. We look to the AAD line in conjunction with the breath ratio to confirm these trend days. For example, a day with 2,500 advancing stocks and only 500 declining stocks would yield a net plus of 2,000 which is an extremely bullish reading. So it's going to take a really large catalyst to shift the market direction with a reading that bullish. If on the open you continue to see the AAD line moving plus 500, plus 700, plus 900 this is a sign of market strength. If, however, the market is moving higher but the AAD line is moving lower that's a divergence that we really want to pay attention to as that can signal the market turn. Next we have the breath volume ratio composed of volume flowing into up stocks versus volume flowing into down stocks. Breath ratio is expressed in up volume minus down volume. This reading is important in relation to where it has been especially where we are during the trading day versus where we opened. For example, if that's 10 a.m. New York time we have 10 million shares moving up and 5 million shares moving down the resulting breath ratio is 2 to 1 positive twice as much volume as flowing into up stocks as down stocks. If at 10.30 a.m. the market is sold off but we have a breath ratio of 3 to 1 positive this is a signal that the markets are actually becoming stronger and it's time to look to buy the pullback. Last but by no means least we have the cumulative delta. This is a cornerstone of order flow analysis. Cumulative delta summarizes buys versus sell activity and can help determine market direction, trend and strength, support and resistance areas and more. Delta refers to the difference between buyers and sellers. Delta is positive when purchases exceed sales. Delta is negative when the sales exceed the purchases. Cumulative delta consolidates the accumulated delta information and then plots it visually on our charts. By recording and displaying a running count of weather and by how much buyers or sellers were in control order flow traders can better extrapolate the flow of the market. Delta is an excellent tool also for detecting divergence between price and the underlying order flow in the market. When price is making new highs but the delta isn't making new highs it suggests an underlying weakness to the market and often precedes a pullback or even a reversal. So now we understand what market internals are and the unique insight they provide and I want to briefly walk you through my strategy. By understanding the market context in which we are trading I'm looking to execute two types of trades. Firstly mean reversion in ranging markets and secondly momentum trades in trending markets all underpinned by the market internals for that cash session. Every day my plot, pivotal support and resistance action areas that are derived from multi-time frame volume profile analysis. This allows me to avoid engaging in the market in areas of heavy rotation or chop. The support and resistance action areas have three purposes. They can act as entry levels in mean reversion setups. In directional or trending environments the action areas act to confirm momentum entries and lastly I use them for targets for trades. I also note additional key data from the prior days price action. These levels are often important to define the bias for the day ahead. The previous volume point of control the highest volume price from the previous day where buyers and sellers perceive the price to be fair value for that given session. I confirm the current market context understanding the dominant side of the market in the near term, medium term and long term. There are times when neither side is dominant and in this instance it's important to assess how the cash session develops and what the market internals are telling us. I also highlight quantitative probability plays based on where the cash or regular trading hours session is opening in relation to the prior days range either above, below or in range based on key levels and the probability of price testing these levels over an extended days data. This can prove useful for trade entry, exit and management. Lastly I note volatility or range analysis as this helps to inform the current market context is the market imbalance in relation to the current volatility equally we can confirm market out of balance and this can inform the bias for the day. It also helps to inform trade execution and management. So now that you understand the basics of the plan let me walk through some examples of how we combine all of this information together to execute and manage trades. So this is an example of a short position. First what we want to pay attention to are this gold and blue line. The gold line represents the midpoint of the current trading session. So for the days trading range this gold line represents the mid, middle point or the 50% zone for the current range that we're trading in. So that's an important level that we want to pay attention to. Equally we have this blue line which is the volume weighted average price. So if we're trading above the midpoint and above the volume weighted average price we consider the current market activity to be bullish. If we're trading below the midpoint and below the VWAP we consider the current market structure to be bearish. So in this session we come into the day we open up and trade below the VWAP and below the midpoint. Now we trade into the primary support zone and then the next piece of the puzzle is what are the internals telling us? Well the tick has a negative distribution it's trading below its zero line and the moving average is negative. The AD line is below the zero point and trending down and we have a breadth that's opened up below the zero point and trending down and we have delta which is also negative. So we have all four of our market internals telling us that we are likely to trade to the downside. So in this instance we enter short positions through the initial support here coming in around 43.85 and our target for the trade is down to the next support zone at 43.75. You'll notice when we trade down into this 43.75 area we get a new low ticket and a ticket stream and we see some consolidation. So that's a straightforward ten point trade based on the current markets structure versus the VWAP and the mid and what the internals are telling us in terms of the underlying market structure as well. Here's trade where we come into the day cash session opens here in this shaded line and what we have is price trading above the mid and above the VWAP. We have tested the initial resistance and pulled back but we're still holding this key support area. We have a positive tip distribution we have AD line above the zero line and trending up. We don't have a breath is below the zero line but is trending to the upside delta is extremely bullish and this is one of the rules of the strategy that I teach in the telegram channel is that what we're looking for as a minimum is to execute a trade in line with the trend is three out of the four internals must confirm and one of those three must be the delta. We know we've got decent buying pressure so the trade here is to play a break of the primary resistance 4386 and we target and move up into the next resistance which comes in at 4400. We don't get a high ticket day here so you could hold the trade or roll up your stops but it's certainly there's 15 points of upside to play for in terms of that signal. And here's another example where we open the day strong retest of the primary support zone again these support and resistance levels are plotted in advance of the session so you have these to hand we hold the support zone and trade back through the VWAP in the mid and let's take a look at the internals of telling us well we have positive tick distribution high tick prints right from the open positive AD line positive bret and trending up and very positive delta so the trade here is to trade through the primary resistance as a momentum trade to the upside so let's say it's coming around 4285 it's a 6 there and then we take it we move into the target zone which is the 4300 but in this instance you'll note we don't get a new high tick a day so price can continue to make new highs so what I'll be doing here is rolling up stops for the next target zone which is up into the 4320 so from the entry back down there at 4285 there's about 35 points of upside to play for there based on the market structure and how the internals are trading to the upside look at another one here so this session opens up we trade through the through the midpoint and the VWAP so we're now in a bearish setting and we rotate back to test those from below we roll over so the trade here is to play a break of the primary support importantly now we have to get those internals confirmed so when we look to the downside here we've got a negative tick distribution we've got an AD line that's tested zero point but rolled over and trending to the downside we have breadth that's been negative and trending to the downside and we have negative delta so we enter on the break of the support here 4330 we take that down into the 4316 so another 14 points of profit to play for there here we have an example on the long side we open the day bullish we're trading above the VWAP above the midpoint so the immediate trade is going to be a break of primary resistance but we have to have those internals confirmed so when we look down here we've got positive tick distribution positive AD line and trending to the downside positive breadth and positive delta so trading through that 4340 area our target zone is up there at 4355 again another 15 points of upside can't see my cursor is anyone else having that same problem you see it now mohan hopefully it's working now we might need to log out and log back in mohan might be the problem okay so next setup is on the short side here we open up looking for a short trade below the what below mid what are the internals saying well the tick distribution is negative we have a AD line that's negative and declining breadth negative and declining negative delta so we trade trade through that 4330 area targeting the 4325 we get a tip we don't get an exhaustion signal from there next exhaustion signal we get is this one here you can see this candle has printed low here into that third support zone so just below the 4320 so 4318 and then we get that low tick a day so that's a signal for us to cover that trade here we have a bullish setup we open up above the VWAP in the mid positive tick distribution positive internals both AD breadth and positive delta so we play the break here of the primary resistance coming in around 4450 and our target is up there 4460 6364 and what we note as we get up into that target zone we don't get a new high tick a day so that allows prices to continue to drive up into the third resistance zone of 4480 so good 30 points of profit there to play for as we when we don't get those exhausts sorry exhaustion signals we're able to trail our stops and lock in more gains so I'll give you an idea of some of the setups that we have been trading recently in the telegram channel and in the facebook e-mini strategy group what I want to do now as opposed to just going back through loads of examples here is I'm actually going to pull up the live chart and like I said at the beginning into the tick mill e-mini strategy group every day I post a pre-market trade plan which is delivered before the open of the cash session so in that trade plan I'll just pull up an example of one here this is yesterday's trade plan and so it will blow up but oh yeah this is the recording yesterday posted in advance of the cash session open with the key levels and I provide details of what the trades I'm looking to take for that cash session now obviously like I said in the telegram group you get live alerts and real-time analysis I live stream the opening hour of the cash session talking through exactly what I'm seeing exactly the trades I'm taking we don't do that in the facebook group this is just a free group but for the telegram channel you have to have that live futures account with tick mill let me just show you this is what I'm looking at for today's session these are the past few sessions we started off the week really nicely in the group we got a long trade develop last week and we took 28 28.5 points out and we got taken out at 46 10 we didn't get a trade yesterday there wasn't a set up versus the trade plan and obviously today we're coming into the FMC and one thing you can immediately see is that we've had quite a contraction in range here and that's because players aren't going to be looking to get overly positioned in advance of tonight's announcement so for me coming into today it's going to be a question of just waiting really until this evening and getting that announcement and then seeing how the market internals are shaping up as we just as the cash session is just open now you can see we're getting these initial prints let me just blow this up for you so in terms of the tick distribution is negative here at the moment we have a negative breath it's opening below the zero line we have negative sorry negative AD advance the client, negative breath we have at the moment anyway some bullish Delta developing here cumulative Delta so we let these opening rotations go through and then we'll be looking like I say for me anyway it's going to be sidelines until the Federal Reserve the FMC and the press conference this evening but the core idea for me will be looking if we have positive internals we'll be looking to play a break of the 4630 targeting a move up to 4640 equally if the internals continue to deteriorate today and the market doesn't receive the this evening's announcement well then we'll be looking for shorting opportunities and the key levels there will be the 4603 and the 4586 a loss of 4586 will be a significant bearish development and we'll see us down into the 4570s in quite a quick clip is what I would imagine but like I say for me it's going to be a question of waiting today and seeing how the market responds to the FMC announcements and the potential tapering and the speed of that and potential for rate hikes interest rates next year so it's going to be it should be a pretty slow day in advance of that but certainly the trading opportunities this evening and those are the key levels I'm going to be watching for and all I'll be doing is making sure we've got confirmation from our internals so I'll be recording the video in a minute to post into the Facebook group highlighting what it is what it is I'm looking for exactly in the trade levels and then in the telegram group I'll be updating that in real time tonight giving the trade alerts for my positions if I take any so that gives you a good introduction to the E-mini micro S&P products and my trading strategy I strongly suggest if you're interested in joining certainly the Facebook group and for those of you who have a live account it's really worth your while to get involved in the telegram group we're delivering real time actionable analysis and alerts and like I say since April when we started these groups the trades and plans that I placed into the groups have delivered over 1300 points of profit and if even on a conservative risk metric of risking 1% per 10 points of movement in the S&P that will give you over 130% in returns so that concludes my presentation are there any questions you can just type them into the chat box equally if you don't have a question an N in the chat box is just as useful as I know then I've done a reasonable job of explaining this stuff I'll just quickly post in again Facebook link and that telegram link okay if there are any questions I'll wrap this up here and get into recording the video for the strategy group and I hope to see you in there or in the telegram group as always traders, plan the trade trade the plan and most importantly manage your risk until next time, thanks very much