 Welcome traders to today's session with me, Patrick Munley, we're going to get started here in 30 seconds. If you can hear me loud and clear and you can see the welcome screen if you just type of why into the chat box so that I know we are good to go here. Testing audio 123 type of why in the chat box if you can hear me and you can see the welcome screen. Testing audio 123 testing audio 123. Okay. Welcome to today's introduction to the E mini and E micro SMP contracts in today's session of introducing you to the instrument structure and advantages along with highlighting some unique market mechanics. I will also introduce you to my core strategy for trading the minis and demonstrate how you can consistently use my pre market analysis to reap consistent returns from the markets. Those of you who are here for the first time. Let me briefly introduce myself. Like I said, my name is Patrick Munley and 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 code found and exit consulting startup which was focused on C suite executive search for technology businesses. Having a front row seat the dot com bubble witnessing people make and lose a fortune in the markets, quite literally at times overnight I decided to explore my curiosity for markets with some capital to play with and some time on my hands. I started day trading the SMP 500 or more appropriately day gambling after some early beginners luck I racked up some solid gains. However, as is often the case, my beginners luck run out and as the market phase changed. I began to average down basically giving back all my gains and ultimately experiencing a significant six figure financial hits to say this was a gut wrenching and sobering experience is is an understatement. I had to really 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 a period of two, 18 months to two years in a row. It was a time during which I not just my technical game in terms of researching developing and extensively back and forward testing strategies that crucially suits my personality, all of which were underpinned by rigorous risk approach, but most importantly during the period of mentorship I significantly developed my mental game and probably most importantly 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 focus solely on manage 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 have a professional trading mindset, and you understand the true nature of trading being a numbers game, in which you're simply playing the probabilities, you lose the emotional investment and that hellish emotional roller coaster of living dying by the outcomes of individual trades. So I'm no longer concerned with the outcome of individual trades or even a string of trades my focus is on the next 100 trades as I know, if I focus on excellence and 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, and currently responsible for managing a multimillion dollar portfolio. Since 2010 sorry I've also mentored hundreds of private traders of all experience levels from complete novices to former CME floor traders in developing the technical mental skills to read consistent returns from the markets. In addition to my fund management and mentoring I'm engaged in other market orientated projects I'm resident market expert exclusively providing market and trade analysis to tick mill, and providing an in depth daily market outlook for fundamental and technical drivers for the day ahead. I also provide daily technical setup videos for two to three markets or two three instruments that I'm tracking in in the market and I also obviously run the tick mill rapidly expanding E-mini strategy group where I provide a daily specific trade plan with intraday trade updates. And since its inception, I've delivered over 1000 points of upside. This project is leading trader education for a premier trading education brand called effectscareerswap.com. We offer development and funding to retail trading talent effects career so we don't just develop retail traders market and trading strategy knowledge. We work on mindset development through our structure program that culminates in managing the firms capital at zero personal financial risk on a profit share basis. And recently I've been involved in developing the trader blueprint strategy group, which is a professional trading community where traders of all experience levels can access daily institutional insights from tier one investment bank trading desks and market strategy teams. They're regular market bulletins within depth positioning and sentiment analysis actionable real time chart analysis with daily setups and trading updates from our expert traders. We have live trader education sessions, helping traders to develop a professional consistent approach to navigating the markets and the mental mind games that must be mastered to make it as a pro. So that gives you a flavor of where I'm coming from so let's jump into today's material. The E-mini or the ES or the minis is a futures contract that tracks the S&P 500 stock market index. It's traded on the Chicago mercantile exchange or the CME via their Globex electronic trading platform. Trading is 23 and a half hours a day five days a week using the contract symbol ES. Trading contracts are available on a wide range of US stock market indices commodities and forex. However, when traders refer to the E-mini or the minis or the spools, they are generally referring to the most important contract the futures contract that tracks the S&P 500 stock E-mini futures were originally launched in September 1997 to attract non professional investors into trading index futures. Previously, the only game in town have been the large S&P contract, but it had become too expensive for the little guys to trade. So the CME created the E-mini contract, which was one fifth the size of the large S&P 500 futures contract and importantly only required one fifth of the margin to trade. The 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's 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 the $50 for the E-mini or the ES and the margin to trade a micro E-mini contract is also one tenth the size. So what are the benefits? Well, it's equally easy to go long or short, you either buy or sell the current E-mini contract and there is no uptick rule. There's 24 hour trading, like I say, which makes the E-mini attractive to traders around the world. Overnight moves in related equity markets like the DAX or the FTSE in the UK can be played with one trading vehicle. The electronic trading platform means that your orders are entered instantaneously and when executed, you are notified instantaneously. Changing and canceling orders is trivial. There are no phone calls to brokers and you know exactly where you stand every second you're in a trade. It's a level playing field and so far as 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 received. Unlike the days of old with the pit traded futures or equities, there are no more of those backroom gains being played. There's a tight bid ask spreads. 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. Again, that large depth of market means the liquidity is there so that 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 day trader plenty of opportunity to trade. Remember, a sleeping market is pretty much impossible to trade, but the E-mini volatility is also manageable, except maybe around certain key events like the FOMC or the non-farm payrolls release. The brokerage rates make it extremely attractive. Broker commissions for trading the E-minis continue to fall. This excludes the exchange clearing and regulatory fees. And when you factor those in, your round trip or the in and out brokerage commission is very attractive. Like I said before, there's a low margin requirements to open the day trading position with tick mill. You only require $1,000 to open a micro account. Remember those are the absolute minimums you should be trading with much more capital behind your positions. The lower tax rate, it offers a lower tax rate than trading forex or stocks. The income from trading E-mini futures is taxed as a capital gain. There's no trade by trade accounting. Another advantage of the tax treatment of the E-mini futures is that the tax reporting requirements are minimal. In particular, there's like I'd say no trade by trade accounting, only the net profit for the full year is needed. So now we understand the instrument and the trading venue. I want to demonstrate some of the unique aspects of this contract. 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 a car, giving indication of the performance and alerting the driver to any issues occurring under the hood. So let's take a look more closely at what market internals are and how we can incorporate them into a consistent trading strategy. First volume, as a unique feature of trading the exchange-traded derivatives as opposed to contracts for difference or the 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 and it's 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 instrument that we use in terms of our internals is the New York Stock Exchange tick index. This gives us the relationships of stocks up ticking versus down ticking. The tick is an extremely useful tool for intraday traders. For example, if there are 3,000 stocks trading on the NYSE 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? You say, well, they could be unchanged from their last trading price. 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 1,000 most of the time on the New York Stock Exchange. We have some interesting tips for using the tick. Tick readings within the 400 plus or minus 400 bracket indicate chop and we can pretty much ignore them when we want to stay out of the market when the tick is registering in those ranges. On a range day, you 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 when we get a high tick and a high in price at the exact same time, this more often than not indicates the high in price for the day. When a high tick prints without that simultaneous high in price, we can continue to make new highs until a new high tick is reached, and obviously the reverse is true for a low tick followed by new loads. The next tool I use is the advanced decline line or the AD line for short. It's the second most important of the internals this indicator tells us the net sum of advancing stocks minus declining stocks. There are roughly 3000 stocks on the New York Stock Exchange and 3000 on the NASDAQ and AD line reading of plus 1,500 is very bullish and a reading of over 2000 is extremely bullish. On the flip side readings of minus 1500 and below are very bearish and readings below minus 2000 are extremely bearish. These extreme readings are indicative of trending days where once the market continues to trend all the way into the close, we look to the AD line in conjunction with the breath ratio to confirm trend days. For example, a day with 2500 advancing stocks and only 500 declining stocks would yield a net plus 2000 as an extremely bullish reading. So it's going to take a large catalyst to shift the market direction for that trading session. When you open you continue to see the AD line moving say from plus 500 to plus 700 to plus 900. This is a sign of market strength. If however the market is moving higher but the AD line is moving lower. This is a divergence and we could see the market turn. Next we have the breath volume ratio composed of volume flowing into up stocks versus volume flowing into down stocks. This is expressed as up volume minus down volume. This reading is important in relation to where it has been especially where we are now compared to where we were when we open the day. For example, if at 10am we have 10 million shares moving up and 5 million shares moving down, the resulting breath ratio is 2 to 1 positive. So as much volume is flowing into the stocks going up as going down. If by 10.30am the market is sold off but we now 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 buy the pullback and look for a long set up. Last but not least, we have the cumulative delta. This is a cornerstone of order flow analysis. This data summarizes buy versus sell activity and can help us determine market direction trend strength and support resistance areas. A positive delta refers to when the buyers and the purchases exceed the offers on sale negative delta is when the sale exceeds the purchase cumulative delta consolidates the accumulated delta information and then plots this information visual as you can see on the graph on the screen by recording and displaying a running count of weather and by how much buyers and sellers are in control order flow can. We can better extrapolate order flow and the flow of the market delta is an excellent tool for detecting divergence between price and the underlying order flow in the market. When price is making new highs but delta isn't making new highs it suggests an underlying weakness to the market and often precedes a pullback or a reversal and obviously the same is true on the downside. So now we understand the market internals and the unique insight they provide. 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. One is a mean reversion trade in arranging environments and then I'm looking to trade momentum trades in trending environments underpinned obviously by the signals from the market internals. Every day I plot pivotal support and resistance action areas that are derived from my multi timeframe market volume profile analysis. This allows me to avoid engaging the market in areas of heavy rotation or chop where most traders lose their accounts, the sport resistance action areas have three purposes. They can act as entry levels in the reversion setups, which is the majority of the time in directional trending environments the action areas act to confirm momentum entries and lastly they can be used as targets for trades. I also know it's additional key data from the prior days price action. These levels are often important to define the bias for the day previous volume point of control, the highest volume price from the previous day buys and sellers. This is the level at which they perceive price to be at fair value for the trading session. I confirm the current market context. The dominant side for the market in the near term so one to three days, one to three weeks and then one to three months. There are times when neither side is dominant and then it's important to assess how the cash session develops as to where we're going to engage the market. I also highlight positive probability plays based on where the cash or regular trading session opens in relation to the prior day, either above below or within the private days range. There are key levels and probability plays that are based on price testing these levels over an extended data set. 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, and is whether or not the markets in balance in relation to the current volatility. Equally we can confirm a market that's out of balance and inform the bias for the day. It also helps to inform trade execution and trade management. So what I want to do now is take you through some examples of how this stuff actually works in real time. So this, the setup here for the day, as we came into the session we were trading below these, these are a couple of key indicators here you should be aware of. This blue line here is the current session volume weighted average price. So it's the perception of where fair value is based upon the current trading action. This straight line here that moves as you can see with price action, and that's called the mid and what the mid is basically tracking the 50% retracement level of the current session. So when we open up the session here on this on this trading, on this trading day, we're trading below the midpoint and we're trading below the VWAP. So we're already looking for for short setups and the short set up basically is going to be a break of the primary support here. So what we're going to assess is whether or not the internals are confirming weakness in the market. So we have a tick distribution versus the moving average that's below the zero line. So that means that the tick is giving us a negative sentiment reading. We then have the AD line below the zero level and declining so for again giving us further indication of weakness in the market. We have the breadth ratio weak weakening from the open below its zero line and declining. So we've now got three of our four internal suggesting weakness. And then last but not least we have the delta cumulative delta also below its midpoint and declining. So that gives us an entry to play for a continuation trade. So here we're trading through the 4386 area and our initial target then is 4375 so that's a 10 point trade there to the downside. We did actually get a signal there versus what we would call an exhaustion whereby we made a new low of the day and we made a new low in terms of tick so that was our signal to cover that position. So this is a 10 points 10 point trade to the downside. Take a look at another example. This is a trader bullish continuation trade to the upside. So what are we looking for here well as we open the session the cash session we're trading above the midpoint and above the VWAP have our primary resistance here coming around 4385. The positive tick distribution the average the moving average for the tick is above the zero line. We have breadth improving from below we're trading above the zero zero line. We do have. Sorry we have Brett the AD line is trading above the zero line so positive so we have two of the four so far. Brett is below the zero line but you can see the moving average is improving. And most importantly here then we have the delta breaking to the upside and trading above so we have three of the four indicators or three of the four internals supporting the idea of a breakout. And we know that we're trading above the VWAP and above the midpoint so that secures a trade to the upside there and through that 4385 gives us move up into our target zone at the 44 so giving us a 15 points of upside there and all three three of our four indicators are supporting the trade. Here we have a move again a breakout to the upside. What we want to pay attention to obviously is initially we pull back into the primary support zone and as we do test that support zone. What's important to note here is that we have a positive tick distribution. We have positive momentum. We have positive AD line positive breath and importantly again we have a positive delta so the couple of entries here you can either enter at the primary support, or you wait for price to exceed through the primary resistance, and then you can set long positions as a breakout play to the upside targeting the next resistance zone here coming in at the 4300 level. But you'll note that in this instance we don't get any exhaustion signals and we can actually by using the internals and their positive slant here, we actually could have trade up into the secondary, sorry the third resistance zone up to 4320. So depending upon where you entered, if you played the reversion trade or the breakout trade, there was certainly 20 to 30, 20, 30 points of upside to be taken from that setup. Another example here, market trading below the VWAP below the midpoint for the session, we open up the session internals are weak with trading below the zero line, weak delta. But there is a break through the primary support in around that 4330 and that takes us down into our targets and they're at 4316. So another 1415 points, again just using these internals to confirm the break the breakdown in the market. So this is incredibly important here with respect to taking these trades we're not just blindly taking breakouts of reversion trades, we're reading what's going on underneath the price, the headline price of the index to see what the underlying derivatives are actually telling us and the flow, the money flow within the market and where that's going. So if you look at another example here, this one is a breakout to the upside we're trading above the VWAP above the midpoint, we have positive internals, everything above the zero line and improving. We're trading the break out to the upside there through 4340 and that gives us a target up towards 4355 and another 15 points of upside. And again we have all our internals confirming this move to the upside and the breakouts. So if you look at one more example. This is a breakdown trade here. So this is a continuation trade to the downside. We open up below the midpoint below the VWAP, negative tick distribution, negative AD line, negative breath and negative delta, and that's all once we get those signals to the downside so we trade through that initial support around the 4335 down through the 4029 area in below 4320 and ultimately down into this 4310 zone. And notice as we get into that 4310 that we get some divergence here I referenced this in the beginning that the delta is extremely good for tracking divergence and letting us know when a trend may be coming to a conclusion. So I don't want to keep going through example after example, looking back at charts. It's not particularly useful but what I didn't want to be able to just show you is how you can use these internals to read that underlying in the market. So what I'm going to do now is I'm actually going to pull up the live chart heading in for today's session. And this is this is the setup as we are looking at today's cash session. And in the tick middle even strategy group every day before the market open normally between half one and two o'clock UK time I provide a five minutes, three to five minute video where I highlight the setups for the session ahead. And I also review the prior days price action versus the plan that I had in place for that day. So, so you can see how the price action plays out versus the plan. And that's posted into the, the tick mill futures and options strategy group here. You are all welcome to request a two week free trial to that. I'll post the link there, those that are interested into the chat, and you can request a two week free trial. Within this I also provide intraday trade analysis I provide quantitative setups. I also provide access to tier one investment bank research with respect to the equity indexes, and I also provide real time trade updates throughout the trading session, letting you know how I'm trading market versus that the plan I've provided. And where there are new opportunities as the day emerges because there are some days where the plan is the market doesn't reach the support and resistance levels as per the plan. But I see additional opportunities develop as as the session develops and as I'm able to read the internals in real time, and I provide updates for those during the opening hour of the cash session. So, you are able to follow along in real time there for those sets. So, looking at today anyway let's let's see what we're looking at. I had a short position from yesterday, I highlighted in the strategy group that I was getting a short at 43 10 we have the openings swing low there at 43. 45 11 and that got filled over the night and actually traded down into the primary support zone at 44 98. And I cover that position for plus 10 points and I updated that in real time in the strategy group. Now as we head into today's session. Let's take a look. We're trading below the daily volume weighted average price for the five period look back that comes in at 45 28 so that gives us a bearish to neutral perspective on daily session. In terms of the globe accession to the overnight trade was bearish but it's come more back into a neutral posture now we're actually trading just below yesterday's volume point of control. That's the highest volume traded price there, and we can see that comes in at 45 20. So for me today, as we head into the cash session to trades that I'm going to be looking at one is going to be a break of primary resistance, which comes in at 45 30. We're going up into that 45 30 and we have positive internals so positive tick distribution, positive a D line positive breath and positive delta, then I'll actually be looking for long positions today. And I'll be training through 45 30 looking initially for a test of 45 45 to the upsides, I'll be using on a continuation trade you can see I have the stop of using a 9.5 point stop for that continuation trade. So if we get filled that for at 45 30, I'll be using a stop of 45 20.5 and then I'm looking initially for a 15 point move to the upside. If we can get through there. Then we should see new all time highs and the next target on the upside for me will be 45 56. The other trade I'll be looking at today will be a bearish continuation trade so if we trade down retest these glow vex lows and break them down so I'll be looking for a move through 44 93 is the trigger point there for this trade to set up I'll need to see a negative tick distribution, negative a D line negative breath and negative delta. And if we get that then I'll be looking for a move down to test the next support zone at 44 80. So as I head into today in the pre market, those are the two types those are the two trades. And then I'm going to wait for the internals to confirm those setups as as the market goes live at 230 UK time. I'll also obviously like I say I'll be recording short video that we placed into the, it's a live stream into the chat into the strategy for traders to review that in advance of the market. So that really gives you an overview of one the mini contract and its structure, its advantages in terms of using these market internals to better guide your trading to allow you to play to play with these breakouts and reversion trades. And three then obviously we have the strategy group whereby on a daily basis I'm providing a pre market plan, and then I'm doing the first half of the cash session and giving intraday updates, giving actionable insight into what's going on in the market how I'm seeing the internals develop and where I see additional opportunities outside of the initial plan. So with that, it does anyone have any questions, you can either type into the chat box or there's a Q&A box there you can type a question in if you have one. I've put into the chat there, hopefully everyone can see at the link for you to take a two week free trial of the strategy group. If you join the strategy group and you decide to stay, the only requirement there is that you open a an e-mini, sorry an e-micro account with TickMill and you have that account as a live funded account and then you can have permanent access to the e-mini strategy group. So are there any questions? Equally if you don't have a question and you think I've done a fairly good job of explaining this stuff, if you type an N in the chat box so that I know we're all on the same page and we're good to go. I'll just give you 30 seconds there. Okay, I can't see any questions coming through so I'm going to wrap this session up. Like I say, really strongly suggest you take advantage of the two week free trial to the strategy group and I look forward to seeing you in there. Okay, I'm going to wrap this one up here. Thanks very much everyone for your time and I hope you found this session helpful.