 Hello, everybody. Good evening. This is Ali Ahmadie with Tick Mill on the webinar series regarding futures and how they can help you with your trading and your portfolios across the board. Once again, my name is Ali Ahmadie and we've been working with Tick Mill on the webinar series for futures over the last two months. And we are starting to tie now the ideas and definitions of what they are, how they work and putting them together. And that's what we're going to be working on this evening in a informal discussion. And once again, my background, I've been in the investment banking and investment management domain for the last 17, 18 years. And this is a much higher. Apologies. That is thanks to Lebanon. And. And. All right. Apologies for that. Technical issues. This is from Beirut Lebanon. We as a lot of you may know, we have issues with the caravan. You just saw a prime example of what it's like in the day in life of trying to get things done efficiently. Without further ado, what I was saying, we are going to be discussing this evening. What I have discussed in the previous five webinars tied into the sixth one, and trying to get a position open, whether it's you are going long or short the position. So how to get that open is nothing more than pressing the buy or the sell button on your screen on the platform, but tying it all together and summarizing where we are up until this point. As most of you know that have been following along. I like to keep everything as informal as possible without trying to read directly from the screen but as a recap. So that's everything that we've had discussed prior and to give us better insight on how the futures contracts in your portfolio or trading accounts will perform based on what we know what to look for what type of research you need to be doing and thus for this recap will we have discussed our futures contracts and just a quick reminder what is that that is an obligation obligatory agreement between a buyer and a seller at a future on a specific commodity or asset across either metals, energy, indices, interest rate asset classes at a future date at a specific price where the buyer and a seller agree upon, and that specific date in the future. It will be settled either depending on the type of industry that you're in if you need the actual real asset settlement or in our case it will be a cash settlement upon expiry date. So you can also obviously close and close your position beforehand, depending on what the market is doing, how futures are used in the markets. Once again speculation and or hedging, depending on what's what's your, what are you fancy any do you want to take a speculative speculative position. What's happening in the market, there's a lot of issues taking place that do provide that volatility that can give you if you get it right on the right swing, you can get it right in a nice way. Number three, the value of these futures contracts, understanding what asset that you can be involved. And then to what's the value what's the tick size and what's the value of each tick. Number four, excuse me with number four what type of contracts what type of futures contracts are traded in the market from metals to agriculture to FX energy interest rates indices equities etc etc. And then what obligations happen at expiration date, I just said, it's a cash settlement in this case. They do settle on the third Friday of each expiry month per contract. As a re intro futures are most often they're traded very rarely and very rarely do people investors or traders alike. Take the actual delivery of the asset of the physical asset and this mean and then in this case, it's a very simple cash settlement net net, either you have a net gain or you have a net loss. At the time you decide to either close your position or at the time of expiry. There are no trading restrictions. This is something here. It's very seldomly spoken about in this part of the world but it's just something to know from from your knowledge base is there is what we call a pattern day trading rule in the States. And if you have your trading account and it's below 25,000 US dollars. They will allow you to day trade your account, only three times three day trades within a rolling five day period so it's really not day trading if you're less than 25,000 US dollars in your account. If you're more than $25,000 in your account, then you can day trade. Accordingly you can get in and out of positions as much as you want. That's under for normal assets, whether it's stocks bonds etc etc. But with it comes when it comes to futures there is no PDT rule there is no pattern day trading rule period regardless on the size of the account that you have. When you're involved in either speculating or hedging or both for that matter. Okay, that's just food for thought. Moving on. Now, remember what we talked about last time. Last week, regarding contract value. I gave a couple of examples. What would happen if the scenario with this if it were flipped etc what would be the profit loss or gain, but the main point here is just to refresh your memory. What the difference between a point and a tick is, when you look at a future screen right now I'm looking at, for instance, what the market is doing right now. I'm seeing that the SMP right now is at 4451 points and 39 ticks. Okay. So, if I take the ticks out I'm at 4451 it doesn't say dollars there's no dollar sign there's no pound sterling sign there's no Euro sign there's no fiat currency sign a demo. That's just points. So any any and every number to the left of the decimal decimal point is considered one point. So in this example live right now, the SMP 500 is trading at 4451 points. Okay. Now, the tick, the value it always comes in the tick. And if there's a big move, then the points start to move and the ticks start to add up, but the tick is to the right side of the decimal. And in some cases, it could be a quarter of a point it could be point 25. In some cases, depending on what it is that you're trading, or it could be point one, depending on what contracts you're trading or it could be point. It could be point 005 like it is in silver. So it's very sensitive. The tick, but you need to understand what the tick is and movement for your ability to analyze what it is that you're going to be trading, and then understand how volatile it could be. So the SMP 500 for instance, the SMP 500. It's an index it's full of, you know, the top 500 largest US companies in the US market. Okay, so it's going to have some volatility some more than others, but it's going to move up and down, depending on what's taking place in the marketplace US economy, etc etc. There are other indices that are more volatile and like the NASDAQ for instance, even though the NASDAQ tick value is less than the E-mini SMP 500 tick value, we're talking $12 and 50 cents versus a $5 tick value. But the volatility of the NASDAQ is much higher than the volatility of the SMP 500. So you need, you can't get tricked into thinking, ah, okay, this is a smaller contract. It has less risk because it's $5 per tick. I'm going to speculate, for instance, on this NASDAQ, the E-mini NASDAQ versus the E-mini SMP 500 because it's $12 and 50 cents per tick versus $5 per tick. You don't, you have to understand this goes back to getting your research and understanding what you're doing. I'm just going to enlarge in this just a bit. So we can refresh everybody what we talked about here with the product, the contract size, the tick size and the tick value. Okay, so in crude oil, right here, if you look in the middle of the screen, one contract is 1000 barrels. A E-mini crude oil is 500 barrels. The tick size is .01. There's no dollar sign. There's not one cent. It's .01. So anytime that number, the second number to the right of the decimal moves up. One tick, up or down, its value is moving up or down $10. If it's an E-mini crude oil contract and it's moving up or down 2.5 ticks, .025 ticks, its value each time it moves 2.5 ticks, one tick actually is 2.5, .025 points is $12 and 50 cents in value. That's what we want to get across here. And like I said, you can find this chart again on Ticknell's website where you can look up the contract specifications and what contracts are available as well. Remember that each contract has different specifications in terms of size and value and in each tick, which ultimately provides different valuations for each point move. Okay, now how do we, let me, let's say this, if I put up something on the screen and I said, okay, tell me which one is the spot price and chart. Show me which one is an option chart and contract and show me which one is a futures contract security. The best way to immediately know what is a futures contract is by looking and seeing a forward slash, a forward slash in front of what it is that you're trading. If you're trading the E-mini S&P 500, E-mini S&P 500 symbol is ES. So you would see the forward slash, here you go, the forward slash right here. And then you would see the ES, which is the symbol of what we're trading is the E-mini S&P 500, then you would see a weird letter afterwards. G, H, Z in this case represents December. We discussed this last week. I give you guys a chart of what letters represent for each month. It's not A, B, C, D, it's not directly in order like that. December's letter is Z. So we're looking at a forward E-mini S&P 500 December 2022 contract just here, if I were to look at this highlighted portion, for instance, okay. That's the easiest way for us to know if we're looking or what we're looking at, if it's a futures contract, they're not first and foremost is that slash, that this symbol right here, forward slash in front of what it is that we're trading. Okay. Now, from previous webinars we've discussed, actually specifically the last one, what is the, we've discussed the initial margin. And the maintenance margin requirements from a carrier perspective. Okay. So let me clarify, there are, and I'm going to get further into the details of the three types, but you have initial margin, you have maintenance margin, and then you have day margin, which is on the next slide. But what we discussed last week, with the initial margin, you, if you are deciding to carry or keep your position overnight, you've opened up a futures contract, whether you're long or short is irrelevant. And you get to market close market closes at 430 Eastern Standard Time basically in New York City Standard Time in the United States, and you decide that you want to keep your contract open for whatever reason. Well, that's when you have to come up with the initial margin that ticker mill requires you to have, which is also listed on the website for you to see what is needed from an initial margin and maintenance margin perspective and what times is are they is the specific future traded, and what is considered after hours now after after hours extended hours trading after hours, all of these, they all mean and equate to the same thing. So you have to come up with the initial margin amount to carry your position overnight because why the broker tick mill in this case has to settle directly with each exchange that it has contracts open with. And this settlement is done at the end of the market trading day. Any contracts that are open, it's a liability to the broker, also the liability to the trader the investor that has it open so for the broker to protect itself and its business and its clients. It has to have what we call the initial margin requirement, so that it says okay Ali if you want to keep this position open we're going to need X amount. And then you can say you know what I don't have it. I don't want to keep it open go ahead and close it and they'll close it for you. If you want to keep it open, you transfer the money or send them the money that's needed for the initial margin, based on how many contracts you have and which contracts you're involved in because each one is different. So from that perspective, you end up carrying it overnight with the initial margin, and then you have what we talked about last week you don't want to get that phone call in the middle of night but if you do, it's called the maintenance margin and it starts to get close to the maintenance margin call they'll call you and they say Ali. Listen, we know you put up the initial margin. The markets moving against you. It's getting close to where you put up the initial margin. And then it starts to get close to the maintenance margin call they'll call you and they say Ali. Listen, we know you put up the initial margin. The markets moving against you. It's getting close to where you're going to have to make a maintenance margin call. If that's the case, then you have to make, make your account whole you have to get it back to the initial margin requirement, you can't just see the way that my son meet the law or humps me the law or whatever, just to get, you know, keep. No, they will go, they'll take you back to the initial margin requirement. So if the initial margin requirement is 12,000, and your maintenance is 10,000. Yeah, and you get that call. Yeah, and then you're going to have to add another 2000 to get it back up to 12,000 Muffin Z. Muffin not this one the initial margin requirement. Okay. So why is that what we need to understand before we get into the day margin is remembering that margin is borrowing from your broker. And an example in the e-mini S&P 500 futures contract remember the forward slash ES. If it was trading at 3800 right now it's trading at 4550 spot change let's just call it 4550 in real time as we speak now. In this means it's trading at 4550 points, not 4550 us dollars mission 4,450 usd. It's not fiat currency. It's in points. So each point in this particular futures contract the e-mini S&P 500 each point is equivalent to four ticks. So this is what one spot 00. Okay, all numbers to the left of the decimal. Okay, our points and all numbers to the right of the decimal are ticks. So for it to move one point, it's got to move for ticks because each tick is point two five. So when it moves for ticks point two five point five zero point seven five, then it gets to 1.0. So each tick value is equivalent to $12 and 50 cents in fiat US dollar currency, which means each point value is equivalent to $50. So now it's 4550. If it goes to 4551 at any point in moment, then that's a $50 up profit or loss pending if I sold or bought the contract if I bought the contract and went long, and it's trading it now it's 454451. So now I, if I had just bought that contract now I have a $50 profit in it. If I had sold the contract I have a $50 loss at the moment in it. Okay. Without margin. This would cost do the math here under this example 3800 points. Okay, would cost you times $50 per point 3800. All right, and this particular case 4451. I'll give you the quick math 4451 times 50. It would cost you $220,000 $550, 222,550 US dollars to take a long position without margin. That's quite expensive. So this is where the margin comes in, and the leverage, and this is going to lead us now into the next part is the day margin. So what the notional contract values referring to is, in this case 222550,000 $50 is the notional value in this example on the screen the notional value of the futures contract would be 190,000. But that's not what amount of capital that you the investor trader and come up with. Initially, what you come up with initially is what we call the day margin, what's it going to cost you to open up a particular position. And this also varies in price, depending whether you're getting into gold, silver, other metals, or if you're going to stay in metals completely. They each have different price points. Same thing for energy, whether it's oil, gas, lighting, gas, crude oil, etc. Same thing for indices, which type of indices, are you going to get involved in? Are you going to get involved in the DAX in the US, in Europe, the FTSE in Europe, the CAAC in Europe? Are you going to get into the S&P 500 in the US, etc., etc. Those also have different day margin amounts to get involved into the position. And then you have your agriculture, where you're going to get into corn, wheat, etc., etc., etc. So you get my point where this will come directly from tick mill and other brokers alike. Okay, the day margin for you to open up this particular position is going to cost you, for the average on the E-mini S&P 500, the average is between five and maybe $600 to open up a one E-mini S&P 500 contract. You can check with tick mill and see what the day margin or what it would cost initially to take a position. And then that you've taken the position and the broker is relying on you, the trader or the investor, to monitor your position throughout the day. This is when you can set your profit and your loss brackets so that if you're not able to sit in front of the screen all day, you're not glued, you can set where your profit loss will be, and you can just move along. So if your profit levels are not hit or the loss levels are not hit in your band that you've put such for yourself and it gets to the end of the trading day, which is 430 Eastern Standard Time in the United States, then you've got a decision to make. Depending on sure what are with your portfolio, how have you been doing throughout the day or why did you get the futures contract in the first place? How is your position doing? Is it worth carrying it? Should I carry it? If you're going to carry it, then okay, you're good into after hours trading then you're going to have to come up with the initial margin requirement, which becomes considerably more expensive. Because why? It gets back to the broker, which is TickMill, they have to settle these contracts with exchanges. We're dealing with real life securities traded in the exchange. This is not something created and you're trading just on TickMill's platform. You're dealing with real futures in the real live market and accessible through the leverage and the margin requirements apply. So that's part of why I'm here is to make sure that everyone understands how important and how heavy and how sophisticated this particular instrument in the investment world is. Because you can make some serious capital in a very short amount of time and or you can lose a serious amount of capital in a very short amount of time. So this is why it goes back to understanding, remember I've said it before, why are you investing it and what are you investing in? You know, you need to be able to understand what it is that you're doing and then understand the tick value. Are you using it to protect your portfolio or are you using to speculate, et cetera, et cetera. Okay, so your day margin ends at 430. Full stop. You want to keep the position open, you like it, you're happy with what you're seeing in the market, then you got to come up with the initial margin, which is right here in the middle, which carries you through the night. If things turn sour on your position over the course of the evening or the trading hours, then and it gets close and it touches your maintenance margin level, then you will receive a phone call. And it's going to say, Ali, what do you want to do? Do you want to keep your position open? Or do you want to close it? If you close it, you take the loss. If you want to keep it open, you've got to cough up the money back to the initial margin requirement. I'm just going to give you a quick sip of water one second. So now we know what you got day margin, initial margin, maintenance margin. And again, what are the commission and the trading fees? You need to know what to look for, specifically when you get into this space, and the best way to do it instead of trying to break it down. What's the commission fee? What's the fee at the exchange? Why is it this? Why is it that? I look directly at the all-in cost. The all-in cost is the amount that is going to be charged to you, the trader and the investor, each time you take a position. So if you buy and sell back to back, you buy and you sell, that's two contracts, that's two all-in cost charges. And the all-in cost charge, you can see, is listed here in one of the columns. So for instance, for me to get involved, and I mentioned two indices this evening, as my examples this evening were the NASDAQ one and the second, it was the S&P 500. Both of them here, if you look at the E-mini NASDAQ and the E-mini S&P 500. What we're going to look at here is the all-in cost is $2.60 for both of them. Okay, but look at the initial margin. The initial margin, this is once the market has closed. For me to keep with the contract open, look at how much I need to come up with for to keep the NASDAQ contract open. It's $18,700 versus $13,200 on the S&P 500. And look at the maintenance margin gap, $17,000 to $12,000. Why is that? So much more for the NASDAQ than it is the S&P. Very simple. It gets back to the example that I gave earlier, even though the tick value for the NASDAQ is $5 versus the tick value on the S&P 500 is $12 and a half. Okay, I can take on the NASDAQ because it's $5, but it's much more volatile, which means it moves up and down faster and more volatile than the S&P does 500 in a much more violent or volatile manner. So that's why you have to come up with more initial margin for the NASDAQ versus the S&P 500. Okay, there's some more examples. Just for you guys, and this is all on Tick Mill's website as well. But you can see here the all-in cost on the micro, micro E-mini NASDAQ is $1.17 versus $2.60. And the initial margin to carry the position overnight is $1,870 versus the micro E-mini S&P of $13.20. Depending on your portfolio size, depending on your budget and depending on how much you're willing to put on the line in the futures markets on your contracts will depend on which con if you are going to go to the micro, or you're going to go to the mini, are you going to go to the big size contract, a full size contract. Okay, there's micro gold. The initial margin is $792. If gold goes down over the course of the night and hit $720, then they're going to give you the call. You've got to dump in and fill it back up to $792. Let's see what example I have pointed out here for you. This is the treasury. The ten-year treasury. We can discuss that in the future. All right, commissions and fees. I just told you that they are, you need to look at the all-in. So I implore you to, if you're already a technical client and customer, that's excellent. That's great. Understand what fees are being charged so that you have a clear understanding. It's always better to be black and white in the financial market than in the gray. And if you're in the gray and you just don't feel comfortable for whatever reason, it's not a good feeling and you just don't want to get in that situation. Know where you stand at all times and what the fees are. So there's no question about it down the road. Okay. The all-in fee is the cost to buy or sell the contract each time you open and close a position. If you open and close a position during the market trading hours, you'll be charged the all-in fee twice. Meaning if I opened it in the morning and I closed it and I didn't want to carry it overnight and I didn't want to pay the initial margin, then that's what I mean by you'll be charged twice. The all-in fee to open the position and then to close it regardless whether I'm long or short. The key takeaways from this evening's webinar. One, again, know what type of futures trading you'll be doing. Are you going to be doing day trading? Position or position trading? Position trading usually implies that you will need more capital because if you are position trading means you're hedging for the most part. A position that you like or want to keep for whatever reason and you've taken out a futures contract to help protect or hedge your position. And that may require you, not necessarily, but it may require you to keep that position or that hedge open overnight. And that's where the initial margin requirements will come in. If you close out the position each day and you're comfortable with the risk and the position that you have, then you can day trade. You just open it up in the morning, you close it at the market close, end of story, and whatever net profit or loss during the movement, the price movement of the asset will either give you a little bit of money or loss on the day. If you carry it, then you get into the initial margin and it will continue and then it will open up the next day and then you continue to move along as you did the previous day. Know the tick value of each futures contract you'll be engaging in. So look at your portfolio. What is it that you find yourself always trading or investing in more than others. So you're naturally gravitating towards a specific asset for whatever reason. This is when I say, okay, do your research, why? What is it that's making you gravitate towards this particular asset? Is it the volatility? Is it the speculation side of it that you can make a quick hit and move on? What is it? But when you get into futures to help enhance your portfolio productivity and profitability, you have to be more careful. This is it gets back to know why and what you're doing because each one has different values and sizes that you have to take into account. Know your day, initial and maintenance margin requirements before you even take a position because you may end up wanting or needing to keep a position open after hours. You may not like what's happened. There's a lot I've seen it many, many, many, many times. You'll see a flurry in the last 30 minutes of the market. Just a flurry. It will go either up or down just a wild swing. It can be down all day and then out of nowhere the last 30 minutes of the market, a tailwind will come in and it will turn negative into positive territory or vice versa. Okay, so your position in the futures, if you have a position in an industry asset or class or anything else, they're all going to get affected by a tailwind of, let's say a magnitude move of serious negative territory back into positive in the last 5, 10, 20 minutes of the market close or vice versa. It's been positive all day and then you have a massive negative downturn to take it negative. So if you have your futures contract open, then it gets to the end of the day and you have this flurry of activity, then you need to make a decision. Do you want to close out your day contract and take the loss because of the last call it last minute flurry of activity, or due to the last minute flurry of activity, you still need that position because based on what you're doing in your portfolio. It may require you to take on the initial margin requirements so you carry that position overnight. And then know the cost of doing business per contract what's the all then cost, you know how much is it going to cost you each time you click that buy or sell button on the on the platform futures platform. So the day that I will leave everybody in on this evening with is in investing. What is comfortable is rarely profitable. This was said and quoted by Robert are no an American entrepreneur investor and the founder of research affiliates. It's always saying, you know, if you're not challenging yourself in your career. If you're not working hard towards a promotion or you're not working towards striving to become better at whatever craft you're doing. They say, basically you're dying, or you're stagnant, there's no wind behind your cell. And that's the same thing I mean in investing if you're comfortable, if you're comfortable, and you're like, Well, you know I've taken this position and I've just kind of sat on it and I don't know what, you know, it should be fine in five years 10 years, it's going to be good. I come across these type of conversations constantly, and the comfortable investor. They're in the market because they want to be in the market, but they don't really know what they're doing or they don't have enough capital to actually truly capitalize on what the market has to offer in these instances. So, when I say rarely profitable, I'm talking about if you have challenge yourself become more dynamic, and your understanding of what I've been discussing now for the last six webinars, and your ability to use these futures contracts to your benefit and understand if you know what the risks are before you take it on you're not going to be so intimidated by one to you're going to be pushing your limits, and your comfort zone, beyond where it has been. So if you agree, by doing so you will also allow your ability to give yourself the chance to make the profit, or the gain on the position that you're looking for or that you've always been searching for, knowing that if you always have a stop to protect the bleeding and or the losses from getting out of hand. So, I found this particular comment. Quite timely within the webinar series. And, you know, once again, understand what you're doing, challenge yourself, push yourself a little bit, not risk wise but push yourself to understand no better, no more, and get involved in that you haven't been but you've educated yourself on you've used me as a resource tick mill as a resource, and every other outlet available out there regarding the futures market because it's a big market, it's a legitimate market it's got many many exchanges this is not a new security these have been around for a long time. If you know how to use them, you can you can do very well. Before I leave it here. For those of you that are listening, are there any questions I'm for Q amp a right now. Now's the time to send me a question, and I can answer it if I have the right, if I have the answer for you. Going once. Going twice. Everybody. Once again, happy Easter for this last weekend. Happy Easter for this upcoming weekend and Ramadan cream to everyone that's celebrating Ramadan. After the rest of this week, we will be back together in May, and I will be a little more challenging. Now that we've got past the introductory series of what futures are. We're going into, let's say more detailed, not not investment advice, but strategies that have been used, and how you can use futures themselves. Thank you and good night. Everyone have a great evening and have a great trading week. Stay sharp and stay positive, and we'll see you soon. Peace.