 Welcome traders to today's E-mini S&P introductory session with me, Patrick Munley, just going to give it another 30 seconds here before we get going with today's content. Okay, so welcome to today's introduction to the E-mini and Micro S&P contracts. In today's session, I'll be introducing you to the instruments, structure and advantages along with highlighting some unique market mechanics that enhance the trading information for the product. I will also introduce you to my core strategy for trading the E-minis and demonstrate how you can consistently use my pre-market analysis to read consistent returns. But before we get going, I just want to do a quick audio check if you can hear me and you can see the welcome screen if you could type her why in the chat box and I'll know that we are good to go. Okay, so for those of you who are here for the first time, just a brief introduction to 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 went with some colleagues and went on to successfully co-found and exit a consulting startup, which was focused on C-suite executive search for technology startups. Having a front row seat in the dot-com bubble, witnessing people make and lose a fortune in the markets quite literally overnight, I decided to explore my curiosity for markets with some capital, but capital to play with and some time on my hands, I started day trading the S&P 500, or more appropriately day gambling. After some early beginners luck, I racked up some pretty solid gains. However, as is often the case, they begin as luck runouts. 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 experience is an understatement. I really had to stand back and figure out if it was feasible for me to make a living from the markets. 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 18 months to two years, I upped not just my technical gain, developing strategies that crucially suited my personality, researching and developing extensively back and forward testing these strategies, all of which were underpinned by a rigorous risk management approach. But most importantly, during the period of mentorship, I significantly developed my mental gain. 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 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. Once you become process orientated and have a professional trading mindset, and you understand the true nature of trading in it 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 and dying by the outcome of individual trades. 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, because I know if I 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 accounts vehicle, delivering annual positive returns. I'm currently responsible for managing a multi million dollar portfolio. In 2010, I've also mentioned hundreds of private traders of all experience levels from complete novices to former CME floor traders in developing the technical and mental skills to read consistent returns from the markets. In addition to my fund management and mentoring, I'm also resident market experts, exclusively providing market and trade analysis to Ticknell. My other passion project is leading trader education for a premier trading education brand called FXcareerswap.com, offering development and funding to retail trading talent. At FXcareerswap, we don't just develop retail traders market and trading strategy knowledge, we work on mindset development through our structured program that culminates in managing the firm's capital at zero personal financial risk on a profit share basis. Okay, so that gives you a flavor of where I'm coming from. Let's jump into today's material. So the E-mini or E-micro is a futures contract that tracks the S&P 500 stock market index. It's traded on the Chicago Mercantile Exchange, CME, via their global 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, commodities and forex currencies. However, when traders refer to the E-mini or the E-minis or the spools, they are generally referring to the most important one, the futures contract that tracks the S&P 500 stock market index. The E-mini futures were originally launched in September 97 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 guy to trade. So the CME created the E-mini contract, which was one fifth the size of the large S&P futures contract and required more importantly only one fifth of the margin to trade. The CME became a huge success not only with non-professional traders, but with professional traders too. The micro E-mini futures contract is the same as the regular S&P 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 US to the $50 for the E-minis and the margin to trade the micro E-mini contract is also one tenth the size. So what are the benefits? Well, it's equally easy to go long and short. You either buy or sell the current E-mini contract and there is no uptick rule. It's 24-hour trading, which makes the E-mini attractive to traders around the world. Overnight moves in related equity markets like the DAX or the FTSE can be played with one trading vehicle. The electronic trading platform means that your orders are entered instantaneously and when executed you're notified instantaneously. Changing and cancelling orders is trivial. There's no phone call to your broker required and you know exactly where you stand at every second you're in the trade. It's a level playing field. The Globex electronic trading platform means that large and small traders have equal access to market and trades are executed in the order they are received, unlike traded futures or equities. There are no backroom games that can be played. There's a tight bid ask spread because there's so much volume 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 absolute minimum movement. The large depth of market means that the E-mini is so liquid there is plenty of volume either side of the last trader 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, a sleepy market is impossible to day trade, but the E-mini volatility is also manageable, except around major news announcements or geopolitical situations, FOMC, presidential elections, etc. Most importantly, though, there's very low brokerage rates. Broker commissions for trading E-minis continue to fall. This excludes exchange clearing and regulatory fees, and when you factor those in, your round trip in and out brokerage commission is very attractive. Low margin requirements, trade E-micro means that to open a trading position with tick mill, you only require US$1,000 to open a micro account. Remember, these are the absolute minimums you should be trading with, much more capital behind your positions. A lower tax rate than trading forex or stocks, income from trading E-mini futures in the UK is taxed as a capital gain, as long as it isn't the primary source of income. No trade-by-trade accounting. Another advantage of the tax treatment of E-mini futures is the tax reporting requirements are minimal. In particular, no trade-by-trade accounting is required, only the net profit for the full year is needed. So now we understand the instruments and the trading venue. I want to demonstrate some of the unique aspects of this particular instrument. 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 more closely now at what market internals are and how we can incorporate them into a consistent trading strategy. Firstly, volume as a unique features of the trading, the exchange trading derivative, as opposed to CFDs or forex. Volume data for forex is notoriously incomplete. 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 tool that I use is the NYSE tick index. This gives us the relationships of stocks up ticking versus down ticking. The tick is an extremely useful tool for intraday trading. 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 what about the other 1,000 stocks you say? Well, that could be that their price has unchanged from the last quoted price. When using the tick, we are looking for extremes to enter or exit a trade. Tick readings of plus 1,000 and minus 1,000 are considered very strong as we typically trade between 1,000 most of the time on the NYSE. Tick readings within the 400 range indicate chop and we ignore them. On a range day, we can look to fade ticket streams. I apply a moving average to make it easier to see the tick distribution on any given day. For example, when we get a high tick of day at a high in price at the exact same time, this often indicates a high of the day. When a high tick prints without a simultaneous high in price, we can continue to make new highs until a new high tick is reached. The reverse is true for the low tick of day followed by new lows. Next, the advanced decline line or AD line for short is the second most important of the internals. This indicator tells us the next sum of advancing stocks minus declining stocks. There are roughly 3000 stocks listed on the New York Stock Exchange and 3000 on the NASDAQ and AD line reading of 1500 plus is very bullish and a reading of over 2000 is extremely bullish. On the flip side, readings of negative 1500 and below are very bearish and readings below 2000 are extremely bearish. 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 these trend days. So for example, a day with 2500 advancing stocks and only 500 declining stocks would yield a net plus 2000, which is an extremely bullish reading. We can take a large catalyst to shift the market direction with a reading this bullish. If on the open, you can continue to see the AD line moving plus 500 plus 700 plus 900. This is a sign of market strength. If however the market is moving higher but the AD line is moving lower, a divergence has occurred and could be assigned for a market reversal. Last but no means least is the breath volume ratio, composed of volume flowing into up stocks versus volume flowing into down stocks. The breath ratios expressed 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 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 two to one positive. Twice as much volume is flowing into up stocks as down stocks. If at 10.30am the market is sold off, but we now have a breath ratio of three to one positive. This is a signal that the markets are actually becoming stronger and it's time to buy callbacks, so looking for long setups. So now we understand market internals and the unique insight they provide. I want to briefly walk you through my core strategy. By understanding the market context in which we are trading, I'm looking to execute two types of trades. Firstly, mean reversion trades in raging environments and momentum trades in trending environments underpinned by the market internals. Every day I plot pivotal support and resistance action areas that are derived from multi timeframe market auction theory and volume profile analysis. This allows me to avoid engaging the market in areas of having rotation or chop. The support and resistance action areas have three purposes. They can act as entry levels in mean reversion setups, which is the majority of the time. In directional or trend environments, the action areas act to confirm momentum entries, and lastly they can be used as 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 current day. 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 the day. I confirm the current market context. This confirms the dominant side of the market in the near term of the one to three day time horizon, a medium term one to three weeks time horizon and long term one to three months. There are times when neither side is dominant and it's important to assess how the cash session develops. I also highlight quantitative probability plays based on where the cash session or the cash or the regular trading hours session opens in relation to the prior days, either above, below or in range based on key levels. And the probability of price testing these levels over an extended data set. This can prove very 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 current volatility. Equally we can confirm a market out of balance, and this can inform the bias for the trading day ahead. It also helps to inform trade execution and management. So now you understand have a basic understanding of how I'm using this approach what I'm going to do is walk you through some examples from from recent trade activity. So, here was the setup for the day we came into the day with a bearish bias, we, we were looking for see the globe external so the overnight trade from when the previous cash session closed to the cut to the open of the current cash session. We had a bearish bias, we had a neutral near term bias which meant that we could either play it from the long or the short side. In this instance, what I was looking for was a pullback into this primary resistance zone as highlighted by this red, red rectangle. And when we got into this area, what I wanted to do was pay attention to the internals to see if we were seeing a pullback in a dominant move to the downside. So going up into this area, we can see that there was divergence the internals were trending lower tick distribution was negative. And so that was a signal to enter short positions, and targeting the, the globe x lows or the primary support area. And in that instance, you had a set up that delivered 18.5 points from the, from the resistance zone. I highlighted in in my daily pre market analysis so this isn't, you don't get these levels after the fact I provide this ahead of the market open normally, but I post my pre market analysis between two and two 15 UK time and then the market opens at two 30. So this instance here came into the day bearish the overnight price action is bearish we were neutral to bearish in the near term. What I said in my pre market analysis on that day was that we wanted to watch how we traded out of the open. If we didn't, if we didn't get a test of the globe x lows, and we saw responsive buying as highlighted by the volume here, and we were getting positive internal straight out of the open. The trade for me was to play a what I call a continuation or momentum trade through the primary resistance zone. And in that instance, we've got to move that achieved the 10 point target because once we enter that trade we're immediately looking to target the next resistance here we came into the day with a bearish gobex turn and a bearish bearish near term bias. And so what we were looking for was to play a break of the primary support. This is the primary support area highlighted here. So we came out of the gate, we had a breath and a D line both below zero status telling us that the internals were negative and deteriorating, and we had a negative distribution in terms of the tip. So we simply played the break of the primary support, we take it down to the secondary support, we didn't get any internal exhaustion signals and when I refer to exhaustion signal. We had a tick extreme on a new low of day. So we held the position to pay for a test of the tertiary support for the day and exit positions there, risking 7.5 points to gain 28 points. So in this instance we had another one of those setups whereby we were looking for a pullback into primary resistance, we came into the day bearish and neutral on the on the daily timeframe so that would allow us if we've got the negative internals to fade the resistance zone, and in this instance we traded up into the resistance zone and once again, we have the divergence here we have breath below the zero line and deteriorating, we have the ad line well below the zero line and deteriorating, and we had a negative tick distribution. And we will get the rise out of the gates here was on very low volume which suggests that there was little conviction behind the move to the upside. So that was a signal to short the resistance zone, and this trade provided 16 points in profit as we test the primary support another example here we came into the day bearish on the overnight session bearish on the one three day objective, and we were looking for a breakdown. Once we test into the primary resistance, again we test into primary resistance, we've got those negative internals, both the breath and ad line up below zero, and the tick distribution is below its zero line. So we're suggesting weakness. And so when we trade up into the primary resistance so we set short positions, and we traded through to the second target on that day, anywhere between 30 or 40 points of profit depending upon where you entered at the resistance So those are a couple of, or those are a bunch of examples there of recent trades. I'll actually pull up now the. This is the chart template. When you, when you join the strategy group you're able to access this chart template in real time through the trading view. This is, this is going back to just last week. We have a couple of examples here. These, this one we were looking for a break of the primary support that we got and took us down for 14 and a half points profit. This day, we were looking for a break of support which we got, but what we noticed once we got into this trade was as we were testing support, we were actually seeing a positive tick distribution develop, and we had significant momentum divergence into these numbers. And so, in that instance, the trade was in profit, and I simply suggest we move our stops to entry, and we were, we were taken out there risk free came into this day. In the pre market analysis I was looking for long through the primary resistance at the open, which is what we got, and then we had a measured move objective 41 42 as the target on the trade. So we took that up into the target. And we got an exhaustion signal there with a high tick of day high in price and that was the signal to cover, we took 19 points in profit from that trade. No trades on the 21st of May. See what we've got here. We came into the day bullish high probability trade was long through primary resistance targeting the equality objective at 4203. And again that provided 17 points of profit there on the break through the primary resistance with those positive internals confirming which is yesterday, we came into the day, we actually came into the day bullish yesterday looking for looking for a break a primary resistance to set up a move basically to retest all time highs. We didn't get that trade and we, we started to roll over and as we did, I highlighted that the trade was going to be the short trade through the primary support looking for a test of the secondary support zone. And we got to move down into that area and booked a points profit on that trade. Just in a bit shortly before we wrap this up I'll, I'll review the setup for today and talk you through what I'm looking for in terms of today's price action. I'll just also introduce you to this is the, the tick mill futures and options the strategy group. This is where I post the trading analysis. I'll also update trades as price action develops throughout the session. I'm generally looking, I'm looking to take one, one or two trades a day I'm not, I'm not actively scalping the markets that speak I do have an automated algorithm that is a bit more aggressive in terms of being in and out of the market passive income stream really for me but what I'm sharing with you here in terms of the pre market analysis is what underpins that algorithm, which I've been using for the past 12 years now so there's, you get the pre market analysis where I define the data that's going into the day I'm very specific about what it is I'm looking to do in the market and like I say I provide updates. I also provide institutional information as well through institutional notes to give broader context to what's going on in the markets, and, and I like I say I don't trading positions as and when. So basically is a two week free trial to everyone who's here today. I'm what I'm going to do is I'm going to put the group information into the chat. You can follow that up on Facebook and you can ask us for membership and we'll provide you with a two week free trial. So you can get a flavor of what it is. We offer in terms of the pre market analysis and how effective it is as over that two weeks which should be sufficient for you to see the efficacy of what it is we provide so going into today let's let's take a look at the market. As we set up so I'm we're bullish on all time frames at the moment so the trade for me will be a break higher here through 42 18 today is what I'm looking for. If we can get through 42 18, and we've got strong market internal so we want to see a very positive time, very positive breath, positive tick distribution. We look to play the break of 42 18 25 to target all time highs at 42 38. And so with this trade what I'll be watching for one if I get the entry signal, I'll be watching as we develop. I don't see any signs of exhaustion as the trade is underway. If we do. And when I refer to exhaustion that I mean a high tick of day, the new high in price, what I will look to do at that instance will be to move my stops to entry. And I'll just see if I can trail up to get the test of the prior all time highs at 42 38 so that's the primary trade for me today that's the one that I'll be looking for as we head into the cash session. Obviously what's important is I need those internals to confirm the underlying strength of the market to set that position up. Alternatively, if we come into the day and we see responsive selling from the open, then what I look for will be a move to test support down to 41 79 41 and 82. If we get exhaustion signals there so a new low in price on the day, a new low tick a tick extreme extreme and a volume spike, I would look to set long positions to target the primary resistance on the upside. Equally if we don't find responsive buyers there as we head into today's session, then what I would look for is if we trade down into this support area, and we've got very weak internal so the ad line below zero the breath below zero, and a negative position, I'd actually look to set short positions through 41 79, initially targeting 41 68 to 41 64. Again watching for exhaustion signals there to take profit if we don't get exhausted, if we don't get an exhaustion signal there, and I'd look to hold the position to trade down to 41 47 41 41 on the on the downside so those are the basically two trades for me today it's either going to be playing the momentum break to the top side here or momentum break to the downside. So that that concludes my overview of the the e-mini micro contract and the tick meal futures and option strategy group which I hope you'll take advantage of the two week free trial there to to follow along with my pre market analysis and my intraday updates demonstrating how you can consistently read positive returns using the action areas as I as I outlined them before the market opens, and then just understanding and becoming familiar with how these internals can give you the information as to whether or not we're in a market that has underlying strength or has underlying weakness. Are there any questions and I've got a few minutes here for any questions if you want to type them into the chat box you can do so, or there's a Q&A box there you can type it in there, or if you've got a microphone and I can unmute your mic and you can ask, you can ask me directly. If you don't have a question typing an N in the chat box is just as useful. So I know that I've done a reasonably competent job of explaining all of this. It's a commission, it's a commission. For Islamic account, I don't know. I'll, can you actually I'll put a, if you want to follow up with customer client services, I'll just, their email address is there, it's client services at tickmail.co.uk, put that in the see. Can you see the Facebook link that I've put above them? It's in the chat. Let me just put that back in with me. There we go. There's the link again. So if you just hit that link and you just asked to join the group and and you'll be approved and you get the two week free trial. And then for clients, let me just type this in. And there's the client services address to inquire about the Islamic accounts. Okay, if there aren't any other questions, I'll wrap this up here. Thanks for your time. I hope you found this useful and I hope to see you in the strategy group. Thanks very much, everyone.