Futures Index Trading Insights

Hey folks, welcome back to our continuing series of the major four asset classes and we're going to be talking about index trading and that's futures index trading. So it's important to remind you again, please take the time to read the disclaimers here. Everything that I'm discussing as it relates to index futures should be viewed in light of a paper trade only. All right, June 2017 ICT Mentorship, ICT Index Trading Concepts Lesson 1, Basics and Opening Range Concept. Okay, Index Trading Basics. We're going to be focusing primarily on the e-mini S&P for the introduction here, but we will brush briefly over the other two indices I like to follow. So the trade symbol for the e-mini S&P is ES, which stands for the e-mini S&P 500. The trading session we're going to be focusing primarily on is the New York session, specifically keying in on the 9.30 a.m. to 4 p.m. New York time. And the contract delivery months for the e-mini S&P are March, Code H, June, Code M, September, Code U, December. Code Z, and the format for the code is ES, the month code, and then the year. Or an example would be ESU17, or September 2017's contract of the e-mini S&P. And the amount per tick is $12.50. One quarter of one point equals one tick. Obviously, four ticks makes one point, or $50 per one point. And you're leveraging... is seen by $50 times the S&P 500 index. At the time of this day's close of this recording, as you see here on the right-hand side, it's about $122,000 leveraged. All right, SPOOS, or that's the slang name everyone referred to it back in the 80s or so. That's 1980s for you folks that are less than 30 years old. So SPOOS is a slang for S&P 500 trading. So SPOOS opening range concept. The highest volume for S&P trading is going to be seen between 9.30 a.m. and 10 a.m. New York time. So it's only a 30-minute span of time where that surge of the highest volume generally kicks off right at the opening. True day for SPOOS is going to be viewed as 9.30 a.m. New York time to 4 p.m. New York time. Now the market does trade 24 hours, but we're going to focus primarily on the New York session as it relates to day trading. Opening range is going to be seen with 9.30 a.m. New York time and ends at 10.30 a.m. New York time. So you have an opening range of one hour. We're going to be narrowing our focus to the opening range between 9.30 a.m. to 10.30 a.m., which tends to create the spooze market high or low of the day. It can be a run on stops or a fair value setup. As you can see here in the chart, this is shaded in. This is the opening range, one hour between 9.30 and 10.30. Now, every chart that we're showing here in barchart.com is shown in central time, which is going to be an hour earlier. So that's why you're seeing it highlighted as 8.30 to 9.30. But in reality, on the East Coast time, New York time in the U.S. It's actually referring to 9.30 to 10.30. True day beginning and true day ending. Okay, another example here. S&P 500, E-mini S&P, September contract 2017. This is a 15-minute candle stick chart. And we're going to delineate the opening range, 9.30 to 10.30 a.m. New York time. You can see the volume is the highest during that portion of the day. And we have our opening range here. And we can look at that opening range, see that return back inside of the previous up-close candle or bullish order block. And then later on, we can see price trading up to a reference point inside the opening range as well for a later. transaction for a short. One more example. Okay, we're looking at the e-mini S&P September contract. This is a five-minute chart on a different day. We're delineating the same thing. The 830 to 930 on bar chart is the same thing as 930 to 1030 New York time. So there's our opening range, highest volume, the opening range high and low. Inside the opening range, there is a return back to a... Bullish order block, the last down close candle, right before the 11 o'clock hour in your time, or would be seen as 10 o'clock on the bar chart.com chart, right there. Bullish order block and rally. Another example here, the September contract again for E-mini S&P 2017. Five minute chart, delineating the 9.30 to 10.30 opening range. Highest volume again during that portion of the day. Our high and low of the opening range. And notice it's an extended range. It's not a small range. It's extended here. When we have that, generally we'll look for the high or the low to be violated later in the day. If it's going to be a bullish day, we'll look for that upper end of the opening range to be violated or treated to. Reverse it as a sell-off day where if we had a move primarily moving up during the opening range. we would look for the opening range low to be retraded to if we're bearish. But the extension or long wide ranges in opening range for spools, that will give us a range to reach back into and look for stops on the opposite end. In this case, we have the run below it. So a turtle soup right here below the opening range later in the morning. So we have turtle soup and then a rally. And it reaches all the way back to the opening range high. to run the stops that were seen during the opening range. Now, I mentioned that there would be a discussion with the other two indices that I like to follow, and that is seen with the NQ or NASDAQ, and the opening range is the same for this. It's 9.30 to 10.30 New York time, and the volume is seen as being high that morning. And we have the high end and the low end of the opening range. And inside that opening range, we can look for reference points. And we have a bearish order block that we can return back into that's prior to the opening range. But we have a rejection block that will be just below it with the last up-close candle inside the opening range. And that could be used as well for a facilitation of a short. And again, that same reference point is used later on in the day for... a dramatic sell-off. So a short here and a short here. True Day for the NASDAQ e-mini futures is the same, beginning at 9.30 and closing at 4 p.m. New York time. The other industry I like to follow is the Dow mini future. And the opening range is the same for it. 9.30 in the morning New York time to 10.30 in the morning New York time. Largest volume during that morning. And again, it's the first 30 minutes. 9.30 to 10 o'clock, it has the largest volume of the day typically for the morning session. And that creates usually the higher low of the day. In this case, we've traded down from overnight, making the low of the day. And then we have our opening range high and low inside that. We can look for, in this case, a rejection block, the lowest down close candle, and it trades back into it here later in the morning, creating the rejection. And notice that that wick that went down, it failed to go lower than the low formed in the opening range. That volume bar that makes the low of the day inside the opening range is the high green volume bar. Then we have that second attempt to trade down below 21265, but it does it with a lower volume or the red volume bar. It's not enough volume. It's weak. We mentioned in the commodity section where futures and bonds and regular commodities, volume precedes price. So if we're going to be making a lower low or retesting an old low or old high, it should be seen with higher volume. If it's not... then that means volume is preceding price in the sense that it's not as strong as it otherwise would look trading back down there. At the time, that wick was a bold bearish candle, and otherwise it would have been very scary to see that. But when that candle closed, the volume for that particular candle didn't register the equivalent to what was seen in the low of the day earlier in the day, making the very low of the day during the opening range. So that rejection block seen here did not see a higher run in volume and it was eventually rejected and price traded higher on the day. So when we look at indices and trading the indices, we can look at them on an individual basis as shown here. And we're also going to start blending them together to get stronger signals, directional bias. And we're also going to look for. Specific is about time of day that are unique with trading indices. This introduction is to focus primarily on the opening range. It's split in the full spectrum is a 60-minute opening range from 9.30 in the morning to 10.30 in the morning New York time. But the first 30 minutes, we're also going to build on that idea as well when we start talking about trading the AM trend. When we have the opening range idea defined and we have bias, and we have institutional order flow also referred to on our timeframes, the opening range will give us otherwise support resistance levels that would be going over other traders'heads. They wouldn't even be aware of it. But there's a very specific relationship to the first hours range high and low and the first 30 minutes high and low, as you'll see in the next teaching, Trading the AM Trend. Until then, I wish you good luck and good trading.

All right, June 2017 ICT Mentorship, ICT Index Trading Concepts Lesson 1, Basics and Opening Range Concept. Okay, Index Trading Basics. We're going to be focusing primarily on the e-mini S&P for the introduction here, but we will brush briefly over the other two indices I like to follow. So the trade symbol for the e-mini S&P is ES, which stands for the e-mini S&P 500. The trading session we're going to be focusing primarily on is the New York session, specifically keying in on the 9.30 a.m.

to 4 p.m. New York time. And the contract delivery months for the e-mini S&P are March, Code H, June, Code M, September, Code U, December. Code Z, and the format for the code is ES, the month code, and then the year. Or an example would be ESU17, or September 2017's contract of the e-mini S&P.

And the amount per tick is $12.50. One quarter of one point equals one tick. Obviously, four ticks makes one point, or $50 per one point.

And you're leveraging... is seen by $50 times the S&P 500 index. At the time of this day's close of this recording, as you see here on the right-hand side, it's about $122,000 leveraged.

All right, SPOOS, or that's the slang name everyone referred to it back in the 80s or so. That's 1980s for you folks that are less than 30 years old. So SPOOS is a slang for S&P 500 trading. So SPOOS opening range concept.

The highest volume for S&P trading is going to be seen between 9.30 a.m. and 10 a.m. New York time.

So it's only a 30-minute span of time where that surge of the highest volume generally kicks off right at the opening. True day for SPOOS is going to be viewed as 9.30 a.m. New York time to 4 p.m.

New York time. Now the market does trade 24 hours, but we're going to focus primarily on the New York session as it relates to day trading. Opening range is going to be seen with 9.30 a.m.

New York time and ends at 10.30 a.m. New York time. So you have an opening range of one hour.

We're going to be narrowing our focus to the opening range between 9.30 a.m. to 10.30 a.m., which tends to create the spooze market high or low of the day. It can be a run on stops or a fair value setup.

As you can see here in the chart, this is shaded in. This is the opening range, one hour between 9.30 and 10.30. Now, every chart that we're showing here in barchart.com is shown in central time, which is going to be an hour earlier. So that's why you're seeing it highlighted as 8.30 to 9.30.

But in reality, on the East Coast time, New York time in the U.S. It's actually referring to 9.30 to 10.30. True day beginning and true day ending.

Okay, another example here. S&P 500, E-mini S&P, September contract 2017. This is a 15-minute candle stick chart. And we're going to delineate the opening range, 9.30 to 10.30 a.m. New York time. You can see the volume is the highest during that portion of the day.

And we have our opening range here. And we can look at that opening range, see that return back inside of the previous up-close candle or bullish order block. And then later on, we can see price trading up to a reference point inside the opening range as well for a later. transaction for a short. One more example.

Okay, we're looking at the e-mini S&P September contract. This is a five-minute chart on a different day. We're delineating the same thing.

The 830 to 930 on bar chart is the same thing as 930 to 1030 New York time. So there's our opening range, highest volume, the opening range high and low. Inside the opening range, there is a return back to a...

Bullish order block, the last down close candle, right before the 11 o'clock hour in your time, or would be seen as 10 o'clock on the bar chart.com chart, right there. Bullish order block and rally. Another example here, the September contract again for E-mini S&P 2017. Five minute chart, delineating the 9.30 to 10.30 opening range. Highest volume again during that portion of the day.

Our high and low of the opening range. And notice it's an extended range. It's not a small range. It's extended here. When we have that, generally we'll look for the high or the low to be violated later in the day.

If it's going to be a bullish day, we'll look for that upper end of the opening range to be violated or treated to. Reverse it as a sell-off day where if we had a move primarily moving up during the opening range. we would look for the opening range low to be retraded to if we're bearish.

But the extension or long wide ranges in opening range for spools, that will give us a range to reach back into and look for stops on the opposite end. In this case, we have the run below it. So a turtle soup right here below the opening range later in the morning. So we have turtle soup and then a rally.

And it reaches all the way back to the opening range high. to run the stops that were seen during the opening range. Now, I mentioned that there would be a discussion with the other two indices that I like to follow, and that is seen with the NQ or NASDAQ, and the opening range is the same for this.

It's 9.30 to 10.30 New York time, and the volume is seen as being high that morning. And we have the high end and the low end of the opening range. And inside that opening range, we can look for reference points.

And we have a bearish order block that we can return back into that's prior to the opening range. But we have a rejection block that will be just below it with the last up-close candle inside the opening range. And that could be used as well for a facilitation of a short. And again, that same reference point is used later on in the day for... a dramatic sell-off.

So a short here and a short here. True Day for the NASDAQ e-mini futures is the same, beginning at 9.30 and closing at 4 p.m. New York time.

The other industry I like to follow is the Dow mini future. And the opening range is the same for it. 9.30 in the morning New York time to 10.30 in the morning New York time.

Largest volume during that morning. And again, it's the first 30 minutes. 9.30 to 10 o'clock, it has the largest volume of the day typically for the morning session.

And that creates usually the higher low of the day. In this case, we've traded down from overnight, making the low of the day. And then we have our opening range high and low inside that.

We can look for, in this case, a rejection block, the lowest down close candle, and it trades back into it here later in the morning, creating the rejection. And notice that that wick that went down, it failed to go lower than the low formed in the opening range. That volume bar that makes the low of the day inside the opening range is the high green volume bar.

Then we have that second attempt to trade down below 21265, but it does it with a lower volume or the red volume bar. It's not enough volume. It's weak. We mentioned in the commodity section where futures and bonds and regular commodities, volume precedes price. So if we're going to be making a lower low or retesting an old low or old high, it should be seen with higher volume.

If it's not... then that means volume is preceding price in the sense that it's not as strong as it otherwise would look trading back down there. At the time, that wick was a bold bearish candle, and otherwise it would have been very scary to see that. But when that candle closed, the volume for that particular candle didn't register the equivalent to what was seen in the low of the day earlier in the day, making the very low of the day during the opening range.

So that rejection block seen here did not see a higher run in volume and it was eventually rejected and price traded higher on the day. So when we look at indices and trading the indices, we can look at them on an individual basis as shown here. And we're also going to start blending them together to get stronger signals, directional bias. And we're also going to look for.

Specific is about time of day that are unique with trading indices. This introduction is to focus primarily on the opening range. It's split in the full spectrum is a 60-minute opening range from 9.30 in the morning to 10.30 in the morning New York time.

But the first 30 minutes, we're also going to build on that idea as well when we start talking about trading the AM trend. When we have the opening range idea defined and we have bias, and we have institutional order flow also referred to on our timeframes, the opening range will give us otherwise support resistance levels that would be going over other traders'heads. They wouldn't even be aware of it. But there's a very specific relationship to the first hours range high and low and the first 30 minutes high and low, as you'll see in the next teaching, Trading the AM Trend.

Until then, I wish you good luck and good trading.

Transcript for:Futures Index Trading Insights

Transcript for:
Futures Index Trading Insights