Beginners Course 1: Futures Explained — Transcript
Full transcript
- 0:00Hey, what's going on guys? It's Justin
- 0:02here, and welcome to the beginner
- 0:03course. We're going to go over
- 0:04absolutely everything you guys will need
- 0:07to understand Nexus Algo and to be able
- 0:09to use it. So, first thing we're going
- 0:11to go over is futures. So, if you guys
- 0:13have no idea about futures or just a
- 0:15little bit of knowledge, this video will
- 0:17basically explain absolutely everything
- 0:19about it.
- 0:20So, first what we're going to do
- 0:23is what even is a future? So, if you
- 0:26guys are familiar with stocks, right?
- 0:27So, if a stock is $100, right? If you
- 0:30buy it for $100, you buy one stock. If
- 0:33it moves up $1, okay, we're going to
- 0:35call it points here. If it moves up one
- 0:37point, you make $1, okay? But, with
- 0:41futures, we don't actually buy what it
- 0:43is, okay? Nasdaq, which is the one that
- 0:45we trade the most, is 28,000 points,
- 0:48right? You don't have to buy 28,000 of
- 0:50it, right? For when it goes up one point
- 0:53to make a dollar, okay? You do not have
- 0:55to do that. So, futures uses something
- 0:57called contracts, okay?
- 1:00What a contract is is you put in a
- 1:02certain amount of contracts, okay? And
- 1:05that is not
- 1:06has nothing to do with money, okay? You
- 1:08put in contracts.
- 1:10For example, let's say you put in one
- 1:11contract. If it goes up 10 points,
- 1:14you're going to make money. If it goes
- 1:16down 10 points, you're going to lose
- 1:19money if you are long, okay? So, for
- 1:22contracts, you can be long or short.
- 1:25Long meaning you're buying Nasdaq, you
- 1:27want it to go up. Short meaning you're
- 1:29shorting it, you want it to go down,
- 1:31okay?
- 1:32Um
- 1:33so, that's how that works. And so again,
- 1:36you are not putting in money
- 1:40for futures, okay?
- 1:42You're putting in a certain amount of
- 1:43contracts, and based on where you exit
- 1:45is how much money you will gain or lose.
- 1:48So, we'll talk about that a little bit
- 1:50more. But, some examples of some futures
- 1:52here are we have gold, right? We have
- 1:56Nasdaq, which is the one we trade. We
- 1:57have ES, which is the one that we will
- 1:59trade a little bit as well. There's ones
- 2:01like platinum, oil, um silver.
- 2:06Um there's there's a lot, okay? But the
- 2:07two two main ones are Nasdaq and ES that
- 2:10we'll be using. So, um yes, again, we
- 2:13use contracts. There is no
- 2:15putting in a certain amount of money,
- 2:17okay? And futures use something called
- 2:19prop firms, which the next video will be
- 2:21all about that. So, if you guys don't
- 2:23know what prop firms are, I would
- 2:26watch that right after this video.
- 2:29All right. Now, you you might be asking,
- 2:31"Why do we use futures?" Well, the first
- 2:34uh simple answer to that is so we can
- 2:36use prop firms. Because prop firms are
- 2:38very high ROI. You're spending $80 to be
- 2:42able to make 10K plus, okay?
- 2:45Um
- 2:45so, that's the reason why you guys will
- 2:47learn about that again, as I said, in
- 2:48the next video. But, um
- 2:50another reason why is because you guys
- 2:52do not need a lot of money to start,
- 2:54okay? If you guys want to get into
- 2:57stocks,
- 2:58um in order to make, for example, let's
- 3:00say $2,000,
- 3:02you would need to put in thousands of
- 3:04dollars yourself or swing trade for
- 3:08days, okay? Now, let me explain for you
- 3:10how to make $2,000 on Nasdaq.
- 3:14So, Nasdaq is going to have multiple
- 3:15different contracts. It's going to have
- 3:17a micro and a mini, okay? The micro
- 3:20being smaller than the mini,
- 3:2210 micros equaling one mini. And you
- 3:25might be asking, "How do I know which
- 3:26one I'm on?"
- 3:27This simple NQ right here, that is mini.
- 3:31If it says MNQ, that is micro, okay? So,
- 3:35if you're on MNQ and you put in 10
- 3:37micros, 10 contracts, it's going to be
- 3:39the same as using one NQ. But, there is
- 3:43commissions
- 3:44um there's commission payoffs for it,
- 3:47okay? So, you will always want to use
- 3:49the mini chart if you want to use 10
- 3:52micros or more.
- 3:53Okay, because it's cheaper to do one
- 3:57mini compared to 10 micros.
- 3:59But that's not too big of a deal. I just
- 4:01wanted to give that out for you guys. So
- 4:04to make $2,000 on one mini contract is
- 4:07only a 100 point move on the NASDAQ.
- 4:11Okay. And just to tell you guys, all
- 4:14right, we have days where we move 800
- 4:16points. We have days where we move 300,
- 4:18400, 500. Okay. So 100 points genuinely
- 4:22is like 2-3 minutes of the New York
- 4:24session. Okay.
- 4:26NASDAQ is moving up and down hundreds of
- 4:28points in New York session. Hundreds and
- 4:30hundreds and hundreds. Okay. So
- 4:33there's absolutely
- 4:36a big reason to using that and it's
- 4:38because not only you right, you might
- 4:40think, oh, well, that means I'm just
- 4:42losing money quicker. Well, that is kind
- 4:45of how it works with leveraging, but
- 4:47again, with prop firms, you don't
- 4:49actually have to be losing that $2,000.
- 4:52Okay. If that 100 point move goes
- 4:54against you, you're not losing $2,000.
- 4:57Again, that's going to be in the prop
- 4:58firm video, but as you can see, you can
- 5:00make and lose money very quick with
- 5:04with futures, but if you have an edge on
- 5:06the market, which is what Nexus Algo is,
- 5:09futures are for sure the way to go.
- 5:12Next what we got here isn't really too
- 5:14important, but this is basically
- 5:17NinjaTrader going to have a NQ. Okay, a
- 5:20month code, which this month is
- 5:23U for September and then the year. So on
- 5:26um
- 5:28on NinjaTrader, you're either going to
- 5:29see NQU26,
- 5:32NQ926,
- 5:34NQ September 26. It's going to say
- 5:36something like that. All you need to
- 5:37know is that contract expires in the
- 5:40month that it says. Okay. So for NQ926,
- 5:44when When it expire? It expires in
- 5:46September.
- 5:47Ninja Trader will automatically ask you
- 5:49as soon as the new contract comes out
- 5:52every 3 months. It's going to ask you,
- 5:53"Hey, do you want to switch?" Always
- 5:55just click yes, okay? Again, this isn't
- 5:58something very important, but something
- 5:59I wanted to cover.
- 6:01All right, so now we're going to be
- 6:02going over the tick value, okay? So, as
- 6:05I was mentioning earlier, one point on
- 6:08Nasdaq, okay, is $1. So, if Nasdaq is
- 6:1129,000 and it goes to 29,001,
- 6:15we moved up one point.
- 6:17Well, every point has four ticks, okay?
- 6:20Cents, right? 24 cents. So, from 29,000
- 6:24to 29,000.25,
- 6:27.15, .75, and then one full point. Okay?
- 6:31So, as you guys can see here, we'll
- 6:32start on a mini, one tick is going to be
- 6:35$5, okay? Meaning one point is 20.
- 6:39And then the micro is right under it.
- 6:42S&P we don't use as much, but the
- 6:43numbers are here on your screen.
- 6:45And then here's a little example. So, if
- 6:47we catch a $50 move on one micro, it's
- 6:50$100. On four, it's 400. On a mini, it's
- 6:541,000, and on four minis, it is going to
- 6:57be 4,000.
- 6:59So, as you can see, there's a lot of
- 7:00scaling involved in this, right? If you
- 7:02if you're able to risk more, you can
- 7:04make much more. So, just wanted to show
- 7:06you guys that as well.
- 7:08This is just a visual representation of
- 7:10what I was saying earlier. 10 micros is
- 7:13the same as one Nasdaq, okay?
- 7:15Or one mini Nasdaq, okay? But um
- 7:18just one NQ. But a reason that some
- 7:21people might manually use micros over
- 7:24minis is so they can scale out. If
- 7:26you're in a position and you're up 50 50
- 7:28points, you can scale out five micros
- 7:32and then keep the rest of them going,
- 7:34okay?
- 7:35If a strategy uses that, you will know.
- 7:38It'll be in the parameters. It'll be in
- 7:40the video, whatever.
- 7:41None of the strategies currently on the
- 7:43website do that, but I have tested a
- 7:45couple that actually do do that. So, um,
- 7:48but that's not something you technically
- 7:50have to worry about. Um, this is just
- 7:52explaining that 10 micros is the same as
- 7:55one Nasdaq, one NQ.
- 7:58All right, something to get into is, um,
- 8:01futures is open 23 hours a day, okay?
- 8:05So, let me go through that real quick.
- 8:07So, today it is Sunday, okay? Um, and
- 8:10the market is closed, okay? I should
- 8:12also explain market is Sunday night
- 8:15through Friday
- 8:18like evening, okay? Not like night. It's
- 8:20like evening. Um, but basically when it
- 8:23opens, okay? We're going to go straight
- 8:24from the opening. It opens at 6:00 p.m.
- 8:27Sunday, okay? EST, everything you're
- 8:30going to hear is EST, that is the
- 8:32trademark for trading. It's EST, Eastern
- 8:35Standard Time.
- 8:36So, the market opens up at 6:00 p.m. and
- 8:40then it's going to close on 5:00 p.m. on
- 8:42Friday. That is the entire market is
- 8:45open, okay?
- 8:46Um, and then let me explain each session
- 8:48now because there is a 1-hour, um,
- 8:50break.
- 8:51So, basically, again,
- 8:54it opens at 6:00 p.m. and then from 6:00
- 8:57p.m. to 3:00 a.m., this is Asia, okay?
- 9:00Asia usually has small movements, uh,
- 9:02usually has a big movement at the open
- 9:04and then small from then, okay? Uh,
- 9:06nothing crazy. We can get a lot of
- 9:08movements. Uh, do we always? No, we do
- 9:11not. After that at 3:00, taking over
- 9:13from Asia is going to be London session.
- 9:15That is going to be from 3:00 a.m. to
- 9:178:00 a.m. Uh, again, there can be
- 9:19movements, there can not be any. Uh,
- 9:21pre-market for the New York session,
- 9:23okay? There's three sessions, so this is
- 9:25pre-market for the the biggest session
- 9:27of all of them is 8:00 a.m. to 9:30. Uh,
- 9:30there's usually a lot of liquidity, um,
- 9:32a lot of moves here that will basically
- 9:34tell you what 9:30 is going to do, okay?
- 9:37Uh, does that matter for us? No, it
- 9:38doesn't, but
- 9:40now I don't know. I'm yapping.
- 9:43All right, and then the last session,
- 9:45and which is the biggest session of them
- 9:47all, the volume is crazy. We're moving
- 9:49hundreds of points. It's going to be
- 9:519:30 to 4:00 p.m.
- 9:54This is going to be New York session,
- 9:56okay? There's multiple, there's New York
- 9:58a.m., New York lunch inside of this, but
- 10:01you guys really don't need to know that,
- 10:02okay? Just know New York session from
- 10:049:30 to 4:00.
- 10:05And then that um that little hole I was
- 10:08talking about was from 4:00 to 5:00,
- 10:10okay?
- 10:11So, from 4:00 to 5:00 p.m. there's
- 10:13absolutely no trades going on, okay?
- 10:16Um
- 10:18or no, from 4:00 to 5:00. Hold on, hold
- 10:19on, hold on.
- 10:20Scrap that. From 4:00 to 5:00, this is
- 10:22the last hour, and then from 5:00 to
- 10:256:00 there's nothing going on.
- 10:27Uh I can't edit these videos, otherwise
- 10:28I would have just taken that out, but
- 10:304:00 to 5:00 is the last hour of the
- 10:33market being open, and then from 5:00 to
- 10:356:00 there's nothing, okay? There's no
- 10:37trades, there's no the chart is not
- 10:39moving at all, and then right at 6:00 it
- 10:41continues back with Asia. So, there's
- 10:43just 1 hour of no trades.
- 10:47All right, next thing here is going to
- 10:48be the type of orders, okay? So, there
- 10:50are four different types of orders that
- 10:52you can place uh with the contracts I
- 10:54was talking about. So, number one is
- 10:56going to be a market. That is going to
- 10:58be, "Hey, I want to get in right now,
- 11:00okay?" It is a guaranteed fill, but an
- 11:02un-guaranteed price because price is
- 11:05moving around a lot, or it's not, okay?
- 11:08When it's not moving around a lot, that
- 11:09means there's not many people buying,
- 11:12right?
- 11:13So, if you're trying to short, there's
- 11:15not many people buying. In order to buy
- 11:16a contract, someone has to short a
- 11:18contract, okay? So, with low volume,
- 11:22you could get slipped, right? With
- 11:25really high volume, you can also get
- 11:27slipped because you click that button,
- 11:29and then boom, it fills you at the next
- 11:30price, which could be farther away.
- 11:33Um
- 11:33with NinjaTrader, you don't have to
- 11:34worry too with NinjaTrader and prop
- 11:36firms, you don't have to worry too much
- 11:37about slippage.
- 11:39Um it's really, really small, which is
- 11:41good. But, um we do have some strategies
- 11:43that use market um
- 11:46orders. Next thing we have is limited or
- 11:49limit orders, I should say. You
- 11:51basically put a contract at a price that
- 11:54is not yet hit, okay? So, if we're at
- 11:5727,000, I can put a short at 27,100.
- 12:01I could put a long at 26,900.
- 12:04Meaning, when price gets to one of those
- 12:06limit orders, it will fill me in on my
- 12:09contract. Um again, it is an
- 12:11un-guaranteed un-guaranteed fill.
- 12:14Um will you get filled? Yes. Uh is it
- 12:17guaranteed? No. But, it's very, very,
- 12:19very rare for us to just
- 12:22hit your hit your limit and then either
- 12:24run past it and don't fill it or
- 12:26reverse, okay?
- 12:27Um so,
- 12:29even though that's here, I would not
- 12:30worry about that, especially prop firms.
- 12:33Um
- 12:34and then a stop, all that is going to be
- 12:37is basically a stop loss, okay? Meaning,
- 12:40if you're in a long, okay? You are in a
- 12:42long, you are up money, you're up 50
- 12:45points. Your stop can be anywhere below
- 12:49where the current market is. And when
- 12:51market and when the market hits that
- 12:53order, okay? This can also just be a
- 12:55simple limit order, okay?
- 12:57And whenever the market hits that order,
- 12:59you're out of your trade, okay? Um and
- 13:03that will not be a take profit, because
- 13:05a take profit cannot be under
- 13:08um your
- 13:10price, if you're in a long, okay?
- 13:12Um a limit order can only be above price
- 13:16for a long or below price for a short.
- 13:18And I will tell you I'm about to show
- 13:20you if you want to change it for it to
- 13:22be below or above. So, now a stop limit
- 13:25is going to be
- 13:27for example, if you want to
- 13:30if we are at 28,000 and you want to long
- 13:33at 28,100, right? Which is very normal
- 13:36for ORBs. You're waiting for the
- 13:37breakout. If you put your limit order at
- 13:4128,100,
- 13:44it's just going to fill immediately
- 13:45because price is below your limit. So,
- 13:47it says, "Okay, this guy wants to get in
- 13:49right now." So, that is what a stop
- 13:51limit is going to be. It says, "Hey,
- 13:52wait, wait, wait, chill. Wait for us to
- 13:54get to this number and then order,
- 13:57okay?" Because again, if you put your
- 13:59limit in 28,100
- 14:02for a buy and we are below it, it's
- 14:04going to fill you in because you have a
- 14:05better price than your limit. But, if
- 14:07you put a stop limit at 28,100,
- 14:10it will wait till it touches it and then
- 14:12enter a long, okay? Which is exactly
- 14:14what our ORBs do. So, I hope that um
- 14:17makes sense.
- 14:18All right. So, next thing we're going to
- 14:20be getting into is if you're using Nexus
- 14:22Algo strategies, uh this won't matter as
- 14:25much for you, uh but I just did want to
- 14:27explain it. So, basically, we're going
- 14:30to talk with prop firms cuz it's what I
- 14:31recommended, um position sizing, okay?
- 14:34So, if you have a 50K prop account, all
- 14:38right? You guys are going to learn about
- 14:39that in the next video again, as I said.
- 14:41Your risk is going to be $2,000,
- 14:44okay? That is how much drawdown you
- 14:46have, okay? Not the 50K, okay? You have
- 14:49$2,000 to work with because that is your
- 14:52drawdown. Meaning, if you lose 2,000,
- 14:54you lose the account. So, if you're
- 14:57manually trading, you're going to decide
- 14:58your risk per trade, okay? Um or you're
- 15:01going to decide
- 15:03your contract risk based off of where
- 15:06your stop loss will be, okay? If you're
- 15:08trading manually, your stop loss won't
- 15:11be the same every time, okay? Um for
- 15:13automation, it will be. So, um
- 15:17that's why it's so much easier to
- 15:20risk when it comes to like Nexus Algo
- 15:22automation because our stops are the
- 15:24same every time, okay? And um
- 15:27we're about to get that to that in a
- 15:28second, but basically, if you go to the
- 15:31Nexus Algo website and you go to put in
- 15:34your strategy, okay? Let me show you
- 15:35real quick here. If you go to put in the
- 15:38strategy you're using, 5-second orb,
- 15:40you're going to put in that 2,000 right
- 15:42where it says your max drawdown right
- 15:43here, okay? And then it's going to tell
- 15:46you the recommended contract. So, what
- 15:47are you going to do if this says seven?
- 15:49You're going to go to MNQ.
- 15:52And you're going to put in seven
- 15:53contracts, okay? So,
- 15:56um none of this stuff really matters
- 15:58unless you guys are manually trading. Um
- 16:00and if you are, there's going to be a
- 16:02lot more information you need as well.
- 16:04But um if you really do want to manually
- 16:06trade or just learn this for whatever,
- 16:07all the stuff's on your screen. But for
- 16:09Nexus Algo, you will not have to
- 16:11calculate your stops, your contracts per
- 16:14trade. That is all done for you as long
- 16:16as you put in the amount of contracts
- 16:18you're supposed to be using, which is
- 16:20again, either on the website or you can
- 16:22ask in the chat, DM me, any of that
- 16:23stuff.
- 16:25All right, so the question is, why Nexus
- 16:27Algo for futures, okay? And the answer
- 16:30to that is basically, it's futures, as
- 16:34you could probably tell from this video,
- 16:35is extremely risky, but when you have a
- 16:38edge on the market, right? A strategy
- 16:40with an edge, multiple strategies, uh is
- 16:42what's recommended, you can make a lot
- 16:44of money from it compared to trading
- 16:47stocks with your money, okay? Because
- 16:49again, as we learned, if you're trading
- 16:51stocks, right? You want to buy Amazon.
- 16:53For Amazon to go up $10,
- 16:56you would need thousands and thousands
- 16:58of dollars inside of it in order for you
- 17:00to make a good amount of money, right? I
- 17:02can make more money on one prop firm
- 17:04account that I spent $80 on. And what am
- 17:07I risking? $80. What are you risking?
- 17:10Thousands, okay?
- 17:11Um but specifically, why automation?
- 17:14Automation gets rid of emotions. It gets
- 17:16rid of all the work you have to put in
- 17:18for manual trading, all the losses,
- 17:20which I myself have have gone through.
- 17:22Okay, I didn't start with automation
- 17:24straight from the start. Obviously, I
- 17:25wish I did. I'd probably be living in
- 17:28freaking
- 17:29Japan by now at this point. But,
- 17:32it basically gets rid of your emotions.
- 17:34It does the strategy for you. You don't
- 17:36need to put in all the hours. You don't
- 17:38need to stare at the charts. And um
- 17:41it will have strategies with proven
- 17:43edges. Okay, because that's a big
- 17:45problem. People can have all these
- 17:47strategies, but if they suck, it doesn't
- 17:48matter if your emotions are good, right?
- 17:50You need emotions and a good strategy
- 17:53and a lots of time. Okay, so this is for
- 17:55new people, this is for people don't
- 17:56have a lot of time, don't want to put in
- 17:58all the time, and people who just want
- 17:59to have the best chance possible to make
- 18:02money over time. So, that is exactly
- 18:04what Nexus Algo is.
- 18:07I have an entire 20-minute video on
- 18:09strategy stacking, but I'm just going to
- 18:10give a little overview here.
- 18:13Strategy stacking is putting multiple
- 18:15strategies on the same account, right?
- 18:18And that's kind of where I'm getting
- 18:19into this with the futures thing. If you
- 18:21have four strategies, they each trade a
- 18:24mini alone, okay? Alone.
- 18:27Then, if you put all four of them onto
- 18:29one account, what should you trade? You
- 18:31should trade each of them with two
- 18:33micros, okay? So, what we use with our
- 18:36our sizing, okay, is we do um our max DD
- 18:41times 1.5, okay? So, what that means is
- 18:46if a strategy went through for 2 years
- 18:49and its max drawdown was 500, we times
- 18:52that by 1.5, meaning
- 18:54>> [snorts]
- 18:55>> it's even safer, okay? You guys do not
- 18:57need to understand this math, but this
- 18:581.5 means it is even safer than it
- 19:01sounds, okay?
- 19:03Um and again, there's an entire video
- 19:05covering strategy stacking. I just want
- 19:06to mention, now that you guys know
- 19:08futures a little bit and how to size and
- 19:10stuff like that, um that is why when you
- 19:13go to a strategy stack, you're going to
- 19:15see much less contracts because it is
- 19:17the amount of contracts per strategy as
- 19:20opposed to using that strategy all on
- 19:22itself. Cuz you're sharing that $2,000
- 19:24with four strategies as opposed to one
- 19:26strategy.
- 19:28Here's a bunch of beginner mistakes. I'm
- 19:29just going to go over the very, very
- 19:31simple one.
- 19:32Uh, trading NASDAQ before MNQ, all
- 19:34right? You guys are going to need to 95%
- 19:37of you guys be on MNQ, okay? Um, the
- 19:40rest of these
- 19:42they they matter, but not for you guys
- 19:45in Nexus Algo, okay?
- 19:47Um, like trading the wrong contract
- 19:49month, you will not have to worry about
- 19:50that, okay?
- 19:52NinjaTrader will literally ask you,
- 19:53"Hey, do you want to upgrade to the new
- 19:55contract?" Okay? Uh, confusing the time
- 19:58frame as well. If you're on a 5-second
- 19:59chart and you're supposed to be on a
- 20:005-minute, uh, just simple stuff like
- 20:03that are some beginner mistakes.
- 20:06Okay, so this is the last slide here,
- 20:08guys. I'm basically just going to
- 20:09explain where do you go from here. Uh,
- 20:11the before you risk anything, you guys
- 20:13can, uh, wait on this wait on this,
- 20:15okay? There's going to be a third video.
- 20:18This is the first one. The third video
- 20:19is going to basically be where to go,
- 20:21okay? How do you like set up? What do
- 20:23you do? What are the steps to get
- 20:25started? Okay? Uh, but for now, you guys
- 20:27will go to the prop firms video if you
- 20:29know nothing about prop firms or you
- 20:31don't think that you know everything,
- 20:33watch that video and then join the
- 20:35Discord, okay? These are the two things
- 20:36that matter. After the prop firm video,
- 20:38as I said, there's going to be a steps
- 20:40to getting started. And once you've
- 20:41watched all three videos, you can get
- 20:43started, okay? There's absolutely
- 20:45nothing else information-wise that you
- 20:47guys need. Um, if you have questions
- 20:49about anything, you can always DM me.
- 20:50And that's why the Discord is definitely
- 20:52my most, um,
- 20:55what's it called? My most, like,
- 20:57you guys should join it, okay? I don't
- 20:59even know what the word is.
- 21:00Um, if you need access to the Discord,
- 21:02just go to the website, okay?
- 21:04Uh, go to the website, scroll down, and
- 21:05the Discord's going to be there. But uh
- 21:07yeah, that's about it for futures.
- 21:08Again, any questions, you can DM me.
- 21:11Um and yeah, hope you guys enjoy the
- 21:13rest of your day.
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