There’s a reason that professional traders watch the S&P Futures. It’s simple. Here’s the only thing you need to know: 75% of all major stocks track with the S&P 500 Futures Index. That one piece of information will change the way you trade.
You’re long Adobe, and the trade has been going against you for hours. The trade is slowly taking the money you were looking to earn away… and making you pay. You glimpse over to a chart of the S&P and see it’s down 15 points from it’s open, and not only is it down but so are the NASDAQ and the DOW Futures Indexes. All of the signs are there, yet you just don’t know what to do with them… it’s a lack of education. If you had been watching these major indexes, most importantly the S&P, you would have known after certain price points were hit to get OUT of your trade and look again later for another entry.
No matter what market you want to trade, you better know how to trade the S&P 500. You better eat, sleep, and drink it until you understand how it can assist you in trend identification, but better yet you need to recognize the opportunities it possesses.
The S&P 500 trades virtually 24 hours a day from Sunday night to the close on Friday. If you are in the US there is a time frame you may not be aware of: the night market in the S&P. And if you are in Europe… well, congratulations because you’re awake when some of the best trending setups happen in this most lucrative index.
The point is no matter what continent you live on, this market is open. All you need is a good internet connection, a trading account, money, time and education.
Here is a list of terms you need to familiarize yourself with. And remember, this is just the tip of the iceberg of what’s available to you as a member of Night Scalper.
What Are Futures?
Afutures contract is a type of derivative instrument, or financial contract, in which two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price. If you buy a futures contract, you are basically agreeing to buy something that a seller has not yet produced for a set price. But participating in the futures market does not necessarily mean that you will be responsible for receiving or delivering large inventories of physical commodities – remember, buyers and sellers in the futures market primarily enter into futures contracts to hedge risk or speculate rather than to exchange physical goods (which is the primary activity of the cash/spot market). That is why futures are used as financial instruments by not only producers and consumers but also speculators.
What is the E-Mini S&P 500?
An electronically traded futures contract on the Chicago Mercantile Exchange that represents a portion of the normal futures contracts. E-mini contracts are available on a wide range of indexes such as the Nasdaq 100, S&P 500, S&P MidCap 400 and Russell 2000.
The product we choose to trade at NightScalper is the S&P 500 E-mini. The E-mini is worth $50 per point and trades from Sunday night at 5pm CT to 4:000pm CT on Friday, with small breaks in between.
The ability to control large dollar amounts of a commodity with a comparatively small amount of capital.
LONG or GOING LONG
A term used for buying stocks or futures contract in anticipation that the stock will go up in value. This is the most traditional means of investing/trading. Its exact opposite counterpart is “going short”.
An amount of money deposited by both buyers and sellers of futures contracts and by sellers of options contracts to ensure performance of the terms of the contract (the making or taking delivery of the commodity or the cancellation of the position by a subsequent offsetting trade). Margin in commodities is not a down payment, as in securities, but rather a performance bond.
The difference between the high and low price of a commodity during a given trading session,week, month, year, etc.
A completed futures transaction involving both a purchase and a liquidating sale, or a sale followed by a covering purchase.
A trader who trades for small, short-term profits during the course of a trading session, rarely carrying a position overnight.
The last price paid for a futures contract on any trading day. Settlement prices are used to determine open trade equity, margin calls and invoice prices for deliveries.Also referred to as Closing Price..
One who has sold futures contracts or plans to purchase a cash commodity.
An order that becomes a market order when the futures contract reaches a particular price level. A sell stop is placed below the market, a buy stop is placed above the market.
A price level on the charts where buyers are likely to jump in and attempt to stop a declining stock, with increased buying power. Often this is an emotional pivot point for buyers in which as much as it is willing to buy at these levels, it is also willing to sell if there is a break of the support level. Support is also marked by time in that the more recent the support level, the fresher it is in the minds of buyers and the more loyal they are to it. The older the support level, the weaker it will tend to be. Identical support levels across various points of time often add increased support. Stop-losses are often times, placed below a support level, which adds to the selling if there is a breach. Also note that once a support level is broken, and price moves below it, it thereby becomes a level of resistance for sellers.
An approach to analysis of futures markets which examines patterns of price change, rates of change, and changes in volume of trading, open interest and other statistical indicators
The smallest increment of price movement for a futures contract. Also referred to as Minimum Price Fluctuation.
The number of purchases and sales of futures contracts made during a specified period of time, often the total transactions for one trading day.