"Strategies for the Futures, Options and Equities Markets"

Transcription

1 "Strategies for the Futures, Options and Equities Markets" Speaker: Tom Busby, CEO of DTI M 1555 University Boulevard, Mobile, AL P W W

2 RISK DISCLAIMER: There is a very high degree of risk involved in trading. Past results are not indicative of future returns. DTI Partners, Inc. and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the futures trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of DTI Partners, Inc. may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Past performance is not indicative of future results. 1

3 BIOGRAPHY OF TOM BUSBY Tom Busby is a pioneer in the trading industry as a world-recognized educator who emerged as one of the industry s first trading professionals to trade live in front of a crowd of his clients and peers at various venues around the country. Busby takes a complex subject, the global markets, and puts it into a understandable language for all levels of traders and investors. With guest speaking spots on Bloomberg and CNBC, he is also the author of three bestselling books, Winning the Day Trading Game, The Markets Never Sleep and Trade to Win. Busby hosts a online room for traders from DTI Headquarters in Mobile, AL. Understanding the Language of the Market Tom Busby The objective of our live trading workshop is to familiarize you with the basic landscape of the market, to acquaint you with the language of the market, and to show you some of the methods and techniques used by experienced, professional traders every day. As part of the session, DTI founder Tom Busby will address the relationship between trading S&P 500 futures and ways to trade other financial markets, including stocks and commodities. He will discuss his unique principles of short-term trading, combining opportunities for reward with steadfast techniques for carefully managing risk. Tom has developed a market-tested approach to help those interested in trading financial futures to make key decisions such as: Whether to be long, short, or out of the market; When to trade and how to use directional indicators; How to determine and use key support and resistance numbers; Most importantly, how to manage trades and risk Busby has been trading since the late 1970 s. He shares real-world lessons at his trading workshop rather than untested theories. His trading method is accessible and understandable, based upon straightforward principles of money management combined with timing and modern day tape reading. Busby s method is action oriented, while emphasizing the value of patience and sound risk-containment techniques. In addition to his substantial education and experience in business and securities trading, his trading method emphasizes the importance of structured risk management in trading. The heart of his teaching is Busby s RoadMap, an easy-to-understand software program designed to aid traders and investors on the DTI Method of trading the market. It is a powerful tool to understand and put to use the interplay he teaches between critical time zones, key numbers and significant market directional indicators. Past performance is not indicative of future results. 2

4 Glossary Advance/Decline Line: The net number of issues trading on the NYSE for more or less than the last reading (which is taken every minute) based on the close of the previous day. Big Indicators: The following key RoadMap indicators: S&P E-Mini, Mini Dow, Mini NASDAQ, DAX Index, Mini Russell 2000, NYSE Tick. Cash: The aggregate current traded market value of the underlying group of stocks or bonds on which a futures contract is based. Chart: A graph of horizontal bars or vertical columns used in technical analysis to track the movements of price over time. These are typically available in combination with your real time quotation system software. Clearing Firm: Firm, connected with an exchange that holds money, process trades, and issues statements. Close: Last price at which a security trades for a specified time segment (i.e. for the day, or any time increment that you may be charting on your real time quotation system, including one minute, five minute, or thirty minute time frames). Exchange: The place where futures contracts are traded, such as the Chicago Board of trade, The Chicago Mercantile Exchange, the Eurex Exchange, etc. Futures Contract: An instrument representing an agreement to buy or sell a predetermined amount of a commodity, including securities that make up broad based trading indices such as the S&P 500, the Dow Jones, United States Treasury Bonds, and other groups of stocks selected as representative of certain stock or bond markets or some industry sector. We typically trade the near month contract on whatever index we are using. Globex: The electronic Market operated by the Chicago Mercantile Exchange that trades the S&P 500 futures contract at night and the S&P E-mini contract at all times. Past performance is not indicative of future results. 3

5 Grim Reaper: A major, but nevertheless temporary, directional reversal in a general market trend which often fills protective stops, and effectively ends the trader s opportunity to realize a profit on a trade. The grim reaper usually visits at times soon after the end of a Trade Zone. Key Numbers: Numbers that act as support or resistance levels for prices during movements of the financial markets. Limit Order: A customer order given to a broker to execute a transaction only at a specified price or better. Long: When a buy is the opening transaction. Margin: Refer to Exchange and Rules and Regulations. Market Hours (Futures): S&P Day Market S&P Night Market NASDAQ Day NASDAQ Night Dow Day Dow Night Dax Russell :30 15:15 (Central) 15:30 08:15 (Central) 08:30 15:15 (Central) 15:30 08:15 (Central) 08:30 15:15 (Central) 15:30 08:15 (Central) 01:00 15:00 (Central) 19:00 17:00 (Central) Market Order: A customer order given to a broker for immediate execution at the best price available when the order reaches the market place. Momentum: Measures the difference in price between the current and the price X bars back. After subtracting the two prices, the differences are then smoothed with exponential averages. Markets that are trending will have higher momentum values. Noon Barometer (noon balloon): A price performance indicator used to gauge the likely behavior of the S&P futures market during subsequent periods of the day. Period that we focus on is from 12:30 CST to 13:00 CST. Pivot: A number which represents the dividing line between a bearish or a bullish tendency. Value per Point: S&P E-Mini (ES) Dow Mini (YM) NQ Mini (NQ) DAX (XG or AX) Mini Russell (TFS) $50.00 USD $5.00 USD $20.00 USD $25.00 Euros $ USD Past performance is not indicative of future results. 4

6 Reference Bar: A specific thirty-minute bar that references a time of day that is taught in the DTI Method. The Reference Bar reflects trading on the E-Mini S&P futures during that specific time frame. There are four Reference Bars formed within each 24 hours of trading. Resistance: Price level beyond which a current direction of market movement has trouble going above. Rollover Day: Futures contracts are traded for each quarter of the calendar year March (H), June (M), September (U), and December (Z). The second Thursday of the month of a quarter is Rollover Day when trading begins on the next quarter s contracts, e.g., the second Thursday of March begins trading on June contracts, etc. Generally, trading on the previous quarter expires on the third Thursday of the month of the rollover, e.g., the third Thursday in March is the last day to trade March contracts. Settlement: The agreed upon fair and equitable price within the opening range as determined by the clearinghouse at the exchange. Short: When a sell is the opening transaction. Slippage: Amount of difference between price specified in order being given to a broker and the confirmed price received from the floor. Avoid by using limit orders. Often occurs when using stop orders. Speculator: The market participants who profit or lose form a movement in either direction. Stop Order: An order given to a broker that becomes a market order when the market price of the underlying instrument reaches or exceeds the specific price stated. Support: Price level beyond which a current direction of market movement downward has trouble going below. Tick Indicator: The resulting value determined by taking the difference between the number of issues that traded won from the number of issues that traded up in the last instant on the New York Stock Exchange, used as a leading indicator for market direction: +750 is overbought; -750 is oversold. Volatility: The trading range of a particular commodity or security for a specified period of time. Volume: Total number of units of a security traded during any given time period. Past performance is not indicative of future results. 5

7 Method for Trading The DTI Method for trading includes three elements: Times of Day to trade, Key Numbers and Major Market Indicators. Here is an overview of the times that you should be aware of when trading in the futures and stock markets. There is an art to learning to read the tape and gather your key numbers (support, pivot and resistance). See Figure 2.1 for an overview of how to identify Pivot using a 30 minute bar chart. The Indexes and Indicators are listed as well with a brief overview of what their symbols are if using the DTN data feed ( 24 Hour Clock Market Times 15:30 Globex Open 17:00 Globex Open Sunday/Holiday 17:30 Bonds Open 19:00 Nikkei Open 21:00 Hang Seng Open 02:00 DAX & SWI Open 02:30 CAC & FTSE Open 08:30 CME/NYSE/Nasdaq Open 15:00 NYSE, Nasdaq, and DAX Close 15:15 CME Close Past performance is not indicative of future results. 6

8 Figure 2.1 E-mini S&P Futures 30-Minute Chart Major Market Indexes and Indicators Here is a description of some of the indexes and indicators you will be exposed to during the presentation. Contract Months are represented by letters of the alphabet: H March / M June / U September / Z - December E-mini S&P Futures (trades.25 increments; $50/point). XGZ9: Dax Futures traded on Eurex Exchange (trades.50 point increments; 25 Mini Dow futures (trades 1 point increments; Mini Nasdaq Futures (trades.25 point increments; Mini-Russell Futures (Trades in.10 increments; $100/point). TTICK: A proprietary indicator used by DTI (>5 Bullish, <5 Bearish). TICK.Z: The RPM Gauge for all stocks that trade on the New York Stock Exchange. JINT.Z: Issues for the NYSE (Advance/Decline line of all NYSE stocks). JIQT.Z: Issues for the NASDAQ (Advance/Decline line of all NASDAQ stocks). Other Symbols to Mini-Crude Oil (worth 30 year Bond Futures (trades in 1/64 increments; Mini-Gold Futures (trades in.10 increments; US Dollar Index (trades in.01 increments, $1000/point). Past performance is not indicative of future results. 7

9 RESOURCE PAGE Recommended Books: Winning the DayTrading Game, Tom Busby Think and Grow Rich, Napoleon Hill Stock Trader s Almanac 2009, Jeffrey A. Hirsch & Yale Hirsch World s Greatest Stock Trader, Richard Smitten 12 Habitudes of Highly Successful Traders, Ruth Roosevelt Websites: IntercontinentalExchange (NYSE: ICE) operates leading regulated exchanges, trading platforms and clearing houses serving the global markets for agricultural, credit, currency, emissions, energy and equity index markets. ICE Futures Europe trades half of the world's crude and refined oil futures. ICE Futures U.S. and ICE Futures Canada list agricultural, currency and Russell Index markets. ICE offers trade execution and processing for the credit derivatives markets through Creditex and clearing through ICE Trust and ICE Clear Europe. A component of the Russell 1000 and S&P 500 indexes, ICE serves customers in more than 50 countries and is headquartered in Atlanta, with offices in New York, London, Chicago, Winnipeg, Calgary, Houston and Singapore. The CME, located in Chicago, Illinois, is committed to being a global marketplace for financial instruments, commodities and securities and an infrastructure provider and partner in the business-to-business marketplace. The Chicago Mercantile offers index futures products and commodities via open outcry pit as well as electronic trading. for more information on trading the S&P e-mini, visit cmegroup.com and click on CME e-mini education. DTI offers an extensive course in trading the S&P 500 Futures as well as the Nasdaq Futures, which also trades at the CME. DTI's goal is to educate both the beginner and advanced, active traders in the global futures markets. We offer courses, both online and onsite, to implement our amazing wealth building strategies using our RoadMap method of trading. While our competition teaches theories on trading the market, DTI offers a market-tested method in a live market every day. DTI's Opening Bell Analysis offers REAL MONEY TRADING in a REAL MARKET. DTI has the education, the software and the support to help you achieve success in the financial markets! DTN's ProphetX and DTN.IQ services provide streaming, real-time quotes and news for the equities, futures, and Forex markets. DTN delivers highly reliable and accurate data feeds, advanced analytical software, real-time quotes, and market-moving news for traders of stocks, agriculture and energy commodities, financial futures, and foreign exchange to more than 100,000 subscribers. Eurex is the world's largest derivatives exchange and the leading clearing house in Europe. Wherever you are located, we provide you with access to the benchmark futures and options market for European derivatives. With clearing services for derivatives, equities, bonds and repos, our customers benefit from a high-quality, cost-efficient and comprehensive trading and clearing value chain. Famed author Napoleon Hill transformed his life experience into an easy-to-understand short read on creating a business plan for your life. In his book, "Think and Grow Rich", Hill not only shows you how to create the plan but also how to put it into action to succeed in areas such as life, career and personal relationships. Suggested Action: Go to Naphill.org and sign up for the Free Daily Thought and start your day with a positive. Past performance is not indicative of future results. 8

10 Seminar Notes Past performance is not indicative of future results. 9