Trading Futures | John McNichol | 2-22-21 | Fibonacci Levels on Market and Gold

Trading Futures | John McNichol | 2-22-21 | Fibonacci Levels on Market and Gold

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good morning everyone it is the market open on a monday time for another fantastic week of education with td ameritrade and this is trading futures we'll do is we'll take a look at the market open we'll review fibonacci retracements as we do have a pullback in the market see if we can go ahead and do a futures option spread so stick around all right hey it's great to see everyone live this morning we got ricardo uh mrs dd we got okay jack mike peter colonel tim we have and mr ken rose helping us out on the chat this morning do appreciate ken joining us any questions i am unable to get to he'll be happy to help us out appreciate that ken you can see my twitter handle on the screen at j mcnichol underscore tda if you wish to follow myself along with other fine instructors such as ken rose and a shout out to those of you that are listening to the archive session uh uh throughout we know that a lot of you have busy lives as well fortunately our webcasts are recorded appreciate your support and if you do like this webcast make sure you click like so other clients as well or anyone that's interested in futures is able to partake of this information as well let's go and take care of disclosures we'll get right into the topic good morning you frank swing b let's go ahead and take care of those right now presentation is for educational purposes now in order to demonstrate the functionality of the platform we will be using actual symbols keep in mind td ameritrade does not make recommendations or determine suitability of any security or strategy for individual traders any investment decision you make in your self-directed account is solely your responsibility uh futures futures options trading is speculative not suitable for all investors and that futures and futures options trading services are provided by td ameritrade futures and forex llc those trained privileges are subject to review and approval not all clients will qualify options as well not suitable for all investors look at the risk disclosure uh provided for you in characteristics and risks of standardized options full spread straddles and other multi-leg options strategies often involve greater more complex risk single leg option trades on top of transaction fees and uh we encourage you to practice what you learn here today with tools such as the paper money software in mind the paper money application is for educational purposes and successful virtual trading during one time period does not guarantee successful investing of actual funds during later time periods market conditions change continuously and here are our topics we'll take a look at the market open new week uh we'll uh utilize fibonacci retracements in our discussion and we'll go ahead and do a futures option spread example i'm going to go ahead and bring up the thinkorswim platform should be coming up right now uh and as we go ahead and look at some of the uh indices i got the futures on the board right now but just uh bring up the cash real quick the s p 500 sliding back essentially for a fifth day talk more about that uh nna actually having a losing week if one goes to the weekly charts you can see kind of falling on the lost side last week after a strong two-week move and starting off the week that continuing as well all the major market indices did the same thing uh the russell you know did try to eke out again for the week did have some recovery later in the week albeit negative compared to last week uh kind of stayed in the range from the previous week and we can see small caps as well taken a little bit of a hit this morning if we look at some of the drivers for that uh you know based off of some of the sectors most of sectors are down across the board with information technology discretionary healthcare kind of leading the way uh we are seeing uh like positive moves in the energy sector there are a couple of companies uh coming out today uh on earnings i believe uh we have to take a closer look at this sector as well on fibonacci that thought uh stocks i believe such as marathon uh have an earnings event that's after market today i believe and uh let's see another one that came to mind all uh offhand notes uh let's see oxy oxy i believe they're also coming out after a market today all right let's go ahead and uh take a little deeper dive here now you know other things coming out for the week as you may be planning for that i'm gonna there is gonna be some fed testimony with uh chairman powell uh i believe on tuesday and wednesday uh another big news story will be on thursday as uh durable goods will be coming out along with gdp that's going to have a an impact potentially on the market as far as with growth and see if the market is still heating up where the economy is still heating up or slowing down interest rates have been a driver uh particularly from the last few weeks so one may be looking at tnx which represents the 10-year yield and see that they update that it yields yields uh ticking up at the opening but fading back just a little bit you can see a pretty strong move on yields uh since the beginning of uh since the beginning of february didn't necessarily end impact the market as much but knows from this past week with that gap and that surge markets don't necessarily like it when interest rates move as quickly as they've done previous week right kind of a snapshot there uh you know as far as uh you know additional uh stocks at least uh on the day there have been some upgrades uh possibly leaning towards the opening trade as uh over cases have been dropping off a lot of upgrades on the airlines including delta united airlines american airlines i think just about pretty much all the major airlines have had upgrades today unfortunately not enough to lift the market on the downside a lot of those those airlines are going to be part of the industrial sector and notice uh still down as a whole but would have been weighted down much more if not for the upgrades on a lot of the airlines there and you know one of the impacts uh considering you know as far as with yields uh would more likely hurt a lot of the stocks that are more growth oriented particularly in the nasdaq you know think of the fang stocks as we look at nasdaq you know nasdaq gap and down at the opening talk more about fibonacci here in a moment you know see consider for areas of support and some of those uh benchmark stocks such as apple are probably going to be down today now i actually reviewed apple uh last week uh on the td ameritrade network separate but affiliated company uh the media company separate but affiliated with uh td ameritrade you had a whole own subsidiary of td ameritrade and charles schwab uh you know technically speaking you know going forward charts may be keeping an eye on apple as far as a potential head and shoulders uh have a a neckline for him in you know at around i believe the 125 126 area and we're kind of around that support some traders you know still may look to trade that range and you know kind of a longer term trend it's kind of the top of the upper part of the channel so interesting to see if there's any more downward momentum i believe we are below the 50-day moving average and you know benchmark stocks like this you know can be a driver on you know indices such as the s p s p futures as far as rising or falling apple's very much weighted to that along with stocks like facebook and you can look for you know potentially similar patterns here you know much more range bound and certainly waited on the nasdaq as well and tesla take a quick look at tesla i've reviewed this in the past as well tesla has actually broken down below a rectangle that they've formed since going back uh to the beginning of the year so a little bit of a laggard there still above uh it's uh i believe it's 50-day moving average i get an example of a 55 here and you know certainly from uh a longer term basis i mean we can clearly see the example of the trend of uh tesla so it'd be interesting to see you know if there's any you know support bounces uh or trying to find some support there okay all right so that's where we're starting off with as far as with the market let's go ahead and tie this in uh as far as with some of the underlying futures so let's go ahead and take a look at uh forward slash es for the s p if you're following along on some of your charts folks uh you can go ahead and take a look over on the left hand margin if you want to follow along with a similar grid chart that is provided for you over on the left-hand margin and then you showed up at the right place this is a trading futures class however i need to understand what's going on with the market for the week it's kind of more of a routine to see how things are setting up that can have a direct impact on some of those futures trades that you may be considering particularly on the indices all right so with the uh s p futures uh forward slash es i'm gonna go and maximize this chart we're gonna go ahead and tie in our discussion on fibonacci so if we kind of zoom in and and look at it more from uh a near term basis we're looking at a daily chart we can look at the last swing on the s p futures as they had found some support at the beginning of the month uh at around that 50 in my case utilizing 55 day moving average and we can go ahead and see that swing high here's the pullback on the market now you know as we look at that price action you know we can identify different price levels by comparing some of those highs and lows we go to drawing tools and we'll bring up a horizontal line and one of things that kind of stands out if we look at some of these previous highs back here at the end of january kind of around the 30 860 area you know we can see uh and this is the beauty of technical analysis and the principles that how broken resistance uh potentially uh may act as new support we kind of see that entry day as far as with the lows uh kind of touching that area and traders attempting to some traders attempting to buy that dip go back a little bit further here and one can also go ahead and identify uh whether price channels or trending areas of support and resistance let's say as an example we'll go to our drawing tools and bring up a parallel channel i'm going to go ahead and you know attempt to contain majority of the price action now price channels and you know doesn't necessarily have to contain all of the data for containing majority of it along the lines of around 80 percent doing pretty good i'm also kind of focused on more of the recency of that price action or as with those touches go ahead and zoom in so we got an idea of the overall prevailing trend as well as with the channel now if i go ahead and uh zoom in on this bit more let's go ahead and bring in fibonacci into the mix and for that drawing tool we're going to go ahead up to the top under drawing tools and go ahead and select that percentage tool now with the fibonacci tool utilizing is to you know attempt to find you know potential price areas as the price is pulling back now without fibonacci we can already see you know attempt to hold uh that previous high now some very short-term traders that are hedging you know they you know may be closing out that hedge uh they may be looking for another failure or a breakdown you know to build on that uh we actually still have the the i think that micro uh hedge on our practice account from a couple weeks ago uh and so on drawing fibonacci i'm going to go ahead and draw from a low to the high now why are we drawing from a low to the high well the prevailing trend or the direction of the overall trend is going from left to right it's going up so we're drawing with that prevailing trend so by looking this on a daily chart potentially identify some potential support areas that may come into play and this is utilizing by the ratios that occur in nature and with markets markets don't go straight up they do have a tendency of zigzagging and a lot of cases of these zags or these retracements a lot of common percentages are going to be about a a third a half about two-thirds in stronger trends uh that quarter retracement may come into play and so notice as we look at you know this retracement after a very strong run since the end of the month you know everything's relative yes a negative week but price is still holding a previous high still be a bullish sign and also holding some of the higher bib areas now we just opened the week this is not going to be a guarantee that this is the low for the week although very short-term traders speculated you know as prices tested that low possibly trade off of that now if i go ahead and let's take a deeper look look at more intraday that same grid we have a five minute chart over here on the right hand side i'm going to maximize this one and those you that have followed this session uh we have uh discussed uh this technical indicator which is pivot points we may spend some time more time next week going over this study but the short story uh if you go ahead and go to well one if you add this grid chart by going to uh setup and open shared items you can go ahead and transcribe that this is a case sensitive i do a capital u particularly helpful for those of you that may be new to this class and welcome we got a capital u capital b we got lowercase h six uh capital capital h and capital s i'm gonna hit preview and then click import then you should see a chart that looks something similar to this and i think in the example i have forward slash mes which is the micro contract you can go ahead and change whatever contract you want so the pivot points on a five minute chart over on the right hand side and so uh as we look at this uh some of the key pivots that keep in mind the way i have the color coded purple is the daily pivot gold is the weekly pivot and we can already see based off of what we were looking at the previous daily chart you know price was pulling back you know over the shorter term for a good part of this last week prices have been below both the weekly predominantly at or below the weekly pivot and kind of fighting around the daily but as we got in the latter part of the week being below that daily so a little more of a uh you know bearish bias there and as we go ahead and look at it entry day-to-day uh overnight you know we were kind of hanging around that daily and weekly and we can see how things that weaken out throughout the night and then you know more of a rectangle pattern so as far as looking for a base here you know if some traders are looking for more of a bullish reversal of this shorter downward trend again we can utilize some of the indicators as far as trend line so as an example if one was short this five minute trend they may be a bit patient on that unless prices break out possibly above this pivot can actually hold that would be an example of a rectangle and a potential bullish reversal hasn't quite happened yet um some traders may look for kind of a time filter uh you know whether it's a five-minute close or multiple closes above that level if they were had let's say again a shorter term hedge and we're looking at possibly removing that and it's a matter of time frame uh the other thing we can also apply we can apply fibonacci on the shorter term time frames as well so even though we had a daily trend that was up here on this five minute trend it is down so if we wanted to apply fibonacci here then we can potentially identify resistance areas that can come into play go ahead and do that so i'm going to go ahead and go to the tools again take that percentage tool for fibonacci if we're looking at this overall move i can go ahead and start from the high and we'll take it down to the low a couple things that you know stand out here well one uh based off of that period here's the quarter here's the third retracement you can see some correlation you know between some of these price levels you know previous support may act as new resistance we look at this five minute uh even if price kind of breaks out of this trend you know we may find some resistance closer around that 38 87 80 90. if things continue to retrace uh we can see levels such as the 50 and the 61.8 which i have in gold uh you know from the many years of utilizing tools such as fibonacci uh a common phrase we'd reference was a a maker breakpoint for that overall trend um in this case for this five minute prices would have to break and hold above that 61.8 retracement to confirm a bullish reversal of this downward trend and notice there's a bit of confluence there with the daily pivot here which is just above that 3 900 area so these are probably a couple areas to be keeping an eye on if the market writes itself and throughout the day shorter term traders may be looking to target some of these different levels if they still have more of a bearish bias they may look for a rejection of these levels as an opportunity to go bearish again see how that may continue to uh set up we're not seeing a a lot of movement uh at the opening here on the mes we'll look at some of the other indices see if they're showing the same thing but we're seeing a bit of consolidation at the top part of this range from the overnight uh probably waiting for a bit of the news i believe uh leading i'm not sure if it already came out on time zone there was a leading indicator report that should have came out not really leading so much as it's just a culmination of previous economic reports but probably some of the drivers for the week again uh are going to be uh on the fed speak on wednesday and durable goods on thursday and then also uh as far as with the uh stimulus package which i believe is still going through some headwinds and uh not helping the market on the lift here today okay so there's a mes uh let's look at uh forward slash uh nq which is the mini con slash nq which is the mini or the nasdaq and we look at the nasdaq you know we can see a a similar situation as far as that range on the opening again if one's bullish you know they may be looking for a breakout above that range if you want to apply you know fibonacci here as well one can do that now when i did that on the s p you know we were kind of looking at more of that overnight if one is looking at even a smaller move you know they can go ahead and you know measure it from you know the last swing down so in the case here on the nasdaq uh if i'm looking for more of a confirmation of a shorter term reversal go to those drawing tools and again since this trend is more down we're going from the high to the low you can see a confluence with that third retracement you know at the base here's the 50 retracement and that's 61 to make or break as an example would be about the 13 471 and you know one of the big leaders has been the russell bring up forward slash rty on the small caps and notice as we look at the small caps small caps actually are dancing around the weekly pivot as we speak this could be a bit of a driver possibly all there's been a little divergence on some of the indices but kind of a driver uh for the week to seeing how the small caps are able to perform we're kind of holding the daily pivot starting off the week but we're having some resistance you know at that weekly and again you can see previous lows how resistance can act uh previous support can act as new resistance so kind of a question mark here uh traders may be looking for a break above here set up for any potential for bullishness during the day otherwise they focus on more of the potential reversal and the breakdown so you know some questions as far as you know on pivots uh this particular class isn't going to take a deep dive on pivots but uh as we uh always show when one adds an indicator you go to the beaker one of the best resources and i find when you know i'm helping out on the chat like ken is some great resources that are available for you one if i go ahead and click on the beaker for the indicator this is where you can add the indicators i've shared with you on that shared chart uh but if i go in search for an indicator let's say pivot there's pivot points right there there's a question mark if i click on the question mark that should take you and bring you a summary although we have a little bit of a lag here on my connection a little breakdown of what that indicator does and basically it's looking at previous areas in this case daily and weekly periods and it's calculating support in resistance based off of those previous trading ranges and it accounts for the open high low close you click on more details that's going to take it to the learning center and i will tell you one of the best features of the thinkorswim platform when you go to the education and learning center which is all things think or swim this little box that says type to search go ahead and type in anything a lot of people ask about things such as trailing stops i can go ahead and type in our trailing stops and there's all types of information here on trailing stops uh you want to know about an indicator first you got to spell it right like stochastic you can go right there and you can go ahead and search for that great reference for you okay so feel free to utilize that as many questions on a lot of these topics are answered right off the board there all right so back to the show so keep an eye on the russell uh to see if it's able to go ahead and break and reverse there and you know if we kind of do some comparatively with uh what we did on some of the other indices at least from the overnight again you know we can kind of see coming up on that trending resistance but breaking above it uh if we were to take fibonacci from a very short term on this last swing draw from the high down to the low notice and some great confl bit of a confluence here the russell did get above that 61.8

retracement is above the weekly pivot so from a bullish perspective you know the trader may you know trade something along the line of the russell okay so more bullish bias there and see if possibly that lifts up some of the other indices uh if i go ahead and look at it from a a more broader perspective on the small caps um we can go ahead and do the same thing uh you know measuring from previous i actually looks like i already did that so i think it's about as far back as we can go on that i want to go and shift over to the daily charts and kind of look for influence as far as that support notice that the small caps did hold above that previous high as well and you know if one wanted to see the strength of the overall trend we can go ahead and draw a bullish fib and probably will see that estimating that this bounce was probably somewhere close to that quarter retracement as we start off the week the small caps being one of the stronger areas of the market actually did pull back to the third so from a bullish case the russell trend still very much intact all right so there's kind of an overview of some of the major market indices and utilizing fibonacci there we'll continue utilizing fibonacci tying in next week uh with pivot points and we'll do some uh trades along that line but the uh the practice training i want to focus on today is a little more uh of a defined risk trade and uh we're going to go ahead and take a look at gold forward slash g c if we go and take a look at uh gold and we could probably apply a few things here as well here's a daily chart uh gold has traded down uh to some previous lows we're seeing a bounce here today in fact if you looked at weekend trader last week uh on the td ameritrade network uh i actually did highlight this uh on keep an eye on gold going into this week you know based off of that support gold had lifted off of uh some of those lows forming more of a hammer and we're seeing a bounce as price is trading above the high of the low day i go ahead and pull this out a bit more if we want to tie fibonacci into the mix we go back to lows and highs in the trend when we look from a bullish perspective we go ahead and take that fibonacci retracement and we'll go ahead and draw from the low to the i and we can see that uh gold is basically sitting and bouncing off that 50 retracement so with the trend intact 1700 would be kind of the make or break point based off the fibs we're seeing a little bit of a bounce there uh you know if one's looking at even longer term you know they may look at a weekly chart and i think i still isolated a similar um weekly swing in the case of gold from the lows in the spring where we are right now now you know gold has been competing against bitcoin uh for uh prominence as uh as a hedge on inflation uh forward slash btc is a future contract for bitcoin um so we can kind of see that performance or that divergence as bitcoin even made uh some new highs from the previous week on the daily chart bitcoin did back off a bit but looks like again found some support and trying to trade higher let's go ahead and see if we can go ahead and apply um kind of a defined risk we'll do a practice trade uh on gold and there's kind of two simpler defined spreads that we can do one could be a short uh put vertical which would uh result in a credit and with the idea being that uh expecting prices to hold support and possibly trade higher uh if we want to be a little more directional um we may look at a long call vertical which may have a strike price that we may target uh and look for price to trade up through that spread now i teach long verticals uh every thursday at 3 pm eastern time on the equity side ken who's helping out on the chat also teaches this strategy on the short side you go to the education tab and go to the webcast you can go to the webcast calendar so you can see these dates you can see a strategy focus at around 3 pm eastern time here's ken rose with short verticals here's me with long verticals and diagonals if you're still trying to understand the concept of that particular trade now we're going to go ahead and walk through an example and to do that i'm going to go ahead and go to the trade tab and bring up forward slash gc as we one learns about the future contract it is important to understand the uh characteristics of it and a couple of ways of doing that on the thinkorswim platform is if we go to the analyze tab and bring up that contract you can see things such as the multiplier which for gold is going to be a hundred uh it does have a minimum tick or minimum move of 10 cents but again there's a hundred multiplier so that tick is worth ten dollars basically a one dollar move uh in gold uh should represent um a hundred dollars okay uh it is physically settled which means the contract uh would settle in gold however td ameritrade does not allow the physical settlement uh of the contract uh they are liquidated prior to expiration if one does not close that out on the option side uh that would actually result in an underlying position in gold which can happen an underlying position in the future contract which can happen but uh we're looking to close this out prior uh to that expiration these essentially trade about 24 hours you can also see days expiration another thing to note when one looks at these contracts is when you see an expiration uh in this case like april uh that does not mean that that option would trade into april uh a lot of these contracts the expiration actually falls in the month preceding notice here this is 36 days on the active contract this would actually be the end of march you know not in april or the third week in april as many of you that trade equities may be familiar with um and we can see the march contract is actually expiring in three days which is well before the end of the month so that's for the underlying future now we're not going to trade the underlying future in our example we're going to take a look at the equity we're going to take a look at the option for it okay so i'm going to do is we're going to go back to trade tab and we're going to apply some of the same principles we teach in some of the spray classes look at you know the number of days uh to expiration uh in a lot of spread trades uh you know we're looking at examples from around 20 to 50 days out so in our example uh you know we do have an option of a weekly uh potentially a weekly option although when you do get into some of the weekly options uh some of them may not be as widely traded and we can potentially see uh some larger spreads make some comparisons there you're looking at things such as volume and open interest uh it doesn't look like uh getting much activity on those weeklies if i go out to april they may not be getting as much data coming across some of these maybe a bit of a lag but uh you know we can see that when it comes into some of the futures options some of these may not be as widely traded we will look to the spread and you know try and see if we can have a spread as small as possible uh we can still use a 10 example uh that the difference between the bid and the ask the bid here's the ask no more than 10 percent of the ask price so you know the buck 50 spread uh you know that would be about uh 15 cents because this is kind of falling just a little outside around 20. so it could be a little more costly costlier as far as trading let's see if we can construct something together here um what we'll do is i'm going to go ahead and bring up the deltas and we'll focus on 30 days out now if i want to do something let's say as an example of a a put spread we're going to look on the put side we're going to look for a strike that's somewhere in that 30 to 40 delta range and uh let's see if kind of focus on the 30 we got a strike of 1760. now ideally that uh short strike on the put like to see that at or below uh support on the chart so i believe with that 1760 that's pretty much putting us right at that low uh but still below that support range i had at around on the fibs at around 17 70 something now we can go ahead and sell a strike that's at or below that support and then we're going to go ahead and buy or go long another option that's going to define the risk so if the price keeps going down our risk would be locked in between that spread all right so with that let's construct it we got the 1760 and then we can go ahead and uh buy a cheaper option against it we may look at five wide possibly look at 10 wide so we can get a reasonable credit so what i'll do is i'm just going to go ahead and right click on the bid on the 1760 i'm going to do cell vertical cell vertical now this would be a five dollar wide there is a bit of a spread between the market price of about a buck ten and kind of mid price around a buck forty we can still put in a limit order whether at or near that uh to see if we potentially get that filled and if i hit confirm and send this will give us an idea of reward as well as the risk maximum gain on a credit spread is going to be the credit received so notice that's 140 dollars a buck 40 times 100 there's the multiplier maximum loss is going to be that five dollar wide minus that credit so that's 360. now theoretically this is a higher probable trade so the maximum loss is going to be greater than that gain a reasonable return on risk uh you know we'd be looking at about a 30 percent return on risk looks like this would be closer to a long line of about fifty percent uh if i go ahead and let's say uh edit this i go to our calculator and we'll do 140 divided by 360. that would be about a 38 return on risk and then position size our risk would be defined by that maximum loss so one would have to determine how much you're willing to risk in the trade let's say as an example i'm willing to risk about a thousand dollars i can theoretically do about three contracts so if i'm able to do that and it'll do three hit confirm and send and then i'll go ahead and hit send it looks like uh i did get that fill so it looks like we got about a buck 30. that was a little less than the 140 looks like the price adjusted and we'll go ahead we'll manage that trade uh to see if we could profit now one way on profit management for that trade is since we went ahead and sold a buck 40 again times the multiplier so uh actually it was a buck 30. i do 1.3

and if i went ahead and multiply this by let's say 20 percent that would be a resulting credit of about 26 cents as a matter of trade management what i can do is keep an eye on the p l uh for this trade monitor tab i'm going to move it into one of my other groups for long verticals and diagonals here let's see like here it is right here all right so uh i can go ahead and actually add a column here for except's a little messed up here right over here on the far right there's a little gear i can click on that gear and there is a p l percent or percent dnl and find that in all percent you can go ahead and click on that and add that what that'll do is that'll keep track uh of the p l on that trade um so you know in the case of this short spread you know if this gets upwards to about like 75 80 percent uh as potentially depreciates and we can possibly buy that back and lock that in for that game uh another example that one can consider you know maybe a uh if they're a little more directional expecting the price to trade higher kind of the long call spread and i teach those on thursday ken teaches this strategy on wednesdays but if i went to the other side this would be a matter of going long for an example a strike that is current or close to the current price in this case right now it'd be about 1805 and then selling a strike where we believe that the price may be trading to closer at expiration in 31 days so if we think the price may be trading around 1815 or 1820 you know we can go ahead and do that spread accordingly so as an example if i was to do that i can right click do by vertical and let's say expected to be above 1815 [Music] and that 30-day expiration this is now a 15 wide this would be a 4.70 debit now notice in this case since it's a debit and you know we are looking for a little more of the move uh this we are paying 470 that's the max loss that's the most we can make but notice the return is also greater uh if the price goes ahead and trades through that 1815. the trade's also a little forgiven too because it doesn't necessarily have to move much to be profitable in this case it would have to be about five points above where it is right now to be profitable so kind of a defined risk defined gain i'm going to go just do one contract on this one and looks like we got to fill so we got two practice trades to manage for next week now some of the consideration folks when one does these trades is we are looking to close them out prior to expiration okay so notice those are 30 days out a daily routine is you know looking to see if you're meeting profit objectives so in the case of that short put vertical uh if we're able to realize about 70 to 80 percent of that maximum gain we can close that out at any time uh in the case of the long call vertical um since it is a greater return on risk we may be targeting as an example 50 of that maximum gain uh so if we're able to see uh you know the premium in this case was for uh 470 if we were able to see uh that uh that spread let's say go up to uh seven or six to eight dollars you know we may consider possibly closing that out and locking in some of that gain so stay tuned for that we'll review that this is a good way to practice with futures uh more of a defined risk whereas when one's trading underlying futures there's typically uh much more equity that is required to be locked up as an example s p futures you know about 17 000 um you know so it can be significant this is a great way of potentially looking at different asset classes and attempting to profit from some of those moves as we'll do with our practice trade on gold remember folks hopefully you learned something new today we encourage you to practice this as well thanks for ken helping us out on the chat today and hey there's a survey folks would love for you to click that out it only takes a few moments so a few things one go ahead and click the survey so that way we can get some feedback from you hopefully you enjoyed this session two if you like this session as well make sure you click like and also subscribe to trader talks that way other people who are interested in futures and whether it's tools such as fibonacci looking at the broader market applying some defined risk as we did with the gold future example you're encouraged to do that all right and we'd like to see a practice which you learn here today utilizing tools such as paper money and i would like to give you a reminder that remember in order to demonstrate the functionality of the platform we did have to use actual symbols keep in mind td ameritrade does not make recommendations or determine suitability of any security or strategy for individual traders any investment decision you make in your self-directed account is solely your responsibility appreciate your support everyone coming up next cameron may at the top of the hour with getting started with technical analysis so stick around bye now you

2021-03-02 01:55

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