Trading the EMinis: Strategies of a Professional

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Trading the E-Minis Strategies of a
Professional
www.dtitrader.com
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DTI Financial Center
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Combined 50 Years of Trading Experience

• Has Traded Tom Busbys Method Since 1985
• A Mechanical Engineer by Trade
• Chief Instructor _at_ DTI Since 2000
• Traded stocks, options, futures, bonds, and
  currencies

• 1975 Opened First Brokerage Account
• 1980 started with Merrill Lynch
• 1984 Vice President of Smith Barney
• 1996 Founded DTI in Mobile, AL
• Traded the SP 500 and NASDAQ Futures since their
  inception
• Membership to CME CBOT

Geoffrey Smith
Tom Busby
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Opening Bell Analysis

• Real Trading. Real Money.
• Daily Sessions
• Live Trade Setups in ES, YM, DAX, NQ, and Stocks
• Education

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Module 1

• Glossary

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What is a Futures Contract

• An instrument representing an agreement to buy or
  sell a predetermined amount of a commodity at a
  specified time in the future.

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The SP

• Traded at the CME
• 250 per point
• Emini 50 per point
• Symbol SP M5 or ES M5 (H, M, U, Z)
• Traded virtually 24 hours

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The Nasdaq

• Traded at the CME
• 100 per point
• Emini 20 per point
• Symbol ND M5 or NQ M5 (H, M, U, Z)
• Traded virtually 24 hours

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The Dow

• Traded at the CBOT
• 10 per point
• Emini 5 per point
• Symbol DJ M5 or YM M5 (H, M, U, Z)
• Traded 21 hours per day

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The DAX

• Traded on the Eurex
• Worth ?25.00 per point
• No mini contract
• Symbol AX M5-DT (H, M, U, Z)
• Trade 11 hours a day

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Big Picture
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Futures Markets

• SP NQ DOW

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Stocks
IBM EBAY MMM (3M)
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Commodities
Gold Corn Crude Oil
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Percent Return in Major Indexes
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• Survey How/What Do You Trade?(Futures, Stock,
  Options - Leaps, Long-Term, Short-Term, etc)

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Strategy

• I) Method
• II) Execution
• III) Risk
• IV) Psychology

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I. A Method

• Time Of Day
• Key Numbers
• RoadMap

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Market Times

• 1530 Globex Open
• 1700 Globex Open Sunday/Holiday
• 1900 Nikkei Open and Bonds Open
• 1915 Dow Open
• 2100 Hang Seng Open
• 0200 DAX CAC Open
• 0230 SWI FTSE Open
• 0815 Globex Close
• 0830 CME/NYSE/Nasdaq Open
• 1500 NYSE/Nasdaq Close
• 1515 CME Close

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1 TIME OF DAY

• Segment 1 Asia 1530 0330
• Segment 2 Europe 0330 0830
• Segment 3 US Morn 0830 1230
• Segment 4 US Aft 1230 1515

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Identified Time Segments

• 30 Minute Bar Charts to Determine Trend
• The 1230pm CT number is the SP pivot number
• The 600am CT number is the SP pivot number

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Key Times to Trade

• 0230 0300am (SP, Dax)
• 0400 0700am (SP, Dax)
• 0900 1030am (All Indexes)
• 1200 1330pm (All Indexes)
• 1415 1445pm (All Besides Dax)

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2 Key Numbers

• Support
• Resistance
• Pivot Point
• Current Key Numbers SP 500 1181, 1178, 1173,
  1169, 1166, 1159, 1157, 1155, 1151, 1147, 1145,
  1143, 1139, 1135

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3 Indicators - Futures Markets

• SP 500
• NQ
• DOW
• DAX

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The TTICK

• Proprietary indicator
• Gauges momentum in the market
• Noise zone /- 5
• Trending market /- 10

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RoadMap Page
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• II. Execution

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Things To Know To Place A Trade

• Long
• Short
• Out

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Order Types

• Market Order
• Buy / Sell Stop
• Buy / Sell Limit
• Stop Limit Orders
• Learn Which Order Type Best Suits You!

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Protective Stops

• Arbitrary Stop
• RoadMap Stop
• 30 minute bar chart
• Combination (RoadMap and chart)

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Trade Log

• Keeps track of your trades
• Will help if there is a discrepancy
• Can print off the log if you trade electronically

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• III. Risk Management

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Risk Tolerance

• Different levels of risk
• Determine your own risk tolerance
• Find a comfort level
• Dont disrupt your everyday life

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Maximum Risk

• On each trade do not risk more than 1/3 of the
  average daily range
• You can find this at www.barchart.com
• Look at the ATR (average true range)
• Check it every couple of weeks

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Risk Tolerance

• Tilt Number
• My Rule Dont Risk More than 10 of your trading
  account in one day
• Some days you do not have it, try to recognize it
  early

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Green Circle Country

• Keep a calendar next to your computer
• Put a green circle on it for a winning day
• Red circle for a losing day
• Purple circle if you did not trade that day

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Reduce Risk

• Do not over trade
• Trade no more than 6 to 7 times in a day
• If you dont like the risk, dont take the trade

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Risk

• Do not trade without a stop
• Use a 10 Protective Stop
• Identify RISK, then Profit Targets
• Analyze the risk, the reward will pay for itself

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IV. Psychology
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Psychology

• Mental Mindset Is Everything In Trading

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Habits Psychology

• Balance Fear Greed
• Understand PEOPLE Move the Market
• The Doctrine of Genius

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Leverage

• Emini 1148.00 (X) 50.00 57,400
• Dow 10080 (X) 5.00 50,400
• Dax 4215 (X) 25.00 135,935
• Nasdaq 1420 (X) 20.00 28,400
• How Do They Relate???

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Long, Short, or Out?

• Use SP 500, Dow and NQ
• Use Time of Year, Month, Day
• Futures, Stock Use Volatility
• Expiration Days

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DTI Simulation

• Proprietary 230pm Trade
• Key Numbers for This Day
• 1230pm - 1166.75
• 230pm - 1168.50

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• Review and Forecast

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April 2005 - DTI

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May 2005 - DTI
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TIME IS MONEY

• 150 days (X) 250 per day 37,500.00
• Procrastination costs money.
• Get Paid for your Time.

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• Questions?

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Winning the Trading GameBy Tom Busby
Set for Release By Wiley Publishing on November
1, 2005
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Upcoming Classes

• May 14-16, 2005 Newport Beach
• May 22-25, 2005 Virtual Class
• June 12-15, 2005
• July 24-27, 2005
• www.dtitrader.com