Wednesday, December 30, 2009

An Attitude of Gratitude / Emini Futures Trading - Wednesday December 30th, 2009


"O give thanks to the Lord, for He is good; for His mercy and loving-kindness endure forever"
(I Chronicles 16:34 AMP)
Today's Show-
An Attitude of Gratitude
(listen now)


If you woke up this morning with more health than illness, you are more blessed than the million who won't survive the week.

If you have never experienced the danger of battle, the loneliness of imprisonment, the agony of torture, or the pangs of starvation, you are ahead of 20 million people around the world.

If you attend a church meeting without fear of harassment, arrest, torture, or death, you are more blessed than almost three billion people in the world.

If you have food in your refrigerator, clothes on your back, a roof over your head and a place to sleep, you are richer than 75% of this world.

If you have money in the bank, in your wallet, and spare change in a dish someplace, you are among the top 8% of the world's wealthy.

If you hold up your head with a smile on your face and are truly thankful, you are blessed because the majority can, but most do not.

If you can read this message, you are more blessed than over two billion people in the world that cannot read anything at all.

You are so blessed in ways you may never even know.

by Stephen Eardley

S&P 500 Emini Futures Trading 


Interesting story in the above chart. As we know, the S&P 500 Emini traded just over 500k contracts yesterday during the day session in a tight 6 point range. Once the London session opened, it only took 10,000 contracts to drop the market a full 6 points... Really?
The Globex sell-off stopped at our 1113 weekly level (to the the tick) and began a 9 point rally which required 160k contracts to complete. My point is this, deep pockets, institutional buyers, or anyone capable of leveraging 10,000 contracts, can dramatically affect a thin market, especially around the holidays. Any holiday!
Let's do the math -
I can trade/leverage 1 Emini contract with $500 during the day session.
At 3:00AM in America (my time) London opens for their day session.
We all know the costs of margin/leverage increases overnight. Right? Why?
Funny you should ask. Perhaps you should even ask the Fed, but I digress.
The market closes and my margin rises to $2,500.00 per contract, yet a fellow across the pond can trade the same contract when his market opens for you guessed it - $500.00  hmmm...
Now don't get me wrong, the boat floats both ways. When I'm enjoying a $500 margin he's potentially faced with $2,500 on HIS overnight which is our afternoon. So before I create any more confusion, let me get to the point. To leverage those 10,000 contracts last night that moved the market a full six points would have required a London trader to have at least the equivalent of $5m US in his account. To take that same trade an American would need $25m US in his account. Now don't forget the boat floats both ways across the pond.
Bottom line, the market moved 6 points and no matter where you live, the S&P 500 Emini pays $50 US per point / per contract. So let's just say you made the perfect trade, and you caught all 6 points. 10,000 contracts X 6 points X $50 = $3,000,000.00 US profit less commission. Right? The London trader could have potentially made $3m US with only $5m in his account. The US trader needed $25m US to potentially make the same $3m US profit.
Did I mention the boat floats both ways?
Did you catch the part about how relatively few contracts can move price dramatically in a thin market? Did you know that even outside of the holidays the Globex/London session is dramatically thin compared to the US market?

As  you know, most of my daily guests as well as myself tend to hang our hat on the fact that when Wall Street closes we go to cash.  When Canary Wharf closes, they go to cash. I believe what may be missing from my business plan is a trading account with a UK broker. Do I want to trade overnight with a $2,500.00 margin? NO! What if I could trade it for $500 through my Canary Wharf broker? Well, the good news is - I can. So can you. You'll still pay taxes. This is no Ex-pat Underground Tax Evasion Scheme, it's simply smart business. The Globex session offers beautiful moves, and depending on where I am, at any given time, I can trade either market without being penalized.
You know I love to travel. We've been to Paris this year as well as Hawaii. In April we're off to Ecuador, Peru, Machu Picchu and the Sacred Valley of the Inca's. And you heard me speak the other day about my heart's greatest desire, to build a trading floor in Uganda for the graduates of New Hope Orphanage & School. And between satellite technology and hotel wi-fi, it's all quite doable.
Do I have a UK account yet? No
Is this one great big advertisement for a Canary Wharf broker to solicit my business?
Maybe =)
Now don't run and jump the gun. Do your own due diligence.  If there is an issue with anything in this post that I'm not aware of, please let me know.
CFRN is no one man show.  CFRN is a team of believers from around the world coming together in one place to share -  Knowledge, Questions, Success, Trials, Tribulations.
My friend, "Whoever you are, wherever you are, you are not alone."
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I do have one more chart for you tonight. At the close  of today's show I talked briefly about the Descending Price Channel the market was trading in. At the time, we were in the middle of the channel. I stated that one of two things must happen, we trade to the top or bottom of the channel. Price did in fact break out of the channel to the upside and then made a picture perfect pullback to our 1121 level which was also the top of the top of the channel and rallied into the close and the Globex as well.

Our broadcast tomorrow will be early. We have to make it to the bank, purchase cashiers checks, and present them at the Tax Assessor's office with an "Attitude of Gratitude". Amen?

Tomorrow will be our final broadcast until 2010.

If you can read this blog - "Thank a Teacher"
If you can read it in  English - "Thank a Soldier"

In everything you do - "Thank God"
As always,
Pray Hard & Trade Safe!

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