Hey, it’s Clay at ClayTrader.com. I’m is about to be your steer now through futures tradingat a particularly amateur elevation, and a very basic level. So I want to quickly justtell you who “its for”, because I don’t want to waste your time. If you are looking for themathematical philosophy of things, if you’re looking forall the different crevices, and chinks of how thefutures markets work from the numerical perspective, you’re probably gonna be disappointed.If you are looking for justlisten, I want to trade futures. I want to know how do Imake money from futures. Sure, I want to knowsome wide-ranging aspects of, you are well aware, how the futures market operates, what actually it is, from a broad sense, yeah, I want to know that, but I’m more now for the practical real world type applications , not a knot of presumption , not a bunch of justmathematically equations that I’d learned in somesort of, you are well aware, textbook. I want to just know futures, sure, but I wanna know how to, how do you make money in the market? How do they labour? How will they articulate profit in my pocket? If that’s more of your mindset, then this will be for you, but again, if you’resomebody that’s looking for the scientific presumption of everything there is, then you’re probablygonna be disappointed.So retain that in recollection, and maybe you’re on the fence. Do I even want to learn futures? One of the most difficult benefitsfutures do allows users to parties is that it is a way aroundthe pattern day trading rule. So perhaps you’re kind ofstumbling around with that. You’re a little bit disheartened with it. Futures trading does not have to, it doesn’t fall under those regulations. So that’s one thing that I would just kind of throw out there that may get you interestedinto the markets, and wanna informed about them. So with that tell me anything, let’s go to my desktop, and let’s get thiscourse and class started. Therefore welcomed my desktop. Before anything else, we need to take a verywise approach to all this, and the wise approach would be, well, let’s just figure outwhat the futures market even is. What’s the purpose of it? What is going on? How is it interacting with thegeneral marketplaces as a whole? And once we know that, well lets start to make money from it, but like I said if we’re gonna make money from the futures market, it would probably be wise to at least know what the futures marketis in the first place.So that’s what we’re gonna dohere with this first class. Establish a good solid framework, and groundwork fromwhich we can build upon, and then eventuallystart to make money from. But let’s just start, likeI said at the ground floor, and let’s look at some definitions here. So let’s seizure our trustyMerriam Webster dictionary, and look at each of these terms. So the first being future, what does future actually aim? Well it’s something that will exist, or happen at a later time. The two key componentsthere being something. So okay something is what? Happening at a later time, and we’ll get to more of that as “theres going”, and then the next component is just a market, and a market is a meetingtogether of parties for aims of trade.But we’re concerned about, andwhat we’re gonna look at is a meeting together of people. So a future marketplace, just something, and this something’shappening at a later time, and this has all beenbased within a market, and a market, a fulfill together beings. So convening together of beings. The logical question then becomes, okay, well who are these people? Who are these people thatare gratifying together? You know, what are they doing? But who, right? Very, exceedingly logical question.So with that, you got to keep in mind thatthere are two major parties that must be involvedfor a market to exist. Once again, extremely, youknow, basic financials here, you can’t have a market if there’s not two those who are involved, right? One party does not make up a market. So who are these peoplethat must be involved, who are these peoplethat make up the market? Well you’re gonna have a buyer, and you’re gonna have a seller, or only in general purchasers, and sellers, and that accompanies up the next question. Okay, well what is thepurpose of their find? And that is to negotiatea deal, or a commerce, right? That’s what a marketplace does. If you’re going to the grocery store, and you want to buy an apple, you are negotiating a bargain. You are saying, okay, I will sell this slouse of coin for that, and you have to try to negotiate. If you think it’s priced too high, if you think the selleris trying to rip you off, well then guess what? As a buyer there’s no deal, right? No cope , nothing’s happening.So again, we’re keepingit very basic right now on just financials 101, that’s what a marketplace is made up of. Two beings and these twopeople are customers, and vendors. Let’s look at the nextpart here, something, and then this ishappening at a later time. Now at this item, the deal has been performed. So that leads us to, alright, well what is the something of a spate? I get it, a administer has beenmade, but the something. So what is this something? And that is an agreement fora transaction to take place at a later time in the future. There “theres going”. Are you checking how everything’s kind of coming together here? So a agreement has been stimulated, and then the details of the deal, the something of thisdeal is just an agreement for some kind of transaction.So what kind of transaction, or in other words, what are the details of this agreement? So a little bit of situation here. Let’s just say that when thisparticular agreement is met, that the current date is August 15 th. So again, to reiterate, who is this happening, who is originating, or who’sis this happening between, who’s manufacturing up the marketplace? Although we have, again, the purchasers, and in our place, in our little fib herethat we’re going through, let’s say the buyer in this story, they manufacturer, they develop, they sell one of my all go favorites, Sour Patch Kids, alright? So if you’re not aware, Sour Patch Kids aren’t exactly healthy.That’s why I eat them in moderation, but the buyer, one of their main ingredientsin Sour Patch Kids that they need to buy is a sugar, right? So they’re saying, you know what? I would like to buy 100 poundsof sugar for $1.50 per pound, and then the other part of this grocery, who are capable of they be talking to? Well, hopefully youhave your common sense, well, if they’re looking to buy carbohydrate, they’re probably talking tosomebody that sells carbohydrate. Very good job. Precisely, so they’re talking to a marketer that is going to offer upor produce sugar, right? They have the large-scale sugar cane orbits, and they are a producer of sugar. So the seller looks at their proposal, the buyer, and saying, alright, the buyer’s offering us $1.50 per pound, and they want to buy 100 pounds of carbohydrate. Well, you are well aware, yeah, I will cause that 100 pounds of sugar for you, and then the final part of this agreement, the last little bit of detail, which is very importantfor the futures market, is that they are saying this transaction will take place on October 15 th.Not to insult your knowledge, but again, as far asour story is concerned, the current date is August 15 th. So this consider, this transactionwill not actually take place until two months later, right? Two months into the future. So that’s what’s going on, or they are making anagreement for this transaction to take place in afuture, or in the future, and that’s why this would becalled a futures contract. All a futures contract is, is an agreement to buy, or sell a stock on agiven appointment for a imparted price.So the agreement, again inour situation right there, and to buy, so what’s going on now? Well, they want to buy that1 00 pounds of sugar, or sell. So in this situation, the seller is going tosell 100 pounds of sugar for some commodity. What is the commodity in this case? Will the commodity isactually the sugar itself? What is a commodity in general though? Well that’s just a raw material, or an agricultural concoction, and that can be bought, and sold. So it’s a physical product. It’s something that you canpick up with your hands, you can smell, you canthrow it at mortal, I approximate if you miss. So what are some other examplesout there of stocks? While there is coffee beans, and these are all things that can be sold in the futures market. There’s petroleum, there’sgold, corn, cotton, wheat, and there there are many others, but here is just kind of afew of the most frequently asked ones. But again, that’s what a merchandise is. Merely a raw material, and then getting back into thedefinition, such arrangements, this futures contract is all what? It’s gonna happen on a returned date.So in such a situation, October 15 th, and then for a handed cost, which we’ve establishedis $1.50 per pound, but why in the future? Why agreed to buy, or sellsomething in the future when you can just simply buy it, and sell it right now? To understand we got to go back to kind of the foundations of business. Even if you’ve never made abusiness class, that’s okay. This is very straight forward, but you know a principle in business 101 that if, expecting of course you want to be a successful company, usurping you want to havea successful business, “youre supposed to”, you are well aware, at the terribly, exceedingly core, the forefront of anydecision you manufacture of any, you are well aware, pathway that you choose to make, you need to always beattempting to do one thing, and all companies once moreassuming they want to be, you know, successful, assumingthey want to be profitable, they are attempting to dothis, and what is this? Well that is try to manage risk.Nobody knows the future. “Were not receiving” such thing as a crystal ball. Nobody can know for sure. Nobody can be certainwhat’s going to happen. So you need to be able todo your best to forecast what you believe is going to happen, what you think is most likely to happen, and that action you canmanage gamble the most part. So that’s really, and that’swhy I desire that likenes. That’s what fellowships are trying to do. They’re trying to go fromuncertainty to certainty. No guarantees , no crystal balls , nobody can tell the future, but the better a companyis at managing the risk, the better a company is at trying to, you know, kill that skepticism, or kill the uncertainty, that’s a good thing. That’s going to give them aleg up on their competition.That’s how companies get so large-scale is they’re just so good atmanaging the unknown. They’re just so good atmaking decisions located off of what they think is gonnabe in their best favor from a risk management perspective. So risk management, and the other word for thiswould you just be hedging. So fencing, that’s what isgoing on in the futures market at, you are well aware, the, the foundationalcore is risk management, and in that you know, infutures market terminology that would be known as hedging. So let’s look at each personin the agreement’s perspective, and we’ll start withthe buyer’s perspective. Now, a buyer from abusiness point of view, a huge focus for that customer is what? They want to make money of course, and they’re gonna make money, and their point is gonna be what? Well, they want to keeptheir costs of product as inhibited, andpredictable as possible.Not guaranteed, but let’s just try to keep our expenses as restrained, and simply keep it coming aspredictable as is practicable, because that’s gonna utter “peoples lives” easier to do forward-lookingprojections, and all that. So from the buyer’s position, when there’s, alright, well we need sugar to makethose Sour Patch Kids. So they’re thinking you know what? In the future, I belief a pound of carbohydrate might actually rise upabove $1.50 per pound. So if that’s what the buyer’s thinking, that’s why they’rethinking, you know what? If we recall now, why do they think that? I mean they have, for some reason, they believe that sugarprices are gonna be going up. So that’s why they’resaying you know what? Let’s just lock in the premium. Let’s get the price of $ 1.50 locked down. So that’s why we’re gonna do that. So they got it lockedin per such arrangements. Let’s now say as part ofthis story, a tornado comes, and carbohydrate cultivates are destroyedjust all over the place, and because of that, all of a sudden there’s less sugar, and when there’s less supply, right? Supply, and demand, lesssupply of something, but the needs and requirements stands the same, well, that’s gonna shift prices up.So let’s say that the newmarket price is $2.25 per pound. Now here’s a quiz for youthat I require you to answer. What does the buyer pay? What cost per pound are they paying? Okay, hopefully I “ve given you” sufficient time. If you said, you know what? They’re pay $2.25 per find, because that’s brand-new market price. That would be wrong. They are paying $ 1.50 per pound. Why? Because, well, that’s what they agreed to. Remember that agreement. In the future, we’re buyingit at $1.50 per pound. So sure, that’s, I meanfor the sugar fellowship, that’s not a very good deal, because had they notentered into that agreement, they could be selling that 100 pounds for $2.25 per pound, but, since they are did enter into it, ah , now they got to sellit for $1.50 per pound.Of trend, from the buyer’sperspective, hey, alright, we made a good decision. You know, good job. They’re all high fiving one another. We’re merely paying $1.50 per pound, enormous. Yeah, our adversaries hah, too bad, they’re not as smart as us. They’re over there paying $2.25 per pound, but us, yeah, we’re gonna be able to constitute those Sour Patch Kids for $1.50 per pound. Now let’s take a look at the other side, the seller’s perspective. A big focus now for the marketer, of course they want to make money too. This is just business, but how are they gonna make money? How is this seller gonna make money? Well, they’re gonna make moneyby just selling their product for as high-pitched as the market, you are well aware, the buyers arewilling to pay, right? That’s just basic trash there. If you’re looking to sellsomething to make money, yeah, the higher you can sell that, that would be the goal, because that’s gonna be the more profit.So from the seller’s perspective, they’re gonna be thinkingsomething like this when they enter into the agreement. You know what? In the future, I argued that a pound ofsugar might plunge below $1.50. That’s what they see. Now, why do they argued that? I necessitate, they’re gonnahave their deduces, they’re gonna have their economic patterns, but for whatever reason, theybelieve that in the future, you know what? I recollect $1.50 is getting somewhat high. I don’t think this priceis gonna last longer and longer. So that’s why they’resaying, you know what? Yeah, yes, make of Sour Patch Kids, we will sell, we agree to produceyou 100 pounds of carbohydrate in the future for $ 1.50 per pound, because in the back of theirmind they’re thinking yeah, because I necessitate if you would just wait, you can probably get it for cheaper. But I mean if you’re willingto pay us $1.50 now, okay, we’ll take it.So to carry on with the tale, they get that you are well aware approved, and then all of a sudden thesupply of carbohydrate simply increases all over the place. You have a bunch of new people getting into the businessof selling sugar. You have sugar cane cropspopping up everybody. So once again, financials 101, when all of a sudden supplyof something increases, well that’s going to cause premiums to what? To was down. So the new market priceall of a sudden is $1.15. So let’s go through the quiz again. The question this time being, so what does the vendor receive? How much does the marketer come? Are they get $1.15, or $1.50? If you are saying, well they’regetting $1.50 per pound, you would be right.Because that’s what the agreed was. So who’s kind of getting theshort dissolve of the stick here? Who is feeling some tendernes? Aw man, the purchasers, becausea buyer saying, huh, I means that we signed that contract, we stimulated such arrangements, we have to buy that at $1.50. Oh that’s not gonna be very pleasant. Now the seller’s thinking, yes we were right. They’re all high five’in because oh yeah, you know our you know, other people are having tosell their sugar for a dollar. You all those other adversaries out there, they’re having to sell theirsugar at $1.15 per pound, but because we made this agreement with the Sour Patch Company, we’re able to sell it for $1.50 per pound, and they’re feeling very, very good about themselves.I mean it would have been agood transaction on their segment. But this is all fairy. This is all only, you know, the basics of how it cultivates, but let’s move into getting a little bit more practical here, and this will be kind of thelaunch point for you and I to be able to start to make money from the futures market itself. Unless of course you are a maker of some sort of product, then yeah, maybe you would want to have more of a, you are well aware, this approach, but I would assume that probably9 9% of people watching this are gonna be, you know, wanting to get a little bitmore practical with all of this, but it’s good to knowwhat actually is going on, like I said, behind the scenes here, so the approach of hedging are the pillars of the futures market. Like I said, that’s the foundation.Those are the pillars thatwe want to build upon. And this is also what is knownas a physical accommodation. However, for us, I intend, like I said, thevast majority of beings here, and the vast majority ofpeople in world markets itself, I mean they’re not makes, they’re not creators, alright? So majority of the person or persons, I want to say that because I make this … I once met the comment about, yeah, I’m assuming most of you watching, which is true too, butplease too understand that as far as the futures market as a whole, the vast majority ofpeople are also involved in it, they’re like you, and I, right? They’re not farmers. They’re not manufacturersof any sort of you know, merchandise that what they would need, you know, parts for, or anything like that.So this is what would beknown as the speculators. You have hedging withthe physical agree, and then you have plungers, and this is the investors, this is the buyers. So you and I can get involved through what is knownas the cash colonization, because we’re not interested in, I’m assuming nothing herewants 100 pounds of carbohydrate to show up at their doorway. So assuming that is correct, then yeah, you would want to be getting involved through the currency accommodation, but the stage here is thatwe can indeed get involved in the futures market through gues by being an investor, by being a trader, and yeah, that, that’sdefinitely stimulating. That’s good, I’m glad we can get involved. So what are the types of futures markets? Pretty much there are two broad-minded sells plungers can choose from.So if you’re saying, you know what? Yeah, I want to get in the futures market, I want to get involved, let’s go. There are two types ofmarkets you can choose from. Two types of futures. So the first category is stock futures, which we’ve already has spoken about. These are the raw materials. They can be metals, they can be agriculture, they can be energy. I mean they can be cattle. Like I said, anything that youcould pick up, give, bouquet. Like I said, pitch at person. You might have a hard timethrowing a cow at individual, but you get the point here, right? Like they are entries that you can see, you can pick up with your hand, and then the other typeis fiscal futures, and these are literallyjust pieces of paper.These are just, you know, they’re some sort of paperthat says, hey, this represents some of other sort of abstractobject, like a money. Have you ever thought of like the money that you hold in your hand? Why does that aim anything? Well, because therewas this abstract idea. There’s this belief that, well there’s significance in there, but is there actually valuein that piece of paper? I make, I predict maybe if you we’re looking to try to start a fire, there’d be some real world practical significance, but other than that , no. I signify it’s not likeyou’re gonna be able to, you know, mallet a nail in with a you know, a piece of paper in your hand.So these are just objectsthat represent synopsi meanings. So you’d have indices, and the more popular for thesewould be the S and P 500, “youve had” futures contractsattached to those, and we’ll actually be talkingabout those in future classes, but you can do it in regards to you know, money exchange rates, and then time even interest rates, and treasuries themselves, and these are all the contractsrevolving around obligation, and you are well aware, you can do either parties, some people trade commodity futures, some people merely want tofocus on monetary futures.But the level now being is that these are the two broad-spectrum types of, you are well aware, futures markets that exist, and that the types of futuresthat would be out there, you have commodity futures, and then financial futures. So how do plungers make money? Well, let’s look at our example now, and recollect “weve had” that $1.50 price, and that is going to bewhat we would consider, and call in our examplehere, the place cost, and recognise rate is somethingyou’ll examine out there, but precisely is clear that a place price, all that intends is that’sthe current price.Right now at this moment, if you wanted to buy sugar, it would be $ 1.50 per pound. At this moment, the current price, that is the spot price, but blot costs don’t change, or don’t stay the same. So as day is making progress, things are gonna start to change around. Spot costs are gonna change. Spot prices could riseup to the $ 2.25 mark, spot rates could go down to, let’s call it that $1.15 assessment. Alright, so why? Why are spot premiums altering? Well, I mean you could have weather, you could have government decisions, you could have just world events, you are well aware, simply material happens in the world. Interest frequencies, maybe interestrates varied something. Speculation itself, that’salways the entertaining, and crazy component. Not undoubtedly justabout the futures market, but genuinely all financialsmarkets as a whole is, well why is the price changing? I don’t know, because hegot a bunch of buyers. You got a bunch of investorsmaking different decisions. So it’s not like from a, you know, an economic standpoint, supply and involve has changed at all.I make, supply and demandcould be the exact same thing, but rates could be changing. Spot rates could be changing just simply, because of speculation. Investors, speculators, acting, and that’s it. So that’s always the crazypart about the markets is sometimes nothing happens at all. Supply demand remains the exact same, but spot tolls are still fluctuating. Well, because you have a bunch of merchants, and investors that make up the market. So let’s think about thevalue of the contract, because of this change in spot price.What is the value of thiscontract gonna be doing? And again, the contract betweenthe buyers, and the marketers. Well when discern premiums reform, the value of the contract deepens. I want to say that again. If you’re taken due note, surely write that down, because this is how you make money. This is how the futuresmarket opens up the door to you and I to make money. When smudge rates reform, again, the whole why we just talked about couldbe for a variety of reasons, but when the discern costs modify, the value of the contract alterations, the best interests of the that futures contract itself is going to change. It’s gonna go up, and down, and all over, and right here the change in the value of the contract itself is what allows speculatorsagain, traders, us, investors, to obligate or of course losemoney from the contract, and who are these speculators? Well the speculators are anyanybody you can imagine. They can be beings down on wall street, they are able to parties you know, in the retirement home, if they have the internet access, they could be, you know, whoever wants to get involved in that, is the power of this day, and senility to new technologies, and the internet, andsoftware, and brokerages, and scaffolds is anybodycan be participating.Anybody can be making moneyfrom this wavering, from this change in thevalue of a futures contract. So you don’t need such requirements. You don’t need to go to college, you don’t need to have a college degree. I necessitate theoreticallywouldn’t inevitably be wise, but you could just open up in the next five minutesa futures detail, and be trading you are well aware, the value of contracts.I mean in theory if you wanted to, that’s just the day, and ageof technology we live in, but that is how we aregonna be making money. That is how the opportunity to make money actually starts is because spot prices reform. The significance of contracts reform, and because the value of contracts deepen, there is an opportunityin there for speculators, speculators to make money. So where does all thisactually happen though? Well, this all happens on what is called the futures exchange. Let’s once more quicklyget out our dictionary. So what does exchange symbolize? Well that is the act of granting, or taking one thing in return for another. But we can boil thisdown a little bit more.So in such cases, as far as the futuresexchange is concerned, it’s the act of imparting, ortaking contracts in return for, well in our case, money. We’re giving money, we’re getting contracts, and so on, and so forth. Now these sells can befound all over the world. The most famous of them allis are still actually started, and that would be the ChicagoMercantile Exchange, the CME. If you, perhaps you’vealready done some research on the futures, and maybe you’ve seen CME residences, that’s what that stands for, but as far as you know, because I wanna I wanna makethis timeless presentation. So if you’re watching thisseveral years from now as far as, because things vary right? Now, the Chicago Mercantile Exchange has been around for decades upon decades. But you are well aware, “youve never” know. So in order to keep this timeless, just get out a bit of technology. You know, if Google doesn’t exist, maybe, you know, 10 years from nowwhen you’re watching this, there’s some little robot butler that will come down from the ceiling, and you can just ask them, but what you’re gonna want to be asking, or time typing into the search engine, and precisely kind in futures exchange, insert whatever country “youre living in”, and then insert the year, and it’ll do its thing.It’ll spit out all theinformation about the current futures exchanges that exist out there, and you can then keep up to date on everything from that point of view. So that’s what I have here. Let’s go back to me at my desk, and we’ll wrap this up. Well, hopefully now you havea much better understanding of what the futuresmarket is, how it succeeds, what the purpose of it actually is, and then who these participates are. And then from that, that’ll establish us a good foundation that we can build from infuture first-class , no pun proposed. Before I disappear though few things, first off, if you experienced this, just let me know. Hit that like button, and then too leave a commentdown below in terms of what you would like to see in the next first-class I put together.Maybe you actually had aquestion on this class in, and of itself so you can ask those, or like I said, if you wantto give me some suggestions for future videos, again, sorry , no pun purposed, then leave those outin the common section, but if nothing else, and you’re just, hey, I enjoyed it, then affected that like button, and over season I’ll try, and do some more seriesin classifies like that.So just like I said, theeasiest behavior to communicate, touched that like button. Also check out the path. The part canal is not necessarily just about futures trading, it’s more about justkind of money in general, flourishing rich, takingcontrol of your finances. So there’s stock market stuff, options, busines trash, personal finance, and real estate stuff. So check out the channel as a whole, and hopefully you to decideto ultimately subscribe to the channel likewise, but if nothing else, like I said, hitting that like button.Leave specific comments down below, and I’ll see you backfor class number two. First off, thanks so much forwatching the entire video. Real quick before you go, I want to invite you to a live webinar, network class practice workshop, online episode, whatever you want to call it, but it will be me live revealingto you what I discovered that enabled me to convert myself from being an employeeto being my own boss, including how I had only one losing period out of 73 daylights in total. I’m gonna submerge three keysthat has assisted in me open profitable compatibility within the markets. The first key is super weird, but in a fertile type of way. The second key is super awesome, because it quite literally iswired into our DNA as humans inducing it very easy to use, but in a cruel room, this becomes a pitfall for countless brokers. I’ll explain it all though, including how to avoid the pitfall that it creates for some, and yeah, the third key, when you hear the views resounds course, road more good to be true, but it’s not, and I’llshow you how it all works.Then at the end, I openit up for a few questions, and refute session thatis again, totally live. Even if you can’t do the live discussion, delight still sign upas it will be recorded, and you can go back, and watch the replay that I will send you. Click the portrait on the screen, or click the link downin the description box so you can get the date, andtime, and declaration your blot, which I should note is limited due to the fact that thistruly is a live event. If you have any questions, let me know. If not, I’ll be seeing you soon ..