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THE MARKET WHISPERER 17 1

just like stocks, but with one difference: its expiration date is at the end of

each quarter.

The price of the futures contract represents the “anticipated future”
of the S&P 500. In other words, the ES represents the anticipated market
direction. In actuality, the ES is a tradable contract, traded by a crazy
bunch of experts in the CME – Chicago Mercantile Exchange. These

traders operate in transactions with a volume of billions of dollars daily.

It’s commonly accepted on Wall Street that futures traders know better

than anyone else on the face of the earth whether the market will go up

or down. If you check the ES at the end of a day’s trading, you will see that

it precedes the SPX or SPY by several seconds, and therefore allows you

to note market direction earlier, too. Since we have already understood
that the S&P 500 is THE most important index for the day trader and
determines 60% of the direction of stocks you are trading, if you also use
the ES, you will definitely know before others which way the market is

moving. In short, it’s worth money.

Not every broker or chart provider allows display of the ES, since
they need to pay for the information coming from the Chicago Futures
Exchange. If your broker does supply this information, you will likely be
charged some $50 per month for it.

Another advantage of the ES is the fact that it is electronically traded
almost 24 hours a day (it closes for 15 minutes at 4:15 pm EST) except
on weekends, which goes far beyond normal trading times of stock
exchanges, operating between 9.30 am to 4 pm EST. This means that the ES
is traded before other trading sessions open. Therefore, if you look at the
pre-market chart about one hour before the start of trade, which is what I
do, you will know whether the market will open positively or negatively as
compared to the prior day’s close. But of course, you are not the only ones
able to check the pre-market chart: every decent financial site or television
channel, such as CNBC, will keep you updated prior to the trade session
opening as to what kind of opening the futures are “signaling,” adding a
warning statement such as: “Futures do not always represent market
direction.”

Should You Trade in Futures?

Futures trading is not for everyone. Futures contracts behave like stocks,
but with heavy leverage of 1 to 20. This means that you get a lot more bang
for your buck trading futures contracts. Even if the price of futures shows

no volatility, the movement of money in the accounts creates the illusion of