Hello and welcome to Trading Futures. My name is James Boyd. We welcome all of you here this morning. Scott is in Hawaii and I put some sunrise emojis out and Scott probably wins the prize for actually being the earliest awake this morning. Welcome him, Grace, Silas, Denning, Dom, Sandeep, Wayne, and many others. Good morning to all of you. Just real quick as we get started, I want to also give you a quick reminder that we' re going to be using a paper money of the software, the desktop version, as we talk about example trades here today as we normally do. I also want to give you a quick reminder, I do post on X throughout the day. Check us out there at JamesBoydCS. We do post educational updates there and also announcements.
Now, just real quick, remember that Futures. Futures options trading involves substantial risk, not suitable for all investors. Also understand that Futures accounts are not protected by the SIPC. And also understand when we talk about examples, they are just that and all investing involves risk. Now, today, what I' d like to really take a look at is, sure, we' re going to look at, obviously, the equity futures for sure. I would like to kind of start out talking about the interest rate example, kind of doing a quick intro. And then, of course, we' re going to start talking about the trading session quiz. That contract expires in one day. Okay, so we talked about that last week, how it would be just a week trade from last week.
And we' re going to get out of that position here today. I want to try to help you also learn about being more comfortable with that contract and understanding the movement of that. Second, we' ll talk about the gold trade that was stopped out. I want to talk about gold again. And I also want to talk about silver, OK? Could silver be setting up potentially like an ascending triangle? We ll also take a look at maybe an equity future short example. We know that the NVIDIA trade has been holding up the NASDAQ. Wonder if NVIDIA starts to pause. Are there any other supporting stocks that could hold up the NASDAQ? We' ll talk about that. And I also want to introduce the VIX futures, and we' re going to also kind of talk about Bitcoin and Ether.
So I want to kind of talk about some of the different futures we haven' t talked about and just kind of introduce those here today. So first off, let' s go ahead here and take a look at one thing that I want to make mention of. So first off, you can go to Schwab. com. And if you go to Schwab. com, we can go to where it says learn and then courses. Some of you might say, I' ve never even heard, never traded futures. Is there an online course for this? Absolutely. Go to Schwab . com, log in, click learn, go to courses. The futures course is at the bottom of that list. And you' re going to see that we have lessons on there from introducing futures, OK? Futures basics, OK?
Portfolio hedging. And also at the bottom of that, there is a fundamentals of futures sample trading investing course. Now, sometimes people might say, well, do I have to read this? Well, you don' t have to do anything, OK? If you want to be lost, go for it, OK? You don' You need my help, OK? So here' s the thing: three hours, OK, to go through start to finish. This would be, in my mind, prerequisite. If you' re going to even pay for trade futures, go through the online course so you have some idea of what some of the terminology is that we cover here. Now. Let' s go ahead here. So first off, if you say, I haven' t done that yet, there you have your homework assignment.
So make sure you have that. Now, what I want to do is I want to talk about a couple of things that we' ve brought up in the past. And one of our symbols that we' ve been using is really been taking a look at the 10Y, OK? Now, what in the world is the 10Y? Well, the 10Y, if we take a look at this, this is the micro-10Y. 10-year yield futures. Why do we care? OK. Well, if I back this chart off for just a second, the last three years, on the 10-year, OK, interest rate, we' ve gone from 1. 4-ish to 4. 5-ish. So in the world of futures, what we' re trying to do is we' re trying to forecast a direction.
Now, if you' re a stock trader or you trade options, you might not have a direct way to play that move in interest rates, like literally the move in interest rates. Well, 10Y is one of those products where we' re literally trading the interest rate for the 10-year yield. Now, what I want to do is I want to kind of, I' m going to imagine that some people, when they look at this, they' re confused. OK? Now, when we look at this here today, and let' s kind of state just real quick what our position is. We have two contracts, okay? Two contracts. If we' re plus two, we' re long. We' re bullish. We' re thinking that that yield is going to rise.
And what you' re going to notice is we got in at 4 . 415, and it' s at 4 . 561. And what you' re going to notice is here, we can see the PL open and the PL day. Now, normally, this wouldn' To make a whole lot of sense to run it down to literally the last day, but I want to kind of include it in today' s class. We try to do all the trades, and we do all the trades in the class. So we will be exiting this position here today, but what I first want to do is get you comfortable with reading the numbers, okay? So if we, for example, let' s break this up. So if we see, okay, so one -tenth of a basis point, okay, equals $1 per contract, okay?
Now, don' t worry. I' m going to show examples of these, but these would kind of be something good to kind of probably write down. One basis point equals $10 a contract, okay? Ten basis points equals $100 a contract. Twenty basis points equals, $200 a contract, okay? Now, let' s kind of look at examples of these, okay? I' m going to tell you something right now. If you' re not comfortable, we know stocks move in cents. When we talk about interest rate products, they move in basis points. At least this one does. Now, what you' re going to notice is, let' s kind of take a look at some examples, okay? 4 . 60 to 4 . 61. Now, how many, what is that, okay?
Is it a tenth of a basis point, or is it a basis point? Now, quick reminder, we have 100 basis points, okay, equals 1%, okay? So if we go from 4 . 60 to 4 . 61, 1, how much? How much is that? Now, this is where it' s really important that you kind of speak back to me on the chat, because if you don' t answer, it tells me this is why we' re going over it. So if we go from 4 . 60 to 4 . 61, this is one basis point, okay? One basis point. Now, what is the one basis point worth per contract? It' s $10 a contract, okay? So if we got that direction right, one basis point, $10 a contract.
Now, let me kind of give you another one, okay? 4 . 60 to 4 . 65, okay? How much is that? Well, what do we got here? If we go from 4 . 60 to 4 . 65, we have five basis points, okay? Five basis points. Now, how much would that be worth? Well, so if we take a look at this, 4 . 60 to 4 . 65, it' s five basis points. How much is the five basis points worth? Well, per contract, it' d be worth $50, okay? Now, let' s take another one. Let' s practice, okay? 4. 60 to 4. 70. How much is that? Well, we know it' s a tenth of a percent, okay? Now, wait, if it' s a one-tenth of one percent, that' s $50.
Also, you could say equals 10 basis points. So if we go up 10 basis points, what I wrote up here before, it' s $100 a contract, okay? So we go from 4. 60 to 4. 70, okay? Now, where I think it can kind of get a little bit, now, if we take also four, now, let' s introduce something a little different here. 4. 60 to 4. 601. Now, now, this is where sometimes people say, okay, now that confuses me. When you see that, that small little movement, that is literally one-tenth of a basis point. And that equals $1 per contract, as shown up above. That' s why I said this, this right here, that' s going to be really important, okay?
So what I wrote, I just want to make sure what I wrote, we also give examples of that, okay? So when we go take a look at the price right now, when we go take a look at the interest rate right now, here' s going to be the final exam, if you will, okay? So when I look at this, 4. 56, okay? Five. And we look at this, and it says down 0. 57. Seven. What does that tell? How many basis points is it down? Well, if it says 0.057, we' Re down five basis points. We' re down five and a half basis points, okay? And we know that if you go down five basis points, that is worth $50.
So that' s why when we go look at the profit loss for today, if we' re down five and a half basis points, it' d be $55. And we have two contracts. That' s where you' re getting that loss. Or give back today of $110. That' s where it' s coming from. So if we' re down five and a half basis points, which would be $55, and you' re seeing that' s a little bit less, that' s where that loss is coming from. I just want to give you some understanding of that P &L, okay? Now, here' s the deal. So if we go back to this, and I just want to make sure we' re crystal clear. So if we go from 4. 60 to 4.
8, how much is that? Well, we know it' s two tenths, okay, of 1%. So two tenths of 1% also equals what? 20 basis points, okay? That 20 basis points, given what I wrote up above, 20 basis points is $200 a contract. And we' re talking about of 10Y, okay? Now, if I did this, last two examples, if I go from 4. 60 to 4. 8, I' m going to get $200. I' m going to get $200. I' m going to get $200. I' m going to get $200. From 4. 60 to 4. 605. How much is that? Well, when you think about that, we' ve just really gone up a half of a basis point, OK?
And so we really, if you think about that, for every, when we talk about a tenth of a basis point, here we don' t have a tenth. It went up five tenths, OK, of a basis point. So five tenths, OK, of, whoops, of a basis point, I' ll spell. Basis point equals, oh my gosh, spell it. It' s horrible today, OK? Different keyboard, OK, $50. So that half. Half of a basis point move per contract, $50. Now here' s the last one, OK? If we go from 4. 0 to 5. 0, how much is that? What do we got? Well, that would be 1%. And we said before, 1% also equals 100 basis points. Voilà! Now the good thing is this. This thing is going to change, OK?
We get 100 basis points. Now, if we went up 100 basis points, how much would it be worth? OK, it' d be worth $1,000 per contract, OK? Now, so I want to kind of type that up here because this is kind of like the little key. 100 basis points, OK, equals 1%, equals which would be $1,000 per contract. Now. Now, was this helpful to kind of go over this, OK? Let me kind of back this off for just a sec. Just for a moment, let me kind of back it off for just a moment. Yeah, there you go. OK, got to go like that. And let me kind of move that up so we don' t have, there we go. Now let me kind of just pause right here.
Now what I want to do is I want to go to talk about the futures label. And then now when we actually kind of have this information, this information at the top, we can understand the basis point movement and how it affects P &L, OK? Now, for a moment, let' s go just real quick to, so first thing is days to expiration, one day, OK? Now, what we' re going to do is, first thing, we' re going to go down to the order cell. And we have a bracket order on it. The idea here is that we were going to get it to go up to 4. 654. OK, now we know what that means. 4. 65, we get it, OK? But 4, we' re like 4 tenths of a way past 4.
65. And we' re almost at or halfway to 4. 66. 4. 65 to 4. 66, one basis point, OK? Every tenth of a basis point, $1. So when we go to the charts and we see right here tick size, 0. 001. That' s saying it' s saying one tenth of a basis point, OK? Now, what you' re going to also see is that one tenth of a basis point has a value of $1. And when it says a point value, that' s like our last example. That' s like saying we go from 4% to 5%, OK? Now, if you did that, it' s 100 basis points, OK? And that would be worth, we go from 4% to 5%, it' d be worth $1,000.
So notice, how close do we get? Well, we got about, what, 4. 63. And the target was to go to 4. 65. So we were literally like, what, two basis points off? Two basis points worth how much? Kind of gives us our little key. Two basis points really worth $10, OK? And we were trying to get two more. So we were literally trying to make about $20 more to go to the target. And then as we got so stinking greedy, we didn' t really get greedy because we didn' t have our class yet, we gave back $108 as we were trying to reach for that last $20. This is why we call it a reward-to- risk stop methodology, OK? We talked about that last Thursday.
So I' m going to right- click on this. I' m going to cancel these orders. Right- click. Cancel OCO group. So OK, we don' t have any stops. We don' t have a target. Now what we' re going to do is we re going to go ahead and right click, create closing order. We' re going to sell. And once we sell that, we' re going to try to lock in that gain on $302. Now the interesting thing about the futures here, we don' t have earnings, OK? We don' t have earnings, OK? And we' re going to go ahead, create closing order, sell. Now the reason why I' m saying we don' t have earnings is a lot of times, equity investors are like, around earnings.
I can' t do anything because there' s a lot to earnings. That' s why there' s different products, OK? Futures sell, OK, that. We' re going to move it to the mid price, 4 . 569 if we can. Put it right there. Confirm send. Let' s make sure it fills. Note the commission. Check. Send the order. OK, fills. Now if we take a look at this, yeah, so the comment is, let' s kind of go back and put this here. Let' s kind of make this. So one of the comments, OK, from Jim, shouldn' t, OK, so if we said 5 tenths of a basis point equals $5 per contract, that is correct, OK? So we know that when we take a look at this, it' s going to really show 0.
001. When we actually take a look at this, it' s going to show 0. 005. OK? So you are key, Rhett. OK? Good. Now let' s go back and kind of just verify this, 0. 001. That' s one tenth of a basis point. So yes, Jim, OK? All right, now let' Some kind of go back and look at kind of some different products for just a moment. Now we had, for example, now by the way, do we think in our lifetime the interest rates are going to probably move? With knowing an interest rate future where you have some confidence on how it trades, et cetera, well, that might make sense, of course, OK? And this is a pure way to play the movement in interest rates. What makes the interest rate future go up, OK?
Or what' s some ideas? Well, last week we had some discussion from the Fed regarding that what they had done so far in terms of trying to tame inflation really hadn' t worked. Yeah, no kidding. James and Jane and whoever on Main Street, they could have told you that. You didn' t need a PhD in economics from Oxford, okay? Go to a local grocery store, they could tell you that, okay? So funny. We act like the average person knows nothing. They know a lot more than they think they do. And they could have told the Fed that, okay? Now when we also go back to just real quick the gold example, now I need you to kind of help me here make heads or tails of what we' re seeing on the chart.
So last week we had an example of gold, okay? And I' m going to go back to the Monitor tab, Account Statement. And what you Re going to notice is we had a position and we got into gold on the 17th of May, OK? And we got into the price of, let' s say, 24%. And the price of gold fell to $23. 31. So that' s about, what, 70 points. 70 points where every one point is worth, survey says, well, $10. So what happened is if we go to the 17th, where was the 17th on the chart? I want you to see the entry, OK? The entry was here. And the exit, let' s go back and confirm. I want to see, where was it? The 23rd, OK?
Where' s the 23rd? Right there. Now I don' t know about you, but it ain' t my first time in getting stomped out. And many times when you get stomped out, you almost get stomped out at the bottom. Has anyone else had that? As soon as I get stomped out, the bottom' s in. And it' s one of the annoying things about trading sometimes. But you' re trying to define the risk, OK? Now, if we look at this chart, would you say that we' re maybe at a spot where maybe an investor might say, hey, look, I' m looking to maybe enter the position of gold? Well, let me say it like this. What might kind of make us think that this might be a spot to try to maybe reconsider entry?
Well, first thing is we have the drop down in price. Fine. I get it. And the drop down happened near a whole lot. It' s a horizontal support. Fine. And then the price went up. And then the price went down. Now, if we look at that type of candle, what type of candle is that, OK? Now, some might call that El Hamero, or translated hammer time, or hammer, known in the English language. Now, if we take a look at this, we talk about these after prices fall. We talk about variations in W patterns, OK? Double bottom, the first one. Tilted up bottom, which is that one. And this one being what we call more of a slanted down bottom. Which one so far do we have that we could be forming?
Well, it kind of looks like we' re almost trying to form, really, that first one here, OK? Now, whether we talk about double bottoms, tilted up bottom. Or slanted down bottom. What is the potential entry spot where the investor might say, ' oh, I' m going to try to get in'? On all three of these, it' s take a look at the middle of the W. Right there. Right here. And here, OK? So OK, fine. I can see it on the drawing, but where is it on the chart? Well, if I go back to this chart, where might the investor try to, where' s the middle of the W? It' s right there. And there being, where is it? Give me the number. And it' s right there.
Now, we have order types, right? We have a market order, OK? Which means get in as soon as possible or out. You' re going to have limit orders, this price or less, if we' Re talking about buying. If we're talking about, let's say, we want the price to go at or above a certain number, that is your classic buy stop. So what we' re going to do, just briefly, is we' re going to do, we' re going to right- click on the chart. We' re going to go to Buy Custom, with OCO bracket. Now, the product that we're trading is the MGC. Now, we want to make sure, because some of these have had expirations, we want to go to the Trade tab.
Now, when we go to the Trade tab, you' re going to see that the active contract has zero days to expiration. We don't want to trade this one, OK? And so we want to trade this one. want to go down to really the MGC, the Q is for the month 24 for the year, so the contract that we' re going to go down to is just the next one, the August contract, okay. Now what I want you to kind of notice is and we haven' t talked about it a lot, you' re going to see that 23 44, 23 66, 23 30, 23 91, 24 13, 24 37. Why as we go out farther in time is the price higher over time? Why is that okay?
Why as we go out over time, August, October, December, February, is there a little premium month over month over month over month? Okay. Type that in so what we' re going to do is I' m going to right click on the ask price we Going to go to where it says ' Buy Custom' with oco bracket, click now. When we do that, we want to make sure this says August. Now if you' re going to look at the next month, let' s verify the spread first off what is the spread 23 69 . 3 23 69 . 2? Is the price move so it' s really if you take a look at that it' s 20 cents, okay, 20 cents.
Now so you can kind of think about that spread if we said one point equals ten dollars, that spread is like two dollars wide if we kind of took the same math, okay! Now what' s the volume here? 53, 000 so quite a bit! This volume dropping some investors going from June to August. What about the other ones, like October and December? Not as much lots of activity on... then we' Re going to keep seeing some new again you' re going to see even more and we' re going to see some pre- at or above this price. Now, we need to be aware of this, okay? James, your horizontal line is right near the downward sloping moving average, okay?
So the investor might say, James, I want to even kind of put it just a couple bucks, a couple points, I should say, above that downward sloping moving average. We' re going to set up a price of $23. 75. Now, this blows a lot of people' s minds. I can' t believe somebody would set up an order to get in if it gets at or above that price. You are trying to catch the momentum to the upside. You bought now thinking it was going to go up with a market order or a limit order. You don' t know it' s going to go up either. We' re saying we just don' t want to get in until we get above the middle of the W. This is going to be GTC.
We' re going to put this on for a week. How do you do that? I' m going to go to the gear, check, okay? We' re going to go over here to where it says cancel at, check. And we' re going to say, look, by next week, okay, the 6th, if you can' t fill by next week, cancel the order. We want to reevaluate, is this really basing out? Save the order. So this order is valid for the next week. Price needs to get to $23. 75 or higher. If someone was very concerned, I don' t like to have that order where I don' t know what the range of the fill could be. Simple fix, stop limit, and we' re just going to put this at $23.
80, okay? So we' re saying, look, don' t get into this price or higher, but no more than this. So this way you have an idea of what the investor could be paying, okay? Imagine you send someone to a car auction. You know that car is probably going to cost this. You tell the person that' s going to bid for you, look, I know what' s going to be about this, but do not overpay above this amount. This is the same idea. You Re allowed to get filled within this range, but if we go to $23. 82, et cetera, and we don' t fall back down inside that range, don' t get in, okay? So there' s a cap on what the investor is willing to pay. Now, what about the target?
We' re going to go back and kind of put that target right at $23. 24,29, okay? $24. 29, and if we go down and look at the stop, what we' re going to go ahead and do is we' re going to put a stop like $10 below the intraday low from today. So if we take out that low, that might be pretty negative considering if this were to be a hammer candle. So we' re going to put it at $23. 13. Now, I' m going to tell you what I' ve learned in investing, okay? A lot of times when someone gets stomped out, they take it personally. Now, I' m not going to look at anyone right now, okay?
Tell me if you know, if you' ve met any investor that' s taken it personally when you got stomped out, and you' ve got your feelings hurt. Now, what we have learned over years of getting stomped out, many reentries can happen within four days, okay? Matter of fact, I think when we ran kind of, this is over years, 75% of the time that we' ve done this, we' ve talked about this for years, but a lot of times we get stomped out, a high majority of the time, there was a reentry signal after getting stomped out. Now, the problem is you didn' t know if it was going to go back up, and you' re trying to set some way to define the risk, okay? So.
We' re practicing kind of having thicker skin, not taking it personally, okay? So, we' re going to assume that we get filled at the high side, and then we have a target there. That' s going to give us 49 points. Every point really being worth $10. If we go from 2380 down to 2313, this is really going to be, in this case, about 77 points. So. So, now what you' re going to see in this is, got to take that off, 77. 77 points times 10, okay? Now, when you' Re- doing a trade where you want the price to go to the upside, if that trade fills, someone might take the middle of that W and set the stop below where the middle of the W is, and that' s going to really make it where it' s a tighter stop.
Noted, okay? So, we might update that stop if it were to fill. But as of right now, we' re going to set the stop. We' re going to set the stop underneath the intraday low, okay? Are there any questions? Yeah. Now, Johnny says, yes, my feelings get hurt weekly. Okay. So, here' s the deal, okay? And we' re having a little fun here, but this is kind of, when we' re investing or trading, we don' t know sometimes if they' re going to continue to go down. And sometimes they do go down, okay? What we're trying to do is have a stop where if that trend were to go in the adverse direction, we just don't want to be caught in a position that's just like going the wrong direction.
We want the money or the capital to be deployed to positions that are upward trending, okay? And that' s really what it comes down to. So, now, I want you to imagine you run a business and you have an employee quit on a weekly basis. You close the business, okay? If you' re a banker and someone doesn' t have a business, you close the business. If someone doesn' t pay you back, you close the bank. Guys and gals, boys and girls, this happens all the time. We' re just now kind of seeing it not from the perspective of an employee that everything' s perfect, where' s my paycheck, but we' re now seeing real -world business here that sometimes it doesn' t work, okay? We' re going to go ahead and send the order.
There it is. Now, I want to kind of just look at just real quick, three -year weekly. This is the trend what we see on the weekly chart. Now, so keep in mind, we' re in that pullback. We might be trying to set up an ascending triangle on gold, okay, where we have a prior high, prior high, low, higher low. So, the whole reason why we' Re- trying to maybe try to get back in in this little dip is we' re thinking that it might be trying to make an ascending triangle, and we have a big, massive pull. Now, where we might see it a little clearer is if we go to hi-ho silver, okay? Now, silver, and this is where we want to get kind of familiar with different products, okay?
Just like you do with sectors and stocks, et cetera, okay? Now, if we take a look at, let' s say, silver, you have, let me back off for just a second, okay? There' s been these waves of moves. Run up, pull back. Run up, pull back. Run up, pull back. Run up, pull back. Run up, pull back. So, if you look at this chart, now, if we look at this and say, James, this is confusing me, okay? We know that . 01 is how much. Now, don' t think this is kindergarten here, okay? . 01 is how much? It' s a penny, okay? That' s really saying if we go from 3,184 to 31, okay? This is, as you would think, 3,185, okay?
But the problem is, it doesn' t move in one cent increments. It moves in a half of a penny increment. I' m not good at math. Well, most millionaires are, so maybe get used to it. Now, what you' re going to see in this piece is, it would be going from, like, 3,184 to 3,184. You know what I mean? Come on, give it to me. Give it to me this morning, okay? Don' t make me beg. Now, here' s the thing. If we go up a half a penny, fill it in. Give it to me. Well, that means if we go up a half penny, it' s 3,184 . 5. Okay, perfect. Now, if we go from 3,184 . 5 to 3,185, okay? Okay?
That would really be worth, in this case, $25. So, half of a penny is worth $25? Well, yeah, that' s if you choose this contract. So, in the world of silver, in the world of silver, there' s different futures products that is controlling a different amount of ounces of silver, okay? So, let' s kind of go take a look at what we see. So, let' s take a look at what we see in some of these other ones. Where would we see that? Well, we click on the dropdown right there. We Now looking at it, we can click on the tab where it says ' Futures' right there. We can see that if we look at the SI, that is the largest contract, okay? So, note that.
You' re also going to see that if we kind of scroll down a little bit, or excuse me, scroll up, and actually, let me go down first. There is also a contract that has 1,000 ounces of silver. And it' s worth about a fifth, okay? So, the silver futures is 5,000 ounces. The forward slash SIL is 1,000 ounces. The tick value, that half penny, is worth a fifth as much, okay, as the bigger contract. Now, you' re also going to notice that if we went up, you will also notice there' s another one. Okay, that is a little bit bigger, okay? 2,500 ounces. And we could see that right there. Now, in our example, we have not traded silver. I think it' s maybe overdue.
Now, the one thing that we' d have to say about silver is it is a volatile, and this is kind of like the stock market, right? Semiconductor stocks compared to staple stocks. We know that some stocks are more volatile. It' s the same thing as some, let' s say, futures. They tend to be, on a percentage basis, more volatile. Now, if we look at, let' s say, silver, let' s practice silver, okay? This is what the paper money is for. And what you' Re going to notice is we kind of have this upward trend with a horizontal area of big detour. Now, some investors, what they try to do is they try to get in maybe the bottom of where they think that trend line is, okay? Now, James.
Oh, they have the product. We can assume that it' s liquid. No. We want to now go to the trade tab, and let' s go take a look at the liquidity, okay? So, first thing that we notice, now, if you said, James, I don' t see what you see. I only see the active owing contract. Where do you see all or three months? Well, hit the dropdown, all. And now we see the June' s expired today. July' s are the active contract. August, September, December. So, like options, you get different expirations. So, just like in the world of options, if you wanted to take a longer, have something that had a longer duration of time, et cetera, you might pick something that' s farther out in time.
The price and the liquidity is going to be a little different, though, okay? Just like you would see in regular options. We' re going to go to the 28-day expiration in July. And remember, what you' re going to notice is $30. 83, $31. 835, half of a penny. What we' re going to do is look at the volume, 24,000, okay? We' re going to right-click on the ask price, buy. Now, in the example on gold, we tried to just, we set up a buy -stop order, thinking it might be trying to set up maybe like a W pattern. In the example of silver, we' re going to try to buy. We' re going to try to buy inside this right -hand side of this triangle, okay, that it might be forming, okay?
Now, some investors say, well, I' m going to get in when it breaks out. Wait, so if it did break out, did the investor get in? No, they were just saying that. Well, I' m going to get in if it breaks out and makes a brand new high. It breaks out and makes a brand new high. They didn' t get in. So, setting up orders, you' re really kind of committing yourself. Instead of just saying stuff. Now, do you know anyone that does that? I' m going to get in if it breaks out. It breaks out. You call up your friend. Hey, man, that was an unbelievable trade you had. Do you see that move on that ticker? And it was just like dead silence. I didn' t get in.
There' s nothing worth. Okay, here. Here' s what we' re going to do. We' re going to right-click right on this ask price. Right-click, buy custom with ask. OCO bracket. And here' s what' s kind of nice. We can take everything that we learned in technical analysis with stocks. Okay. And what we' re going to do is we' re going to go with OCO bracket. Okay. Now, when we talk about a triangle like this, we' re going to take the same measurement technique. Let' s just say 32. 25. We don' t have to get to the exact penny. And if we look at kind of where it fell down to, it' s like 30 and a quarter. So, if we measure.
So, if we measure like a price target, where might, for example, the target, we call it target target, we' re going to add two points to the top. So, if we add two points to the top, it' s going to give us a target, okay, of 34. 25. Okay. Now, you might be thinking, well, James, every half penny is worth $5. So, how much is a penny worth? How much is a penny worth? If we know a half penny is worth $0. 50, okay, a penny is really worth how much? Come on, hit me with it. A penny is worth $10. Okay. So, what you' re now going to see. Now, remember, how many pennies are in the dollar? Well, we know we have 100 cents. Okay. Cents.
In one point, or $1. And that' s why it says the point value is $1,000. Okay. One cent move, $10. How many one cents are there in one point? Okay. 100 of them. And if we did 100 times 10, you get to $1,000. Okay. And that' s where those numbers are coming from. So, we' re going to put the target at $34. 25. Let' s put this here. Thank you, Scott Thompson, for answering those questions. $34.25. Limit date, GTC. Okay. Now, the target. We' re going to set that stop underneath the trend line. Now, that trend line is about $30. 94-ish. Okay, $34. 949, to be exact. If we said we' re going to set that stop, maybe, let' s say, $0.
30 below. That' s like 1% if we took 2% or almost 2%. That would be about, let' s say, 2% less or near there. Let' s say we put it at $30. 50. Okay. Dated GTC. Now, remember, this stop is not valid. The target' s not valid until the order is filled. Okay. So, now we can kind of run those numbers on what' s the potential profit, what' s the potential loss. Okay. Now, we saw before. Okay. Then, if we go from $31. 70 down to $30. 50, that' s $1. 20. So, one point equals, read it up above. It' s $1,000. Okay. So, if we go down $1. 20, how much is it? If we get stomped out in this position, it' s $1,200.
If we go from $31. 70 up to $34. 25, that' s $2. 50. $2. 50. Every dollar worth or every point worth $1,000, it could be $2,500. Now, here' s the deal. This is where people are like, wow, futures are volatile. They can be. It kind of depends upon which contract. Okay. So, we' re using the SIL. And now you' re thinking, my gosh, what would the SI contract be? Well, there you go. Okay. So, that' s why some investors like different types of contracts. Okay. We Re choosing the contract that has it' s 1,000 ounces of silver, not 5,000. We' re going to confirm send. Let' s kind of look and see what that order says. Note the commission. Okay.
Now, your homework assignment, I want you to go back and review this recording where we talk about basis points. Next week, if I could, I would say RJ is going to be teaching us about basis points today and the value of each basis point. Or so-and-so is going to teach us about gold and silver. And understanding the tick size and what the value is. Okay. So, I want you to get familiar with trading different types of products. Okay. And that way you kind of find out is what do you like for yourself. And you' re not also shy. And maybe when you see moves, you' ve had practice trading them in paper money. And you' re used to the movement or also known as the tick size.
We' re going to send the order. There we go. Now, the other part of your homework is if you say, well, James, I have not done the futures course yet. I need you to do that. You need yourself to do that. You' ve got to remember, go to learn, go to courses. And then at the bottom of that list, you' ll see the futures course. The other part is if you said, hey, James, is this like a one-off class or is this every week? It s every week. You can subscribe to our trader talks from Schwab Coaching. If you have not subscribed yet, subscribe. How much is it? So, a nice round number called zero. All you got to do is smash. Hit the subscribe button.
Also coming up in a little bit on today, here we go. We' re going to have long verticals and diagonals at 11 a . m. Eastern with Ben Watson. So, stay tuned for that. And the last but not least, we do have a playlist for this class. And you' re going to see that it' s right there. Make sure that you bookmark that. Now, remember with what we discussed, it was done for example illustrative purposes only. And also remember that all investing involves risk. We tried to kind of go into some different products here today and kind of branch out our knowledge a little bit. So, thank you so much for attending. And stay tuned for Ben Watson coming up at 11 a. m. Eastern. Thank you so much. Take care. Bye-bye. Bye-bye.
