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How To Trade Emini Futures

s&p price study

With the advent of home based computerized trading at the start of the 21st Century, the market for new products, such as the Emini Futures, that would appeal to the individual, amateur trader was bound to grow.

Leverage, Low Price, High Liquidity, Volatility and unrestricted times for trading were the characteristics that such a trader would find highly desirable.

What Are Emini Futures?

EMini Futures debuted in 1997 on the Chicago Mercantile Exchange to fulfill this demand, and they have been very successful.

As a retail type product, EMinis meet all of the above criteria in spades: For leverage, they are futures contracts, so whichever index that is chosen, whether it be something ubiquitous like the EMini S&P 500 (ticker: ES) or more rarefied products, like the EMini Health Care Futures (ticker: XAV), the leverage factor is omnipresent.

In these examples, one tick can equal $12.50 (ES) or $10.00 (XAV).

Emini Futures Are Suitable For Small Accounts

For Low Price, EMinis are designed to represent a fraction of their cousin standard contracts.

So, in the case of S&P 500 E Minis, they are only 20% of a standard S&P 500 futures contract, hence the margin requirement is a proportionately more affordable 20% as well.

s&p point and figure chart

How To Make Money From Emini Futures Trading

High Liquidity is of paramount importance for speculative individual traders, who lack the financial cushion to take big paper losses on their trades without incurring margin calls. The ability to quickly exit a position on a trade going the wrong direction is what separates those traders who can stay in the game from those who are eliminated.

EMini Futures are highly liquid, with the S&P 500 EMinis, for example, averaging roughly 40 million contracts per month and 2 million per day. The high volume allows for tighter spreads, which also benefits the individual trader’s entry and exit pricing.

Due to EMini trading’s inherent volatility factor, the prudent trader will make judicious use of stops and ride trends as opposed to attempting to anticipate market tops and bottoms for any day session.

Daily Emini S&P 500 Prices

Charts and technical analysis are extremely important tools for the individual trader engaged in EMini trading, particularly in the ES, since stocks in general have been running counter to commodities trends in the past.

For the truly disciplined, it may be possible for some EMini traders to adopt a system dedicated to day trading multiple trades for a few ticks if they can manage trading costs per contract and per trade within that spread. However, most traders will likely try to ride trends to at least get a few intraday points out of a winning position while cutting losses through pre-set stops.

Gain Similar Advantages As Large Speculators

As the volatility of the S&P 500 and other futures markets quoted on the CME is already rewarding institutional traders, the individual trader can realize comparable benefits with EMini futures trading, as their ticks peg accordingly in proportion with those of the standard contracts.

Emini Trading Hours

Lastly, thanks to the CME Globex system, EMini Futures trade electronically from Sunday at 6pm EST to Friday, 4:15pm EST; roughly 23.25 EMini Trading hours a day, as a 15 minute and a half hour break are taken in the afternoon to address any maintenance issues.

EMini Futures contracts expire on a quarterly basis and can qualify as 1256 contracts under IRS rules, for mark to market tax reporting purposes.

With over 40 different types of EMini Futures contracts to choose from, ranging from various NASDAQ futures to Russell 1000 futures and currency and commodities in between, the individual trader has a wide menu of sectors and products for speculation purposes from which to develop his or her own EMini futures trading strategies.

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