Emini Futures

Emini futures are basically miniature versions of future contracts that are typically traded by hedge funds and large institutions. With that said, when they were initially launched in September 1997, they were specifically targeted towards non-professional investors who were looking to trade in index futures.

Emini futures are based on indexes and major market averages which include the Dow Jones industrial average, the NASDAQ 100, the S&P 500, and various other resources that are followed and tracked by traders worldwide. Emini futures actually offer far more flexibility to many more traders. This is typically because the regular full-sized futures contracts will usually require exceptionally high margins, whereas Eminis can be traded for a fraction of the margin of such a contract. A prime example of this is a full-sized S&P 500 futures contract may be as high as $20,000-$30,000, or even more, although an Emini S&P 500 contract will have a much lower margin, but this will very much depend on the brokerage firm that is used, and this will typically range from $3000-$5000 per contract.

There are various reasons why traders are becoming more attracted to Emini futures, and the lower margins are simply one example of this. The other reasons that traders are turning to Emini futures include:

Emini futures are ideal for traders who typically open and close their positions over the course of a single session, or partake in day-trading. It is generally because of the extremely low margin rates and the fact that day-trading of stocks can become very expensive. In order to day trade stocks, a trader will require a margin account of at least $25,000 although Emini futures day traders can trade for as little as $500 per contract.

Pure trading
One of the major problems that many traders face is the requirement to differentiate between to almost identical equity trading opportunities. However, Emini futures only require a person to trade a single vehicle, and therefore they can significantly minimize their risk. The tools that Emini traders can use to reduce risk will include proper position sizing, initial stops, trailing stops and profit targets.

Possibly the main reason that traders are attracted to futures is because of leverage. It is true to say that the leverage that is involved in a full-sized futures contract will be huge, and the leverage the traders who are trading Emini futures can still be fairly sizeable, although nowhere near as large as the full-sized counterparts. In fact, it is said that leverage is the best tool a trader can use in order to make substantial sums of money.

Extremely easy to follow and maintain
The process of trading Emini futures, when compared to trading stocks, is actually very simple and straightforward, and this becomes even more apparent when a trader compares having to trade a few Emini futures to a large number of stocks. Of course, due to the leverage involved, a trader will have far less room for errors, although they will typically only need to focus on one vehicle and one set of prices.

It is often said that Emini futures are far more suited to those who are technical minded. A trader will need to be aware of moving averages, short-term cycles, trendlines and a wide variety of other technical tools. In addition to this, Emini futures are great for the more discretionary trader, thus allowing them to take advantage of some very specific situations, such as the Federal Reserve Board announcements, etc. In order to increase your chances of succeeding in this market you will be able to use certain indicators which can be utilized in order to predict certain changes in market trends so you will be able to make financial decisions accordingly. The TRIN indicator as well as volume patterns and the Momentum Indicator are just some of the tools which traders use to take advantage of great opportunities in this futures market.

As you may expect, Emini futures are no different from any other form of trading, and therefore a person has huge potential for both gain and loss, and this is especially true that traders in the short term. Emini futures are growing ever more popular, and therefore there are far more resources available to traders. There are various online facilities that will help traders understand the specific trading vehicles, as well as a wealth of information about how Emini futures should be traded.

One thing that those who are experienced in forex and stock trading will want to consider is that the same basic principles apply to emini trading as well, making it an easy and potentially profitable type of investment to get involved with. Many experienced traders, those who have traded just about every security, such as stocks, commodities, options, forex, futures, mutual funds, ETF, etc. are now turning their attention to Emini futures. Many agree that this is, without doubt, the ideal trading vehicle, and the ideal way to make great gains.

The low cost of these futures is something else which attracts thousands of new people each year, making it a truly great way to build a decent amount of profit over time. The extremely short time between when a trade enters and exits is certainly something else to consider and whether you win or lose ultimately depends on your ability to correctly read the fundamentals. Those who do not have a lot of money or resources but still want to get involved with a new type of trading will certainly want to consider this option before anything else.

Comments are closed.