Emini Trading Systems

Emini trading systems made their debut in 1997 after investors complained about the high cost of the standard S&P futures contract. The Emini futures contract is small in size and traded on the CME, which stands for Chicago Mercantile Exchange Globex platform. Since its introduction in 1997, this type of futures contract has gained popularity and the daily average being traded is $140 billion. A typical Emini contract is $50 times the value of the S&P index. You can also buy Emini contracts for Nasdaq 100 and other indexes as well.

There are some advantages to Emini trading systems. For example, the margin requirements are low. Traditional futures contracts require thousands of dollars, but an Emini contract can be yours for $100. This gives every investor a way to enter the futures market without spending a fortune. The cost for a standard futures contract can be even more expensive in times of inflation. This would make it very difficult for most investors, besides the rich, to get into the market. There are other good things about Emini trading that  you may want to consider also.

The affordable price is of course a clear advantage, however because Emini contracts are traded electronically, they can be traded internationally. Electronic trading takes place for almost 24 hours per day and five days a week. The S&P 500 futures market is traded in the open pit, which is a disadvantage when compared to the slippage prevention electronic trading offers. This in turn makes the prices for buying and selling more reliable. However, no investment type is perfect, all types have their disadvantages.

For example, Emini trading systems only permit a limited number of orders. Some investors may desire to place a GTC order, which stands for good til canceled. However, these orders aren’t available in the Emini trading market. The alternative is to put a stop order daily before the start of the trading day. So, this type of investment needs to be actively managed, or positions need to be closed out at night. And, that’s not the only downside to this type of trading.

In May of 2010, a flash market crash happened. The SEC performed an in-depth investigation which led to the conclusion that Emini trading was the cause. A big mutual fund sold 75,000 Emini contracts in a single day. This in turn caused big traders to sell their contracts. The combination caused a three percent fall in Emini prices in a matter of only a few minutes. Because of this, there are new regulations that have placed restrictions on Emini trading. There must be a five minute wait after any stock on the S&P 500 rises or falls above or below 10 percent within five minutes. So like every investment, Emini trading systems have both advantages and disadvantages to be weighed carefully before you enter the market.

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