E-mini Futures Trading: Increasing Popularity

By Author: Francisco Mandelbaum
Total Articles: 28
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Day trading in e mini futures trading provided a viable alternative to trading in futures, which had become grossly expensive for retail traders, due to high margin requirements. High leverage is another reason for the attraction of traders to E-mini futures.

E mini futures trading are miniature versions of the typical futures contracts (traded by large institutions and hedge funds). These contracts are traded on the Chicago Mercantile Exchange and New York board of trade. E-Minis's trading was started by S&P 500 index in 1997 and today high octane indices like Dow Jones Industrial Average, the Nasdaq 100 and Russell 2000 are involved in trading in this instrument successfully. E-Minis popularity is due to a few factors such as the highly liquid nature of the futures contracts and high affordability compared to the large contracts. Margins for large contracts can be as high as $20,000, while those for E-minis are $3000-$5000, a mere fraction of the large contracts. The clock trading happens from Sunday afternoon to Friday afternoon for 23.25 hours. A majority of emini futures trading contracts typically expires quarterly ...
... in March, June, September and December except agricultural products.

Advantages of E-Mini futures trading

Day Trading

Day trading in e mini futures trading provided a viable alternative to trading in futures, which had become grossly expensive for retail traders, due to high margin requirements. While day trading in stocks, calls for margin requirements of as high as $25,000, an E-Mini trader can trade futures for as low as $500 per contract with online brokers.

Leverage

High leverage is another reason for the attraction of traders to E-mini futures. But leverage works both ways. When trade goes well, it can make traders dance on the table, but if the trade goes bad it can make the traders hide under the same table. But (it hardly needs to be stressed), if Leverage is used wisely, it becomes a tool, which can be used by the traders to generate huge fortunes.

Simple and Straight Forward

E-mini futures are easier to follow and trade when compared to stock trading. There is less complexity involved with E-Mini, which naturally leads to less analysis, than trading a stock with a portfolio of 10-15 stocks. E-Minis trading has one closing price, one High or Low and one exit price, which gas great appeal with small traders dealing with a single E-Mini index future. E-Minis provide a viable alternative. E-Mini trading offers the same potential for gain and loss like stocks, options, currencies, etc., but for traders in the short term, E-minis have a significant advantage over the rest of the trading alternatives, in terms of exchange trading or exchange tracking. Traders interested in intra-day trading find the short term benefits becoming exponential.

Tax Benefits

United States tax laws provide E-minis qualify as 1256 Contracts and thus are given a number of tax advantages.

Conclusion

The increasing popularity of E-mini futures trading means, that traders have far more resources at their disposal to acquaint themselves with this vehicle of trading, while E-Minis futures trading contracts, introduce the traders to the myriad ways E-Minis could be traded. E-Minis growing popularity is because the instrument combines the market indices movements with high leverage of the futures market, thereby giving an effective and truly viable alternative to traders, who are not too sanguine (or hot) about the prospects of trading in stocks and options.

Author of this article enjoys listening to the CFRN Emini Futures Live Market Commentary each day and also watching the CFRN Professional Emini Traders place live trades in their Live Emini Trading Room.