Day trading future - Using E-mini futures, the day trader can successfully take long (buy) or short (sell) positions for a few minutes at a time, taking advantage of whatever trend or lack thereof is in force at any given time. E-mini Trading is significantly different from traditional methods of investing in equities. Traditional investing usually involved a broker who is looking out for his own interests and investments which are made with the promise of medium to long term gain. E-mini futures trading is far more flexible in terms of time frame, giving the investor the opportunity to make many small gains in a day compared to a traditional investor taking positions with several days, months or even years between each transaction.
Characteristics of E-mini Futures (or mini futures)
- Emini futures are small-sized contracts to buy or sell the E-mini security in the future, based on a stock index, commodities, foreign currencies, or other financial instruments as the underlying assets. See comments on “how much money do I need to start?”.
- E-minis are traded electronically, (“E” for electronic) affording retail traders the opportunity via online trading compete against institutional traders in day trading future contracts.
- E-minis are derivative in nature
- E-Minis typically grant the holder a 20:1 leverage on the underlying asset, thus giving the trader the ability to control 20 times more of the commodity than if the contract had been for a direct purchase or sale of the underlying asset.
- A sample list of items that can be traded in e-mini form include:
- /ES – E –mini S&P 500 (our favorite)
- /QM – MiNY Light Sweet Crude
- /TF – mini Russell 2000 index
- /NQ – E-mini Nasdaq 100 Index
- /YM – E-mini Dow Jones Industrial average
- /EMD – E-Mini S&P Midcap 400
- /E7 – E-mini Euro FX
- /M6A – E-micro Australian Dollar
- /M6B – E-micro GBP
- /M6E – E-micro Eurodollar
- /YG – mini gold
- /YI – mini silver
- /ZB – 30 year US Treasury Bond
- An E-mini is a futures contract to buy or sell at given price for a given commodity
- Mini futures contacts can be traded overnight
- Futures contracts do not have the short-selling uptick rules as stock trading does
- Futures differ from options in that the contract is not an “option” to buy or sell, but a commitment to buy or sell. This introduces a strong risk element . (See Emini system necessities – managing risk)
- Taxation rules applied are same as stocks and options traders
- Each type of futures contract has a unique value per “tick” on the electronic exchange. For example the /ES (e-mini S&P 500) has a value of $12.50 per “tick”. In this case 4 “ticks” comprise a $50 “point”. Day traders use the “ticks” as the measurement value on which to place orders to buy or sell. See more on E-mini charts on Day Trading Emini Stock Tips.
Example of a typical day trading future trade.
A “sell” trade in /ES (E-mini S&P 500) futures could look like the one below.
In this example the price moved up from $1389.00 (entry point) to $1,397.25 (exit point) , a total of 8.25 points, which at $50.00 per point translates to a gain of $412.5 per contract purchased. Entry and exit points are carefully planned according to a pre-defined trading strategy using indicators, volume, and average volatility.
This strategy and others can be learned in detail, step by step from the (lowest cost available for this course) “Day Trading Home Study Course”. For more details on what the Home Study Course covers, check out our post Emini education – Day Trading Class and Day Trading Seminars
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