The broker usually requires about $3,500 ($3,500-$5,000) as “surety” or “bond” to cover an initial emini trading account. They may allow 5 to 10 contracts to be traded at this level. If your trade loses money, the broker may require additional “bond” money in the account to cover. The broker may offer some form of margin which will lower the amount of actual cash required in the account.
As you can see, this is a lot less than the $25,000 required for stocks and options, but the risk of loss with futures is high, and traders unfamiliar with futures trading can lose big, very quickly.
One of the advantages of internet day trading with an Emini trade system (See Day Trading Basics) is that you are only required to put up a fraction of the contract price. Unlike stock or options trading, where you are required to have $25,000 minimum to “day-trade”, it is different with futures. Instead of a minimum balance, trading emini futures requires a cash backing. Although funds are “committed” with each trade, the trader does not actually part with any money unless settling the contract for a loss.
A very common question is Can I make A Living Day Trading? The answer is is YES for some, and this is explained in a useful course called “Can I Make a Living Day Trading?” The course also give step by step instructions on how to set yourself up for success.
Each E-mini S&P 500 futures contract is valued at $50 x the futures price. Thus if the futures price is $700, then the contracts value being traded is $35,000 ($50 x $700). When the price changes 1 point, the value of your contract goes up or down by $50 for each point movement.
EXAMPLE: Case involving a real trading range over 2 days where H=$1,119.00 and L=$1,087.00
- Purch. 1 contract at $1,090, price moves up to $1,100 (10 points = $50 x 10 = $500.00)
Sell the contract at $1,100
$500.00 less commission deposited into account, (gain).
2. Purch 1 contract at $1,100, price moves down to $1,090 (10 points = $50 x 10 = $500.00)
Sell the contract at $1,090
$500 is extracted from account, (loss) .
Therefore the lessons to be taken from this are:
- Paper trade (simulate trades) first, to establish and practice day trading techniques which result in more wins than losses, before you start live trading.
- Trading single contracts only is best, until confidence and pattern established. Increase the number of contracts only when experienced.
- An emini system necessity is managing risk so you must always have stops in place to protect against major loss if the trade goes against you.
Directions on internet day trading of E-minis successfully can be learned in detail, step by step from the “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 SeminarsMail this post