How To Trade Micro E-Mini S&P Futures | A beginner’s guide


If you are trading stocks and options on stocks, there is a good chance that you will find your way into futures trading.

Why? Most traders are always looking for the extra leverage that futures stock indices provide, and one of the more liquid stock indices is the E-Mini S&P Futures contract.

One of CME’s most successful futures contracts was the launch of the E-Mini S&P.

However, over time and the rising trend of indices, the notional value of the contract has also increased. The initial contract of the E-Mini SP contract is $ 50 a point, and now that we have the E-Mini S&P breaking through the 4000 level, the notional contracts are worth over $ 200,000. This is clearly very high for many smaller day traders who are trying the futures market.

Presentation of the Micro E-Mini index futures contract

In 2020, CME launched E-Mini Micro contracts to meet the demand of small traders who may not have the high risk capital required by most regular futures contracts. New E-Mini Micro contracts are 1/10e the size of regular contracts, and each point is $ 5 and each tick is $ 1.25

To trade the Micro E-Mini S&P Futures, you simply need two things:

  1. A futures broker
  2. A futures trading platform

Consider trading futures contracts through Optimus Futures, a leading discount brokerage that has garnered rave reviews from its growing client base and has access to a variety of dedicated futures trading platforms, including downloadable ones, Web and mobile.

Their flagship product is Optimus Flow, a platform for traders looking for super fast execution. This is especially important for day trading scalpers.

Why trade equity futures

Futures trading has huge advantages over stocks or stock options. First, they have leverage that you don’t have to pay interest on, and you can be both long and short as long as you stick to your margin requirement.

Moreover, unlike the PDT (Pattern Day Trading) rule which requires you to have a $ 25,000 account for day trading, you can start a Futures trading account with as little as $ 500 when you trade the Micro E contract. -Mini S&P. .

Remember that futures are probably one of the riskiest instruments in the financial industry, and if you can’t handle leverage and volatility, both psychologically and financially, leave it alone. these instruments.

Forward margins for microphones

This is the amount of money you need to keep in your account if you decide to hold the futures contracts overnight. Most day traders ask their brokers for day trading margins, and depending on the broker, it is up to them to decide how flexible they want to be. Some brokers offer daily trading margins of $ 500 for E-Mini S&P and $ 50 for Micro contracts.

Remember that the futures markets are in debt as they are, and the more you prepare for contracts, the more you put your capital at risk. If you are a beginner, you should start with single contracts.

Micro E-Mini Index Futures Brokers

There is certainly no shortage of brokers in the futures business, but as a beginner you might want to look for one who is known for their customer service. When shopping, look beyond commissions and see if your broker has a streamlined client onboarding process in terms of explaining the software and the different, sometimes unique, mechanics that apply to the futures market.

Each market and asset class is unique, so you should choose a broker that meets your needs as a trader. From Optimus Futures:

“When we meet a newbie futures trader, we take special care to provide them with all the resources we have, plug and play trading platforms, quick and easy deposit and withdrawal options, a dedicated help line. . , and access to support specialists available to answer all of your questions about trading, software and how to get started.

Futures trading platforms and software for micro futures

As a beginner trader, stay on platforms that are easy to use. Most trading platforms include a lot of bells and whistles that you might not need or never use. Don’t pay for features that you just don’t need when you’re just starting out. There are plenty of free platforms out there with great and easy command fulfillment to get you started.

Think of Optimus Flow as your beginner’s platform. While it has all the features that more advanced traders are looking for, such as order flow and volume profile, the platform also has all the necessary tools to make things easier for you, such as a module simple order execution, DOM trading and the ability to trade from cards. The platform’s unique blend of visual display and trading panels make it easy to get started while ensuring that its more advanced features are easily accessible as you become more comfortable trading futures.

Futures trading fees

Futures trading has several costs that you should be aware of. The CME (Chicago Mercantile Exchange) charges a clearing fee for the Micro contract, and your broker charges commissions and clearing (to clear your trades through the futures clearing merchant). You should check if your broker has some sort of sliding scale where you can negotiate the cost as you can potentially increase your trading volume.

In summary

Micro contracts are smaller contracts that appeal to day traders looking for higher leverage. The trend in retail is to go smaller with fractional shares, options and now with Micro Futures.

The CME offers 4 micro-contracts on stock market indices: S&P, NASDAQ, Dow Jones and Russell. You should explore these tools if you are a day trader or looking to engage in such activities.

Disclaimer: There is a substantial risk of loss in futures trading. Past performance does not represent future results. Trade only with venture capital. Before engaging in any futures trading business, please consider that in futures contracts you may lose more than your initial investment.


About Author

Comments are closed.