Emini futures contracts are electronically traded futures contracts on the Chicago Mercantile Exchange that represent a portion of the larger futures contracts institutional traders use.
Emini futures contracts are available on a wide range of indices such as the Nasdaq 100, S&P 500, S&P MidCap 400 and Russell 2000. Emini contracts are 1/5 the size of larger institutional contracts and so are more affordable to retail traders.
So for example the very popular Emini S&P 500 contract works as follows: One point of the Emini S&P 500 contract is worth $50, so for every open trade held, an one point movement in this Emini index would result in $50 profit/loss, If 2 contracts are held then a one point movement on the index will cause a $100 profit/loss.
Why Trade Emini Futures
• Volatility – Volatility creates huge opportunity which makes it possible to make significantly more profits with small account balances.
• Affordability – Trading Emini futures offers broad market exposure at low cost.
• Easier to monitor – You only need to watch few indices as opposed to traditional stock picking where you have to scan through 100’s of stocks and still are exposed to single stock pre-announcement movement risk and accounting fraud risk.
• High liquidity – Highly liquid market as opposed to single stocks which often lack transparency and can be manipulated by large brokerage firms.
• 100% Electronic – Eminis trade virtually round the clock and fill orders really fast as opposed to the old days where you had to ring up your broker, get stock quotes and sometimes had to wait for as long as 30 minutes before you got filled (at a bad price) often wiping out your entire profit, order fill efficiency and speed of the Eminis are unparallel!
• Profit in up AND down markets - Emini trading can facilitate profitable strategies in both up and down markets as opposed to single stocks that are often vulnerable to short selling restrictions imposed by the SEC (Securities and Exchange Commission).
• Tax free profits – Unlike traditional single stock investing, income from futures trading such as the Eminis is 100% yours to keep (depending on where you reside).
Learning To Trade Emini Futures
So do the Eminis offer an effortless, guaranteed source of income? Definitely not!
Anyone who claims they can teach you how to trade markets, currencies or Emini trading strategies, and over promise… are actually lying. However there are good trading mentors out there.
Comparing the Eminis to other markets or single stocks is like comparing a modern driving instructor’s car to that of a 1960 model, that has no power steering, no ABS… and young people are required to learn to drive and park and take risks in that car! Emini futures contracts are definitely better than any other trading instrument for all people new to trading.
