May 4, 2010

The Interesting World of Emini Futures

Emini futures have exploded in popularity in the electronic trading age. With the growth of the at home day trading industry, emini futures have grown equally in popularity, creating a following that dwarfs many other speculative investments.

Today, individual investors make up a substantial part of the futures market, thanks in part to inexpensive futures contracts.

What is So Special About Emini Futures?

The word emini futures is a combination of the words electronic, miniature and futures. Putting all the terms together, you get a product very much like normal futures, albeit much smaller in size, that are traded electronically through an online broker. They are traded proportionally to futures, with an emini contract costing only a portion of the size of a full scale contract. Emini futures are worth $50 per point change in the index being traded.

For example, a change from $800 to $801 on the S&P 500 would be worth $50 in an emini contract. An emini futures trader need only put up $800 to buy the contract mentioned above, allowing for excellent returns on investment.

Calculating Emini Futures Returns

Since a one point move in the price of the index is worth $50 per lot, a .25 point change in the index would be worth $12.50 on your account balance. Investors can both long and short the market, allowing for the opportunity to profit when the price rises or falls, and earning $12.50 per contract, per .25 point change. As always, a move of 1 point is worth $50 in either direction, and it is worth that much regardless of the amount paid for the emini futures contract.

Why Should You Be Interested In Emini Futures?

Emini futures are a favorite among investors who do not have enough capital to purchase a regular futures contract, or those who enjoy the additional risk of leveraged returns. Many professional traders tend to trade emini futures instead of regular futures for the purpose of accessing leverage to boost profit potential. Thanks to overwhelming interest in the markets, from amateur and professional traders alike, the emini futures markets have significant liquidity to buy and sell on short notice. This turnaround time allows for investors to open and close trades within the same day, even minutes if necessary.

A 24 Hour Marketplace

If you have been trading stocks for any period of time, you should be accustomed to a trading day that spans only six hours and 30 minutes. By contrast, emini futures are open to trade 24 hours around the clock, and these often price stocks for the next day well before the stock markets are open. The 24 hour trading clock creates a secondary market, whereby all the information released before and after the markets are closed can be priced into the futures market, bringing the market to an equilibrium price at all times.

For this reason, many new traders prefer to start with eminis as they are able to trade after working a normal full workday.

Take advantage of the trading opportunities presented by emini futures through the free indicator resources and guidance from Barry Taylor, a full-time trader who has been mentioned by Reuters, Yahoo! Finance, and many more, through the website http://www.Emini-Watch.com

Filed under Stock Trading by Barry Taylor

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