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3 Advantages To E-Mini Trading

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The lineup of E-mini futures listed on the Chicago Mercantile Exchange (CME) offers something for everyone. No matter whether your specialty is stocks, energies, or currencies, there’s an E-mini product that is right up your alley.

Driven by unparalleled flexibility, a diverse array of trading options, and limited risk exposure, the popularity of E-mini trading has exploded over the past decade. Let’s examine three key advantages that make E-mini futures outstanding products for professional and novice traders alike.

1. Reduced Size

In the futures markets, a product’s size is defined as being the amount of an underlying asset assigned to a specific contract. It’s an important determinant of applied financial leverage and assumed capital exposure. Simply put, the larger the contract, the greater the applied leverage. Futures contracts come in several sizes, including full, mini, E-mini, micro, and micro E-mini. Each category features a unique quantity of the underlying asset and a distinct degree of leverage.

The E-mini classification is used to differentiate contracts that have a reduced size and are traded in an exclusively electronic fashion. The key benefit of E-mini trading is that it’s an easily accessible, low-risk way of engaging the world’s most popular asset classes.

2. Diversity of Trading Options

One of the calling cards of the CME’s E-minis is the extensive collection of individual contracts readily available for trade. From the industry-standard E-mini S&P 500 to specialized products such as E-mini Financial Select Sector futures, there’s likely a contract that’s right for your trading strategy.

Here are a few samples of the most popular and exotic CME E-mini products:

Asset Class Popular Exotic
Equity Index E-mini S&P 500 E-mini FTSE Emerging Index
Energy E-mini Crude Oil    E-mini NY Harbor ULSD
Metals E-mini Gold   E-mini Copper
Currency E-mini Euro FX E-mini Japanese Yen

Keep in mind that both liquidity and volatility will vary from product to product. Be sure to examine each listing’s current depth-of-market and historical price action for suitability before jumping in with both feet.3. FlexibilityFrom day trading the leading U.S. equities indices to swing trading international currencies, there is no shortage of strategic value available to E-mini participants. The combination of market access and reduced capital requirements greatly enhances the flexibility of E-mini trading. Here’s a quick look at the two attributes that make the E-minis ideal for almost any approach to the markets:

  • Reduced margins: E-mini products feature vastly reduced day trade and maintenance margins over their full-size counterparts. For instance, E-mini S&P 500 futures can be traded with $500 intraday margins and $6,300 overnight margins. These figures pale in comparison to the full-size S&P 500 contract, where both intraday and overnight margin requirements exceed $30,000 per lot.
  • Extended market hours: Trade of the E-minis is conducted on a near-24-hour basis courtesy of the CME’s electronic platform, the CME Globex. Market hours for each product vary, but typically run from Sunday (6 p.m. EST) to Friday (5 p.m. EST), with a daily late-afternoon halt of less than one hour.

The reduced margins and extensive business hours of E-mini trading provide participants with possibilities that aren’t available in other markets. For example, the $500 intraday margins and near-24-hour session of the E-mini S&P 500 give large-cap equities traders market access while Wall Street is closed. This feature is strategically valuable because you can capitalize on opportunities outside of standard NYSE business hours. Getting started in E-mini Trading as in any discipline, there’s a learning curve involved with achieving success with E-mini trading. Before risking real money in these exciting markets, it’s a good idea to learn the ins and outs of E-mini products before risking real capital.

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