E-Minis Futures- Small Traders Vehicle For Tapping Futures Market -

E-Minis Futures- Small Traders Vehicle For Tapping Futures Market

The E-Mini Futures came into being on 9th September 1997 and soon rose to become the world’s most widespread equity index futures contract. It was first introduced as the E-Mini S&P 500 which later branched into the E-Mini NASDAQ, E-Mini Russell 2000 etc. The Chicago Mercantile Exchange launched this product to facilitate the small traders and individual investors who could trade in futures with a small investment as E-Mini S&P is one fifth the size of regular S&P futures contract.

What Exactly Is E-Mini Futures?

In simple terms, the ‘E-Mini’ is an electronically traded contract to buy or sell the cash value of the specified index at a specified future date. Normally, this term is used with reference to stock index futures. Through the stock index futures, the traders can indulge in trade without having to own each of the stock in question.

In the futures market, the greatest advantage lies in the fact that whatever be the levels of individual stocks, you can earn profits irrespective of the market going up or down. The terms ‘long’ and ‘short’ are associated with the futures market. When a trader gets into a long trade, he is essentially buying a stock with the expectation that its price will increase further when he can exit for a profit. In a ‘short sell’, the profit is the difference in original short price at which trader borrows the contract from the broker and the lesser price at which he ultimately buys it from him.

E-Minis futures contracts expire on the third Friday of March, June, September and December and on the expiry of the set date, the contract rolls over and get traded for the next three months under a new listing.

Every novice to this form of trading has hordes of questions before he starts to trade, as to whether he needs to take Binary Options course, what is the investment to be made by him, the trading platform to be used and so on.

Techniques of Trading In E-Mini Futures

Like any Binary Options Strategies, the three strategies adopted in E-Mini Futures are

  • Discretionary
  • Semi-Automated
  • Automated

A brief explanation of each is as follows:

Discretionary
In this technique, no scientific basis goes into the trading aspect and hence the name ‘discretionary’ attached to this form of trading. Here, the trader bases his judgment on tips or advice received from experts or just goes on the basis of his gut feeling. No technical analysis is involved while making the entry into or exit positions of the trade.

Semi-Automated
The discretionary aspect is reduced partially with the entry into trade depending on discretion whereas the exit positions are determined by the automated signals. A trader makes his entry by taking a long position on a particular stock. After the trade entry is noted, two orders are entered, the first is the target for profit and the second is notification of a ‘stop loss’ which is a protective measure if things are unfavorable to him.

Automated
The discretionary or the emotional factor is totally eliminated from trading which is based on customized strategy adopted for trading by the trader’s trading platform. Developing a customized strategy is no mean task and involves work of an expert as he devises an optimum technique that can be successfully operated in live environment. The ‘Stop and Reverse Strategy’ is one such example. This method which is based on quantifiable data is normally followed while trading in E-Minis futures.

Various binary options strategies are employed to gain maximum profits but the binary options lessons tell us that one can become an expert in the futures market only by remaining in the field for a long time and combining the gut feeling with the technical analysis for optimum results.

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