E-mini Futures

What is an E-Mini?

Although there are other E-mini contracts, E-mini is usually the abbreviation of E-Mini S&P 500, with the tick symbol ES. Essentially, it is a futures contract for stock market indices listed on the Chicago Mercantile Exchange (CME).

The value of a single contract is 50 times more than the S & P-share index. So the contract size is reduced, while still tracking the same index.

It’s also worth noting that there are a number of other E-mini contract options available, as detailed further below, from Russell 2000 futures to S&P MidCap 400 and Dow Jones futures.

Expires

Contracts roll over to the next active contract. However, as the expiry diary shows, the expiry occurs every term, usually on the third Friday of March, June, September and December.

Having said that, the date on which the contract is available is of greater importance. The changeover takes place on the second Thursday of March, June, September and December. Although the date must be on a Friday, the first will take place on Thursday.

You can find upcoming details on expiration date and S&P 500 options settlements by visiting the official website of CME.

E-Mini selections

Amazingly, the S&P 500 E mini contract was so successful that CME and other exchanges introduced more than 40 other mini futures, including:

• • NASDAQ 100 (futures symbol NQ)
  • NASDAQ Composite (symbol QN)
  • S&P Midcap 400 (symbol EMD)
  • S&P Smallcap 600 (symbol SMC

).

• Dow (symbol YM)
• Russell 1000 (symbol RF2)
• Russell 2000 (symbol RF2)
• NASDAQ Biotech (symbol BQ)
• Commodities – Gold, silver, copper, wheat, corn, soybeans, natural gas, heating oil and light sweet crude oil contracts.
• Forex – Long list of rates against the US Dollar, including Euro, British Pound, Japanese Yen, Swiss Franc, Canadian Dollar, Australian Dollar and Chinese Renminbi.
• Options – On the S&P 500 Emini and the NASDAQ 100 Emini.

Furthermore, you can also find mini Nikkei 225, Nifty 50 and FTSE 100 index futures.

However, despite a number of mini options, the S&P 500 E-mini still accounts for the majority of trading volume. Of the more than 40 other mini-contracts, only ten have daily volumes that exceed 1,000 contracts.

Also note that the price, volume, volatility, contract size and other specifications vary between each product and market.

Who trades E-Minis?

If you decide to start trading the E-mini index futures, who are you up against?

• 15 companies with high frequency trading represent about a third of the E-mini market.
• Approximately 6,000 professional intraday or position traders make up nearly two-thirds of the market.
• About 6,000 amateurs who trade about one contract per trade every other day represent just 1% of the total volume.

 

Why e-Minis trade?

There are several factors that make E-minis a fantastic intraday commercial vehicle, including:

• Global – You can trade a global portfolio of stocks from just a single market.
• Low costs – Deep liquidity and a tight bid-ask spread can help keep costs down. Moreover, alternative futures shares can help save on margin.
• Leverage – Leverage can help you buy and sell a large contract with minimal capital. This means you have many more options when you open your real-time S&P 500 futures bar chart.
• Access – With nearly 24-hour access, you can trade as events unfold. There are also a host of news sources and other online resources available. This means that you can identify futures contracts or NASDAQ 100 symbols when a major event occurs and trade accordingly.
• Choice –  The number of products and options has grown significantly. For example, you can now choose depth in technology and utility features sector futures on top of the more standard E-mini contracts.
• Resources – Brokers today offer numerous additional resources, from advanced charting packages to in-depth user guides. For example, you can decipher Dow Jones charts, quotes and Emini ticker values.

Risks

While there are clear benefits, you should also be aware of the risks before checking S&P 500 and crude oil tick values, including:

• Electronic Trading – Speed is not always good news in electronic markets, as the E-mini can move quickly. These high volatility levels can be dangerous, especially for new traders.
• Overtrap – With so many opportunities and an electronic interface, it can be tempting to keep trading and putting money down after big losses. This is especially true when, for example, there is access to so much convincing futures historical data available on the NASDAQ 100. All of this can mean that those without discipline lose a lot of capital in quick succession.

Both the advantages and disadvantages of these futures contracts are explained. This will help you approach the E-minis S&P 500 futures symbol list with caution.

E-Mini Futures vs Stocks, Options and Forex

You have gold contracts, major currency pairs, copper futures, binary options and so much more. How do you know which market to focus your attention on? Let’s see:

• Stocks – There is certainly no shortage of choice with stocks. Most of the time, however, they only track the overall market. Moreover, only a single news event can cause prices to fall. Giving an edge can also be challenging, especially if everyone is looking at the same NASDAQ forecast on Yahoo Finance.
• Options – although they aim to be straightforward, they usually aren’t. Often you need to get the direction, size and timing of a move right. Not to mention, there are quite a few trading strategies to get your head around.
• Commodities – This is the home of professionals. You often need to have a niche and stay on top of things like milk. In addition, with commodities you often don’t have enough volatility or too much.
• Forex – Although FX trading is very popular, volume data is incomplete. Until banks are willing to share all volume data in real time, you are always a step behind the average trade size and the professionals.

Margin Requirements

The margin requirements are just as important as your E-mini S&P 500 futures contract price. Of course, these requirements will vary between brokers. However, there are three key rates that are important:

1. Intraday Initial Margin – This is the account balance you need to place an intraday order. It can be from $1000 to $2,750. Note that the volatility of the market can also affect the price.
2. Initial Overnight Margin – This is the account balance you need to trade overnight or during the after hours session. Normally, the price ranges from about $4500 to $5,250.
3. Minimum account opening – this is simply how much you need to open a term account. You may need between $5,000 and $10,000.

It is also worth bearing in mind that you do not need to check how much 1 Emini contract is and the associated margin rates. For example, volume traders will want to consider the trading platforms and additional resources offered.

Additionally, you may want to consider a practice account or an online trading academy before risking real capital. Both will help you develop effective trading strategies while building confidence in the market.

Finally, you may want to consider margin rates in conjunction with other rules and regulations. For example, will the low margin requirements lead you to trade more and then follow the pattern day trader regulations?

Trade hours

E-mini S&P 500 futures trading hours are Sunday through Friday 5:00 PM to 4:00 PM CT. However, there is a 15 minute gap between 3:15pm and 3:30pm CT. Additionally, daily maintenance occurs between 4:00 PM and 5:00 PM CT.

The trading hours are divided into two sessions:

• The day trading sessions start at 08:30 and end at 15:15 AD.
• After-hours trading starts at 15:30 and lasts until the next day’s session.

As E-mini S&P 500 futuristic data and live charts demonstrate, the largest volume is seen during the day session. Having said that, releases before the day of the day session also cause significant activity. Additionally, any major news events from Europe could lead to a spike in trade.

Note that NASDAQ E-minis and other mini contracts usually trade almost 24 hours a day as well. Head over to the official website for trading and upcoming futures trading hours.

History

Early history

A little E-mini context can give meaning to trading systems in use today. These futures were first implemented by the CME on September 9, 1997. This was the result of the S&P contract, which was valued at 500 times the index (over $500,000) was simply too big for smaller players.

Amazingly, the E-mini quickly rose to become the most traded stock futures contract in the world. In fact, the daily volume of the E-mini is now over $100 billion, which is far more than the combined volume of the underlying 500 stocks.

It’s not just individual traders who choose the E-mini over the larger S&P. Hedge funds also want a piece of the action, as the latter rely on a regularly delayed open-outcry pit system.

After seeing the tremendous success, the matter was soon announced to launch another E-mini. So live charts soon showed the E-mini NASDAQ-100 futures contract, which is a fifth of the actual index. Furthermore, more mini products aimed at smaller traders and investors were introduced.

When June 2005 rolled around, a new smaller instrument was made available on the S&P. However, this time the underlying asset would be 100 shares of the SPDR ETF. But unfortunately, regulatory requirements meant that the required margin per contract was almost five times the time of the larger E-mini contract. As a result, the product never really rose, with daily volume being below 10 contracts per day.

Recent events

There are some interesting recent events in the timeline of E-mini. First, there was the 2010 Flash crash auction. The US government found that a single dealer was responsible for selling the 75,000 E-mini contracts. In effect, the firm in question “inadvertently instructed its trading program to dump everyone in a series of sell orders within 20 minutes, rather than spreading the sell orders out over a much longer period”.

On December 7, 2016, another great event took place. Numerous buyers bought approximately 16,000 E-mini S&P 500. This is believed to be a series of stop orders triggered by just one contract at 2225.00. Those contracts traded as stops all traded “at the same nanosecond” and were worth about $1.8 billion.This series of new high trades was quickly followed by a fierce market streak for the remainder of the day and the next two days. In fact, it was without a doubt the biggest E-mini trade of that year by a factor of two. Surprisingly, analysts compared it to the Flash crash auction six years later.

Final Thoughts on E-Minis

E-minis are a fantastic tool if you want exposure to large cap companies on the US stock market. You benefit from liquidity, volatility and relative low costs. You also have access to numerous markets and products, from NASDAQ biotech and EUR/USD futures to weekly options and Dax futures.