Emini Futures - The Why and What of Day Trading Them

Those that have been involved with futures trading for any period of time have obviously heard about Emini futures day trading. On the other hand, you might not be a very seasoned trader and have no idea about Emini futures trading options.

What Are They?

Emini futures were started over ten years ago to give non-professional traders an attractive option for index futures trading. They are traded on the Chicago Mercantile Exchange five days a week, twenty three and a half hours a day. The most well known and traded emini futures contracts are the S&P 500 but there are many other choices for traders. Other popular choices are the NASDAQ, Gold, and the DOW index.

The reason Emini futures are attractive to non-professionals is the size of the commitment...an Emini futures contract is only one-fifth the size of a regular S&P 500 contract, which means it requires eighty percent less margin to trade.

The margin requirements will be different depending upon your choice of broker and what postion you are holding, such as are you day trading or trading based on a position. Normally, a trade of 1 S&P 500 emini futures contract will take $2,000.00 to trade. However, an overnight position generally requires roughly two times that amount.

Emini futures contracts have become extremely popular due to the lower margin requirements, lower brokerage commissions and the lower barrier for entry to trading.

A 1 point move of the emini S&P 500 futures equals a value of $50 per contract traded. Each move is a quarter of a point in value. Due to the fact that the Emini S&P 500 futures contracts are traded in an electronic format you will hav ethe ability to trade at any time of the night or day. The only time you will not be able to trade is during scheduled maintenance times and planned days of being closed. This allows you to adjust your position more frequently, taking advantage of the volatility of this market.

The Why

Obviously the easist answer to this is for an income but there is a lot more to this than just making a profit. As we have stated it will require you less capital to buy a emini futures contract and you can trade them pretty much at any time of the day you desire. You also enjoy a lower tax rate for US traders, lower brokerage commissions and fewer tax reporting requirements than other options.

Another benefit is the large volatility of Emini futures contracts, and their high leverage. There is a great opportunity of financial gain, especially when you consider the smaller amount of margin needed to invest in the emini's. As always, though, remember that any potential for gain is accompanied by an equal chance for financial loss. That being stated, trading in the emini futures is a great place to begin trading for a monthly income.

Now it is critical to learn about the importance of a proper trading education. By not properly educating yourself to become a successful trader you are bound to set yourself up for signifigant losses. So be certain to spend the necessary amount of time focusing on your education before putting any capital at risk.