Taking a plunge in emini futures: what you must know

Taking a plunge in emini futures: what you must know

Many traders nowadays are opting for emini futures as a preferred instrument for trading, especially day traders.Emini, also called as e-mini, futures are smaller contracts of more established pit-traded futures. Their smaller size indicates that their margins are ack balso smaller and this fact appeals to many retail traders who are ready to spend only a few thousands or so dollars for this business. This is what the mini aspect of these contracts is about.

Some 10 years A decade or so ago, there was only one emini futures contract that one could consider for trading and it was ES, the emini futures contract for Standard & Poor 500. Many new emini traders start their careers with this contract, but a question that needs to be answered is whether it is really the best emini futures contract to launch your trading career with? Are there other emini contracts that can be more appropriate for the beginner to this field?

There are quite a few other emini futures contracts among US stock index futures that attract some attention among day traders. One of such contracts is the emini contract for the Dow Industrials futures, whose symbol is YM. Its ticks are smaller, only $5 per tick, compared to $12.5 for ES. There are also contracts such as NQ or TF, both of which have smaller ticks than ES.

Owing to its smaller tick size, YM can be a better trading vehicle for new traders. The smaller the size the finer your entry can be. In other words, you are more likely to attain profits, at least tickwise, not necessarily dollarwise. This and the fact that fills seem to be better, easier to get, than in a very competitive ES, are the main reasons why YM can be a better choice for the first emini market to try your luck in.

The same is true about TF, the emini futures for the Russell 2000 index. On the other hand, ES is more dynamic than YM, so you may find out that squeezing out only 3 ES ticks ($37.5) is easier than 5 YM ticks ($25) and for this reason ES can be better than YM, although hardly better than TF.

One company that helps you deal in emini stocks is Proemini. For more information, log on to www.proemini.com.

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