Benefits of E-mini Trading | RJO Futures (2024)

FAQs

What are the benefits of trading futures? ›

Futures have several advantages over options in the sense that they are often easier to understand and value, have greater margin use, and are often more liquid. Still, futures are themselves more complex than the underlying assets that they track. Be sure to understand all risks involved before trading futures.

Not accounting for commissions and slippage, these strategic frameworks show that it is theoretically possible to make a living trading E-mini futures. Given a solid success rate and positive risk versus reward scenario, long-run profitability is attainable.

A micro futures contract is a smaller version of the same futures contract. This means they require significantly less capital to trade—which can help you speculate on the stock market and commodities at a lower initial cost.

Key futures markets include stock indexes, energy, currencies, cryptocurrencies, interest rates, grains, forestry, and livestock. Advantages of futures trading include access to leverage and hedging while disadvantages include overleveraging and challenges presented by expiry dates.

Here we will discuss the many key advantages of trading futures vs. stocks including increased leverage, 24-hour trading, unrestricted shorting, tax advantages and trading on a level playing field just to name a few.

That said, generally speaking, futures trading is often considered riskier than stock trading because of the high leverage and volatility involved that can expose traders to significant price moves.

The contract size of an E-mini is the value of the contract based on the price of the futures contract times a contract-specific multiplier. The E-mini S&P 500 has a contract size of $50 times the value of the S&P 500. 2 So, if the S&P 500 is trading at 2,580, the value of the contract would be $129,000 ($50 x 2,580).

An e-mini is a standard futures contract that is broken down into a fractional portion of a stock index. E-mini futures are traded electronically, hence the name e-mini. E-minis are heavily traded on the Chicago Mercantile Exchange (CME) where e-minis were first introduced (on September 9, 1997).

This efficiency is one of the primary reasons that this index future has been so successful. For example, the full cash value of the E-mini is equal to the S&P 500 index price * $50. In other words, if the E-mini is trading at 2,380.00, the full cash value would be $119,000/ contract (2,380.00 * $50.00).

How many E-mini contracts can I trade? ›

Theoretically, you can trade as many E-mini contracts as your account balance allows you. Because E-mini contracts are traded on margin ($500/contract) you can trade more contracts with less money. For example, if you have $3,500 in your account, you could technically trade 7 contracts ($500 x 7 =$3500).

To apply for futures trading approval, your account must have: Margin approval (check your margin approval) An account minimum of $1,500 (required for margin accounts.) A minimum net liquidation value (NLV) of $25,000 to trade futures in an IRA.

In the world of futures trading, success can mean significant profits—but mistakes can be extremely costly. That's why it's so important to have a strategy in place before you start trading.

Overview: Swing trading is an excellent starting point for beginners. It strikes a balance between the fast-paced day trading and long-term investing.

While the cash market offers immediacy, the futures market provides avenues for hedging and speculation. Choosing the right market depends on one's financial goals and risk appetite.

Stock futures investing

Some traders like trading futures because they can take a substantial position (the amount invested) while putting up a relatively small amount of cash. That gives them greater potential for leverage than just owning the securities directly.

The futures markets provide direct access to trade a variety of products and contracts, both financial and commodities, which are not available through stock option trading. This means that futures can offer greater diversification which can help offset the risk of having all your eggs in one directional basket.

Individual traders trade futures contracts for their own accounts. They might speculate on price moves to profit from short-term fluctuations or hedge personal investments in other markets. Individual traders have different strategies, risk tolerance, and amounts of capital at stake.