Exactly What Are EMini Futures?
Emini futures track the most popular broad-based stock index benchmarks in the financial world. Launched between 1997 and 2005, E mini futures are among the fastest growing products in the industry.
The four most popular E-Mini futures consist of the following:
EMini S&P 500 futures contract
EMini NASDAQ-100 futures contract
Russell 2000 Index Mini futures
All E mini futures contracts are traded completely electronically via electronic order management software on a PC or through a registered commodity futures broker over the telephone. In addition to offering unique opportunities for risk management and market exposure, E mini futures are appealing because of their excellent liquidity and around-the-clock availability. At one-fifth the size of their standard counterparts, these contracts have found an audience among professional and individual investors alike.
E Mini futures are contracts to buy or sell the value of a specific stock index at a specific price on a specific date in the future. Businesses and individual traders trade E Mini futures for different reasons, but they trade them primarily to try to profit from or protect themselves from changes in the price of the underlying indexes. Financial professionals, such as pension and mutual fund managers, typically use E Mini futures for managing risk and hedging portfolios against adverse price moves. Others, such as day traders or position traders, trade these products to speculate on the price fluctuations of the stock market.
EMini futures closely follow the price movement of their respective indexes, typically referred to as the "underlying" or "cash" indexes. Intraday, monthly, and yearly correlations between cash indexes and futures are very close.
If in trading futures you buy an EMini futures contract, you hope to gain from future price increases when you offset your trade by selling the contract. Correspondingly, if you initially sell (sell SHORT) an EMini futures contract, you hope to gain if the price of the contract declines. Remember though, if your forecast proves wrong, you risk loss. The rapid price changes associated with stock indexes and EMini futures create continuous trading opportunities. It can be more efficient, however, to trade EMini futures instead of equities. This is because an E-Mini futures trade involves just one transaction to get into the market and one to get out, while selling a basket of equities is likely to involve numerous transactions.
The above information has been reproduced with permission from Todd Mitchell's Emini Success Formula 2.0 Course. Todd offers traders the ability to learn the full scope of how to trade the Eminis through his two decades of personally trading these markets. Test him out first by getting instant access through FREE Emini trading video, audio Program, course Demo, charts, trading reports & more information on his interactive course & live personal training.
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