Why You Too Can Know the Benefits of Trading the S&P 500 E-Mini Futures | Investments

Why You Too Can Know the Benefits of Trading the S&P 500 E-Mini Futures

Written by Barbara Cohen, CIO, Shadowtraders

Saturday, 27 March 2010 20:22

by BarbaraCohen,CIO,Shadowtraders

Regardless of whether or not you are a novice trader or a seasoned veteran trader, you could be trading S&P 500 E-Mini Future. E-Mini Futures trade with technical charts and live Futures strategies using Futures alerts. You can daytrade E-Mini futures, just like you daytrade stocks. Attend a Futures trading seminar or buy a Futures trading course and learn more about trading the Futures Market. Why not attend a live Futures trading Webinar for free for more information.

Large Institutions and Hedge Funds trade S&P 500 Futures contracts. This way they leverage their money, not having to invest in any one company but actually able to trade all 500 at once. The S&P 500 E-mini Future is a smaller version of the exact same futures contracts traded by these large institutions. It is designed primarily for individual traders to trade. But it follows along exactly with the larger S&P 500 the institutions trade. That way, when the large S&P 500 contract goes up, the E-Mini S&P 500 goes up along with it.

The E-mini S&P 500 Future offers significant profit potential for traders. Margins for trading E-mini S&P 500 Future contracts are $400-$500 for each contract, depending on the brokerage where you have your account. Low margins are not the only purpose for trading Futures contracts and turning away from trading the Stock Market. If you are overrun being in stocks "for the long haul", or you are sick of watching your mutual fund portfolio value cut in half, discover trading S&P 500 E-mini Futures.

What is the best part about trading the S&P 500 E-mini Future contracts? In a word -- Leverage. The underlying asset of S&P 500 E-mini Future contract is the S&P 500 Index. How exciting would it be to be able to trade all the top 500 stocks simultaneously. No more research to do to find any one stock in particular. The problem is that indexes can't be traded. To resolve the issue, the Chicago Mercantile Exchange (CME) created an E-mini futures contract based upon the index. Now, rather than buying shares in all 500 companies (which by the way would be a small fortune), you can get one S&P 500 contract for $500 and achieve the same results. That's leverage,and that's most likely why the attraction by seasoned professionals to the futures market.

Here's another purpose for trading the S&P 500 E-Mini Futures...the ability to daytrade. With just $500 per contract, daytrading is yours. Just what stock could you buy for $500? Several futures brokers have a $2500 minimum to open the account. With daytrading stocks, suddenly you become a "pattern day trader," requiring you to have at least $25,000 in your account in order to daytrade.

Still not ready to jump in? Here is yet another reason for daytrading S&P 500 E-mini Futures...you won't have to do research. With trading futures, you won't have to spend hours researching which stock you want to invest in. You won't need to invest in a Live stock screener. And here's the best part, you won't need 5 or 6 charts open at once. You can trade with just one chart. You'll be able to concentrate all your technical skills on only one instrument. You won't need to flip back and forth between one stock chart and another. The ability to trade just one instrument means you can reduce your risk because your attention can narrow to only what you are trading.

As we know, each instrument trades differently, requiring its own profit targets and stop losses. Trading the S&P 500 E-mini future, you'll be able to identify profit targets and stop losses easier because you only need to set them for 1 instrument.

Monitoring your technical charts for highs and lows is the most important job of a trader. That requires patience and spending a lot of time sitting on the sidelines watching. That becomes a more arduous task if you have to watch a portfolio of 4 or 5 stock charts. But with S&P 500 E-Mini's, you only have to monitor one chart, looking for only one high or one low. That benefit itself makes it easier to become successful.

S&P 500 E-mini Future may be profitable for you, regardless of whether you're into technical analysis or more a fundamental trader. You'll be trading the same instrument as the professional traders and you'll be following their lead. When they buy, you buy. When they are sell, you sell too. Do you like to trade News announcements? Federal Reserve announcements? Unemployment? Other news items? The S&P 500 E-mini is ideal for being successful during those specific annoucements.

If you're a master chart technician, the S&P 500 E-mini Future can be an ideal trading instrument. The S&P 500 closely follows moving averages, macd's, stochastics, pivots, and other such technical alerts. If you would rather watch the markets with a fundamental approach, the same techniques for identifying oversold/overbought markets apply to E-mini index futures trading.

Just like your other trading, stocks -- options -- currencies -- bonds, S&P 500 E-mini Futures trading provides the chance for gain but also loss. Before you jump into trading the Futures market live, learn to trade it first on a real time simulator. Get yourself a futures market trading course, do a Futures trading seminar, read a book about futures trading. Take a long look at http://www.Shadowtraders.com. At Shadowtraders you can discover an online Futures self paced course as well as a Live 4-Day Futures trading seminar. Shadowtraders also provides live software with built in strategies that keeps up with the Market calling alerts real time. Try attending a free live Futures Trading Webinar for more data.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

Before you buy Futures Trading software or Futures Trading alerts, make sure you take Barbara Cohen's excellent free Webinar on Futures Market Trading. You can get a preview of the Webinar at Futures_Market_Software