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Intro to E-Mini Futures Day Trading

The E-Mini futures have become one of the staple methods of day trading over the years due to nearly round-the-clock trading hours, low margin requirements and healthy levels of volatility and liquidity.

Although there are many E-mini contracts, E-mini is typically the abbreviation of the E-Mini S&P 500 futures contract. It was the first E-mini contract offered by the CME in 1997. It was originally designed to make futures trading a more accessible instrument to traders, as the full-sized S&P 500 contract was becoming too large for most. It rapidly became a success, and the CME created many more mini-sized contracts as a result.

Some of the most popular E-mini contracts available today:

Contract Symbol (Firetip X) Tick Value
E-Mini S&P 500 ES $12.50
E-Mini NASDAQ 100 NQ $5.00
E-Mini DOW ($5) YM $5.00
E-Mini Crude Oil QM $12.50
Mini-Sized Corn XC $1.25
Mini-Sized Wheat XW $1.25
Mini-Sized Soybeans XK $1.25
Why Trade E-Mini Futures?

Many factors make E-mini futures appetizing to day traders, including:

Leverage: Futures are leveraged by nature. For example, the tick size on an E-Mini S&P 500 is $0.25, but the tick value is $12.50, 50 times the actual price fluctuation. This entices traders to capture small market movements throughout the day, as opposed to waiting for larger movements to see substantial gains or losses.

Shorting: Different from stocks, where the margin requirement to short a market is typically much higher than going long, the requirement to short futures is the same as going long.

Trading restrictions: There are no pattern day trading rules in futures. Any account size or type can technically trade as much as they’d like in the span of a trading day.

Access: Futures markets trade nearly 24 hours a day.

Resources: Brokerage firms and software vendors alike offer a wealth of additional trading resources. Many trading platforms today provide advanced charting and analytics, such as live depth-of-market, spread builders, and custom market indicators. You can view some of the tools available to you here.

Risks

The nature of electronic trading: E-mini futures can move very quickly in either direction. Elevated levels of volatility can be dangerous to any trader. Remember, we explained how futures are leveraged. This can be both beneficial and detrimental, as your positions can move very quickly with and against you.

Overtrading: It can be very tempting to a trader to accumulate large numbers of trades throughout the day. Beginner futures traders tend to overlook the fact that every time they buy or sell, there are various fees such as commissions, exchange, clearing, NFA, and platform fees. These fees can stack up very quickly if they’re not paid attention to.

Margins

Margins are an extremely important concept to understand as a futures trader. Being under-capitalized during a trade can result in the brokerage’s risk desk liquidating your position at non-preferable prices and charging fees for doing so.

Initial Margin: This is the exchange-set margin requirement per contract to initiate a position.

Maintenance Margin: This is the dollar amount per contract required by the exchange to maintain your position. If your account falls below this figure, your account will be placed on Margin Call status and will need to meet this call by sending additional funds or reducing positions to satisfy the Initial Margin requirement.

Intraday Margin (Day Trading Margin): This  amount is typically set by your broker. It is the dollar amount you need in your account per contract to initiate a trade, and it only applies to the day trading hours set by your broker. Many beginner traders misunderstand this term and will try to hold positions at low margins through the market close. This will usually result in your broker liquidating your positions. We recommend that all traders do their best to meet the full margin requirements of their preferred contracts, but we also understand that some smaller traders require lower margins to access some of these markets.

If you have any questions, feel free to contact us or leave a comment.

 

DISCLAIMER: There is a substantial risk of loss in trading commodity futures and options products. Losses in excess of your initial investment may occur. Past performance is not necessarily indicative of future results. Please contact your account representative with concerns or questions.

By |2019-04-30T10:12:18-05:00April 26th, 2019|Resources|10 Comments

10 Comments

  1. Avatar
    Jeffrey A Morse April 29, 2019 at 4:19 pm - Reply

    How much is the margin requirements to day trade the mini dow? Also, what platforms do offer for free, and do you offer a free demo account?
    Thank you

    • Ironbeam
      Ironbeam April 30, 2019 at 10:01 am - Reply

      Hi Jeffrey,

      We do offer a free demo of Firetip X here. Firetip X is currently offered free for 60 days.

  2. Avatar
    Noel P April 29, 2019 at 4:51 pm - Reply

    What’s the best day trading (12.01 AM to 11.59PM the given trading day) margin per contract on EMINI ES futures?
    Does the customer order sit on exchange or Ironbeam servers?.
    Are there monthly non active fees or even Firetip monthly software fees?
    How long it take to open a sole proprietor (Canadian) Business account?What forms to fill?

    • Ironbeam
      Ironbeam April 30, 2019 at 9:59 am - Reply

      Hi Noel,

      We offer margins as low as $500 per Emini ES contract for accounts that qualify. However this is always subject to change. We always recommend traders avoid using leverage when they can & be properly capitalized for the contracts they wish to trade. In regards to your server question: all Firetip X orders sit on our own servers located within proximity of the exchange servers. We do not charge inactivity fees. Accounts are typically opened within 1-2 business days.

  3. Avatar
    rory rice April 29, 2019 at 5:13 pm - Reply

    How about a list of margin for these trading accounts?

    • Ironbeam
      Ironbeam April 30, 2019 at 9:53 am - Reply

      Hi Rory,

      We do not post margins on our website, as the exchanges change them very frequently. However, if you’re on Firetip X you can view margins in real time whether you have a live or demo account.

  4. Avatar
    Richard F Hrkach Jr April 29, 2019 at 8:13 pm - Reply

    What is the account minimum and the preferred minimum.

    • Ironbeam
      Ironbeam April 30, 2019 at 9:52 am - Reply

      Hi Richard,

      We do not have account minimums. Please see our New Account FAQs for answers to your questions on this.

  5. Avatar
    Steven Stennes May 14, 2019 at 7:08 pm - Reply

    Can I move my current account to e-mini or is it the same? I would like to demo the new firetip X platform. Is there a tutorial on how it differs from the old firetip platform? How much is broker assisted trade’s ?

    • Ironbeam
      Ironbeam May 16, 2019 at 11:30 am - Reply

      Steven,

      You do not need to make any changes to your account to be able to trade the Micro E-Minis (or regular E-Minis). We have some tutorials on Firetip X HERE. We will also be releasing some videos shortly to get a little more in depth with the new platform.

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