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How to Start Trading Emini Futures

Emini futures, or just e-minis, are enjoying an incredible popularity among small traders, the real "moms and pops" of the modern trading scene. To those new to the subject, eminis are simply  smaller-sized contracts of "full-grown" futures contracts that have been around for decades. Unlike the latter that have been traded on physical exchanges, the former have always been traded electronically, which explains what the "e" stands for. 

It is not difficult to become an emini trader, although it can be much harder to become a consistently profitable one. There are only a few basic things one needs to do to start a career of an emini day trader. That's what most emini traders are: they are really day traders, which means they never hold their positions overnight, but finish their trading by the end of a daily trading session.

First, you open an account with an emini broker. There are many of them out there. Because of the great popularity of emini futures among small traders, these days even traditional stock brokers, such as Ameritrade, offer eminis for trading. These brokers should be avoided though, as they charge relatively large commissions that can easily eat all your trading profits. Basically, any broker that does not offer at least $5 per round turn, should be avoided. The overwhelming majority of regular stock brokers are in this category, the only notable exceptions being Interactive Brokers and Tradestation Securities.

Some brokers offer better margins than others. That's also a very important thing to consider when choosing a broker. The smaller the margin, the more emini contracts you can trade and thus, assuming your trading has a positive edge, the more money you are likely to make. Some brokers offer margins as low as $500 per contract for intraday trading for most if not all emini products. Others are more conservative, but still offer discounts for daytraders. Those are the two groups worth considering. It may happen that brokers who offer lower margins, charge more in commissions, although it is possible to find brokers who are good when it comes to both margins and commissions.

Once you opened an account, you need to fund it. Makes sure you have enough money to safely trade at least two contracts. The key word here is "safely." Suppose that your broker's intraday margin is $1500 per contract. Add $1000 to this as a cushion and you will come up with $2500 per contract to trade safely, meaning you would need at least $5000 to trade two emini contracts without getting overly stressed out.

Now, you only need to choose a solid trading platform. Most brokers offer NinjaTrader, a popular trading platform, and many others as well. If you a client of Interactive Brokers, you will be able to choose from among a few good trading platforms that in addition to NinjaTrader include Bracket Trader, Zeroline Trader, Button Trader, and a few others, lessser known.

Obviously, you also need to come up with a winning strategy and test it on a simulator before you commit your money, but that's another thing that goes beyond the scope of this article.

If you are serious about trading emini futures and want to jumpstart your career in this field, then see our highly profitable emini trading methodology.

 

 

Disclaimer: HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS UNLIKE AN ACTUAL PERFORMANCE RECORD. SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

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