How to Exploit Micro E-Mini Futures in Day Trading

Micro e-mini futures are among the popular financial instruments in the financial market today. Millions of people in the United States and around the world trade them each day, at times without realizing what they are trading.

In this report, we will look at micro e-mini futures are and how you can trade them successfully.

What are micro e-mini futures?

In the late 1990s, the Chicago Mercantile Exchange (CME) launched micro mini futures, which grew increasingly popular in the financial market. They became popular because the value of the main indices was getting extremely expensive for most people to afford.

The mini contracts were worth a relatively lower amount than the real futures contracts.

A few years ago, CME launched the micro e-mini contracts of the S&P 500, Nasdaq 100, Dow Jones, and Russel 2000. These contracts were about a tenth of the previous e-mini contracts. They are priced at about $50 times the value of the index.

This means that a single tick of the index usually provides a better result than the real S&P.

Advantages of micro e-mini futures contracts

There are several benefits for using these kind of contracts.

High liquidity

First, they are highly traded markets, with hundreds of thousands of transactions happening every day. This means that their liquidity is usually relatively higher.

Highly leveraged

Second, micro e-mini futures are highly leveraged, which means that every tick is usually more profitable.

Unlimited time to trade

Third, unlike the normal indices, these contracts are a 24-hour market, which means that you can trade them during any time of the day.

Other advantages

Finally, they are provided by hundreds of brokers from around the world. Other benefits of this futures contracts are capital efficiency, risk management, and portfolio diversification.

How to trade micro e-mini futures

Basically, the process of trading micro e-mini futures is relatively easy. Easy because the futures contracts regularly move in the same direction as the normal futures contract. Therefore, there are several things that you need to do when trading them.

Fundamental Analysis

First, you need to conduct a fundamental analysis, which is the process of looking at the underlying factors that will move the asset. For example, the S&P 500 micro e-mini futures will rise if some of the popular companies in the index release strong earnings.

Also, they will climb if the Fed lowers interest rates.

Technical Analysis

Second, as a day trader, it is essential that you conduct a technical analysis to determine where you will enter your trades. For starters, technical analysis refers to the process where you use indicators and other chart analysis patterns to predict where the financial asset will go. Some of the popular technical tools you can use are moving averages, Relative Strength Index (RSI), and Bollinger Bands.

Chart Analysis

Chart analysis is also an essential part in trading micro e-mini futures contracts. This includes using tools like Fibonacci retracement, pitchfork, and candlestick analysis patterns.

Risks of trading Micro E-Mini Futures

First, since they are traded on a 24-hours, there is a risk of low volume in various times if the day. Second, since these futures are leveraged, there is a risk of losing money.

Final thoughts

Micro e-mini contracts are relatively new tools that are offered by many brokers today. They offer a better way to trade in indices by making them more affordable. However, as mentioned there are also risks involved in these activities.

External Useful Resources

  • Are these contracts ‘the Next Big Thing’? – Investopedia
  • List of micro e mini futures – CME

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