I've only been trading stocks and SPYs sometimes for a market bet, but lately I've been hearing that a lot of daytraders are making good money scalping E-minis. Can anyone elaborate on what the edge is in trading the eminis? How are people consistently making money trading them and why eminis vs. the SPYs?
There are several advantages of trading E mini's over ETFS. First of all the commission is only$5.60 round trip per contract plus or minus. The mini is super liquid and moves much faster than the SPY or QQQ. Tax treatment of Futures is much better than stocks. Futures are taxed on a 60/40 LT/ST capital gains basis. So your MAX tax bracket on Minis is reduced to 28% as opposed to 36%. Finally, the margin on E minis is about 10 to 1. You only need $1850 per contract to day trade S&P E minis. You only get 4 to 1 buying power on ETFs since they are treated as a stock. They are VERY volatile but if you have balls, you can make a nice living scalping/ position trading minis. I position trade the QQQ's and Day trade and hedge with E minis. Good Luck! ebo
How do you define scalping? when entering a position on the eminis you are already out of pocket by one tick because of the spread and when exiting on the otherside you are losing another tick and then you have commissions on top, so your profit must be fairly big to cancel out losses.
He said that the e-minis are VERY liquid. You shouldn't be paying for the spread. The only time that I've seen it difficult to get in at your side of the spread is in a fast moving market, and if you're following the crowd then you're not scalping anyway.