Futures Daytrading

Discussion in 'Trading' started by matt5555, Jul 28, 2003.

  1. matt5555


    Pardon my igorance, but I have a few /simple/ questions.

    How much does an e-mini S&P 500 contract cost? A nasdaq?

    I was looking at Global, and they say for every $500 I can trade one contract. I don't know much about futures, but that does not look like a good idea at all! :eek:

    I plan on funding my account with whomever I open with $5,000.

    How many contracts could or should I trade?

    Another question, I hear that one "tick" in the e-minis = $32.50 or so? IS that true? Where could I find all of these very basic answers to the beginner questions.

  2. matt5555


    What is the current price of one E-mini S&P 500 contract and one Nasdaq contract?

    Thanks for that link, according to their site, it says:

    "This is a move the investor can afford at this point. The performance bond, or margin, (the minimum "down payment" a trader needs to trade a contract) at the time for each E-mini NASDAQ- 100 contract is $8,625. "

    Does this mean if I want to trade a contract I need $8,625?

  3. Mvic


    until you have done enough reading/research that you have at the very least answered the above questions for yourself.
  4. jasrlew


    I would recommend going to interactive brokers chat help and have them walk you through it.
  5. TGregg


    Well that's the rub, see? If the price was the same all the time, then there'd be no sense trading it, right? How could you make any money on it if it didn't change in price?

    Now futures trading (which is what one does when one buys and sells the Eminis) is mighty risky business. You have higher leverage in futures than in equities, which means you control a lot more stuff with your money in futures than in stocks. On one hand, that's good because you can make a lot more money. On the other, you can lose yer butt a lot faster.

    So, I suggest you avoid futures until you've got a great handle on all this trading stuff. But, you'll probably ignore me, which is fine with me, seeing as how I trade futures and we need more fresh meat.

    Anyway, the question to ask is not "How much does an emini cost?", but "what are the margin requirements for an emini?" And, the answer to that is "It depends." It depends on the broker and the time frame, but it's usually too small anyways. For Interactive Brokers, I believe the intraday initial is about $1892 per contract for ES (the S&P 500 emini). So if you have 2 grand in your account at IB, you can daytrade one ES all day long (just be out by about 3:30 ET).

    The overnight margins is set by some busy-body organization (I believe) and is the same for all brokers. Could be wrong - never checked into it. I'm pretty sure it's about double the intraday at IB, so for about 4 grand you could swing your way to riches with one ES.

    Oh, and points. One point on ES (it moves practically in-step with the S&P500) is $50. And commisions at IB are $4.80 per round turn (when you buy and sell). So, it's easy to see how one can make buckets of cash from trading ES. Plop down 2 grand, buy it, sell it 10 points later, gross is $500 minus commish of $4.80 is net (before taxes) of $495.20. Not bad on a 2 grand account. See you in the markets!
  6. The "price" is $50 times the cash index value for the ES. Thus if the SPX is 1000, each ES contract has a nominal value of $50,000. There are minimum margin requirements and some brokers allow reduced daytrade margin. Margin has a different meaning in futures than it does in stocks. In stocks you are actually buying the stock, and margin is the amount you put up in cash. In futures by contrast, you are only buying or selling the obligation to buy something in the future, so you are not borrowing money from the broker. Margin in futures is more of a good faith deposit. I have said before trading with $500 margin per contract is suicide. I would say $5,000 in account equity per contract is the minimum an experienced trader with very good discipline should use. A total newbie should use double that at least.
  7. One tick in the ES=$12.50, derived as follows: one full point=$50, each tick is .25, so 1/4 of $50=$12.50.

    You also need to be very aware of the rollover cycle.
  8. nitro


    Some firms will let you trade with as little as $2700 for 1 ES, but most I believe are at $3200. You can get away with a little less with the NQ, but not much.

    $100 can disappear trading the eminis faster than you can blink. If you try to trade them like stocks you will end up out of the game.

    I suggest that you trade SPY at first with 100 shares while taking your signals from the ES, or accordingly with the QQQ/NQ.

  9. matt5555


    I can see how I came across as many others who have tried and lost it all.

    I do not intend to open my account and trade tommorow, or next week, or even next month.

    I am looking to learn, then fund my account then maybe trade.

    I am learning a little already. ES = E-mini S&p 500, NQ = E-mini Nasdaq.

    $50 = 1 point move on ES, $20 = 1 pt on NQ.

    How is liquidty on these two? What is the typical volume per day?

    I plan on using IB I think, and I will fund with 5k if/when I decide to open an account.
    #10     Jul 28, 2003