How the CME’s New Micro E-Mini Futures Might Work to Your Advantage

Discussion in 'Index Futures' started by CaseyB, Apr 25, 2019.

  1. CaseyB

    CaseyB Sponsor

    New contracts that are about 1/10 of the standard emini contract size; is this lower market exposure going to be a game changer for you?

    It all depends on you and your trading strategy. What are the constraints that may be holding you back from achieving your futures trading goals?

    • Maybe you’re a new trader who can’t leave the simulated market environment because you’re afraid that your trading method will not cut it in the live market.
    • Perhaps you’re still developing and testing new strategies, but not quite ready to put real money on the line.
    • Maybe you want to take longer-term positions, such as swing trades or position trades, but are held back by the cost of larger stop losses or margin requirements.
    • You might be a stock investor who needs to hedge an index fund or ETF, but whose stock positions are not quite large enough to match a full emini futures contract.
    • Or, you might be an international trader who trades US Index CFDs (contracts for difference), but would rather trade through a regulated exchange than a third-party liquidity provider.
    In each of the scenarios above, the CME’s new “micro” emini futures–to be launched on May 6, 2019–just might open up some new opportunities that were previously unavailable to you.

    The new micro contracts for the S&P 500, Dow Jones Industrial Average, Nasdaq 100, and Russell 2000 feature about one-tenth of the standard emini value.

    With only a fraction of the exposure, that might mean a fraction of the market risk, a fraction of the dollar value per tick, and eventually (if market volume picks up), a fraction of the trading margins.

    Here’s what we know so far.
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  2. Assuming the micros attract enough following for the markets to be appropriately liquid (and I'm sure they will), they will be a great vehicle for those starting out. They'll get the feel of "real money" pressures without too much risk.

    "Two thumbs up" all the way on this!
    Last edited: Apr 25, 2019
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  3. CaseyB

    CaseyB Sponsor

    this is my sentiment as well, too many new traders come off of demos or paper trading with unrealistic expectations regarding how quickly a limit order should fill or how much slippage should or should not be occurring for stop orders in a fast market.

    I think the micros will provide an invaluable tool for smaller traders and an excellent way to gain experience in real market conditions for traders new to futures who are hesitant to go all in with an full sized emini.
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  4. RedDuke


    Wonder what the commissions will be???
  5. CaseyB

    CaseyB Sponsor

    considering the tick values will be around $0.50 and $1.25, I'm sure the commission rates will be priced accordingly, it's definitely going to be very competitive commissions wise.
  6. tiddlywinks


    While I think at least 3 of the contracts will be successful, it doesn't make futures trading appropriate for anyone who can spell CME. There is something else that irks me though...

    It is all but guaranteed that very close to 100% of the participants will be "retail". So now the behavior of this hobbyist/novice/middle-class/low risk tolerance retail crowd is corralled and can be analyzed. This "knowledge" may have the potential to create increased volatility, and this unsuspecting retail group may not survive a mere return to volatility normalcy.

    Like I said, I think at least 3 of the contracts will be successful, but it doesn't make futures trading appropriate for anyone who can spell CME and has $50 in their pocket.
  7. clacy


    This is a great thing for people building portfolios with futures, or who are maybe currently using leveraged ETF's.
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  8. southall


    CME are not known for low fees on the E-mini. They doubled the fees on the Russell2000 compared to ICE. And compared to say Eurex futures and most others they are high.
  9. tiddlywinks


    This has been on AMP Futures portal for a few days now.
    This is all-in cost PER SIDE, based on MY account setup, YMMV.

    With the .50c contracts (MYM,MNQ,M2K) 2 tics will be required for NET BE trade.
    MES, with 1.25/tic will require 1 tic for a NET BE trade.

    Last edited: Apr 25, 2019
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  10. R1234


    If that is truly all-in (including exchange fees) then that is very interesting.
    #10     Apr 25, 2019
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