I'm new to the futures business and am thinking about starting to trade the ES. I'm familiar with how stock trading works but I've been reading up on the futures with contracts and everything and would like to know what I am getting into. I was hoping I could get some basic information on things like what a contract is, how much it costs to purchase a contract, what the potential benefits and pitfalls of trading the ES and any other general information the seasoned vets think a new futures trader should know before getting into futures. Thanks.
http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_contract_specifications.html http://www.cmegroup.com/education/index.html
it's ben a while since I traded ES. 1 contract is worth about 65k and you need to put up about 3500k to trade it. 1 tick is $12.50 it moves in 1/4 points so a full point is $50. margin varies from broker to broker, but the exchange sets the minimum, so you can check out the exchange minimum at cme.com you'll definitely want to paper trade for quite a while till you're comfortable with the way it moves. it's just like SPY, but your margin is significantly more powerful. even if you are a very conservative trader you can burn through 5k pretty quick.
Wats0210 Do you daytrade stocks currently ? Have you watched futures movement real time daily with making your stocks trades ? Are you looking to daytrade futures only or hold overnight positions ?
The best advice I ever got that I never followed, is to start trading SPY on minimum size first. Once consistent there, you can progress to big brother ES. No reason to put the cart before the horse. Quite frankly, if you`re looking to day trade only and only one market, I think there may be markets that are better to trade than ES, offering consistently better volatility, more follow through and better R/R per trade on average. As always, do a lot of research and backtesting before commiting any real capital.
+1 No seriously, wats0210, do this. Take your time. Rushing into trades for the thrill of it will result in losses anyway. You'd have to recover from them first to claim you are overall profitable. So keep your losses tiny while figuring out a strategy.
What you are getting into is a zero-sum game, where there are thousands of traders with ten times your experience trying to take your money.
talk about coincidences, I was just going to search for this thread because there is one thing I forgot to mention. Yes, you could trade SPY, but I think a better idea is to spread ES vs YM at 1:1. Because of the difference in values you are then instead of trading an e mini in effect trading an e micro. Yes, the spread and commissions are twice as much, but you are for the most part protected from a sudden move against you that was more than you anticipated. I don't know why when anybody asks a beginner question 90% of the replies are negative. Probably has to do with the fact that most traders are losers. But seriously, I was just going to go to my email and look for the last reply, then go to et and search for this thread and mention the ES vs YM spread. I mean at that very minute and the first e mail from et was this very thread. I've asked about it before on the psycho forum and the best answer I got was, "There is no such thing as a coincidence."