I was wondering: what is the difference between trading 5 S&P emini contracts and one regular S&P contract? If I understand it right, 5 eminis are the same as one regular S&P contract...meaning a one point movement with 5 minis is $250, which is the same as a one point movement with regular. SO...why would some one choose to trade 5 minis over regular? I may be mistaken, but dont they both have about the same movement during the day (about same volatility?) Also...since most brokers charge per contract, would it not be more advantageous (commission-wise) to trade the one versus five? Did all of this make sense? Or am I just on the wrong track here?! Thanks!
I do not trade the ES very often, but I am very active in the Nasdaq and routinely trade 100 contracts at a time. This is equal to trading 20 "Big" NSD's and though our commissions might be slightly higher, we save a ton on slippage. If we did 20 NSD's depending on the time of day we could expect to lose 1/2 a point up to 2 full points. Trading the NQs we rarely have any slippage at all. Brandon
Brandon... Why little/no slippage on the NQs versus the big contracts? (I am trying to understand the difference between the minis and their bigger counterparts)
The minis, ES, NQ are electronically traded on globex, first in line gets the fill. No or very little slippage.The "big" contracts are pit traded by humans who hate everybody and want to take everything they can from the suckers who show up at their door, slippage.
JustDave, One reason a trader may wish to trade 5 e-minis rather than 1 big S&P contract is for trade management. If you like to scale in and/or out of positions, you may not have enough capital to trade multiple big contracts, whereas trading several e-minis may be more within your risk tolerance.
Just, I have not traded the SP for a while, and it sounds like the NSD contracts may be different, but I used to hit or lift 100 full size, pit traded SP contracts without budging the market at all. As others mentioned, however, there are money management issues and I suspect that execution is faster for most when using the E contract. I had a direct line to the floor so speed of execution was not a problem. O.
JustDave, the simply answer is that the five minis are executed electronically while the one big contract is not. When you start to trade them you will have way less slippage, not to mention quicker execution, by using the minis.
After posing, I started doing more research on it and you guys are right - not that I doubted you ;-) I realized that the S&P contracts are pit traded - so that in itself should have helped answer my questions... Well, I guess its the eminis for me! Thanks for the replies and have a great weekend!
just so you dont freak out on globex trading the first day (all times are CST) SP and ND big contracts trade in the pits 8:30am-3:15pm Mon-Friday they also trade electronically 3:15pm-8:15am the next day the ES and NQ, little contracts if you will trade basically the whole time electronically on the screen they start at 6pm on Sunday night and close each day at 3:15pm only to reopen at 3:45pm and trade to 3:15pm the next day so in theory each day after 3:45 you can trade both big and little contracts at the same time maybe even capture some arb if your lucky
Dear Sir Brandonf "I do not trade the ES very often, but I am very active in the Nasdaq and routinely trade 100 contracts at a time" As each e mini nasdaq = 800 QQQ 's are you saying you are swinging the equivalent of 80,000 QQQ a clip ? Do you trade for a hedge fund ? Or did you work your way up to this size ? wow ...