When trading the e-mini futures, is it better to send in market or limit orders? How much slippage is normal? Thanks.
usually no slippage. if it's at a significant support/resistence level everybody in the world is looking at, then you may slip 1-2 points. I am not talking about unusual events like unexpected 1/2 greenspan rate cuts of course.
Ehlaban, Trading one NQ contract electronically is approximately like trading 800 QQQ shares on Island ECN at 5:1 margin. Fast, liquid, no downtick, more leverage. Risk, volatility, price movement of one NQ - almost same as for trading 800 QQQ shares. Fohat
How much is one contract? I read on the CME that it's $20 per point and each tick is .5 or $10. If the NAS is at 2000, that's a 40K investment for the underlying. I understand that this is a futures contract and not the underlying and I also read here that the margin is 5:1??? I guess my question is: If I buy one contract, how much will my account be debited and how much margin maintenance will I incur? Thanks
ktm, you do not buy the underlying. your cash in your account is a guarantee. so it is not actually used, the contract's fee is 2.95 for IB in example. that's all you pay.. Of course, there's a time when it is settled ! When you close your position, the value of the contract is compared to the value of the contract when you entered [that's where the 1 point = $20 comes from]. If it is worth more, you have a profit, if less you're in for a loss. it's that simple. Because of the speed of these markets [because of leverage] you have a minimum of $ needed in guarantee [so you can cover losses]. That's the initial margin requirement and later the maintenance requirement to prevent liquidation. It's a pretty clean structure for pure trading. You buy to resell and you don't need to have the capital [the total real value of the underlying]. But like any leveraged instrument you need very strict money management because you can loose more than you brought in [unlike stocks when long, you can only loose what you brought in]. neo
shouldn't compare point for point between stock and emini trading... the underlying $$ value is a more reasonable comparison in regards to volatility potential. $20 x 1700 (roughly current market level) = $34000, so 1 contract is roughly like playing 1k shares of a $30 stock.
what's more liquid ? I think a good way to measure is slippage. If that's the measure emini is more liquid. You will have usually no slippage for 2 to 4 contracts [often there is even more liquidity at the inside market]. With QQQ, you should see more [sometimes much more] slippage for the same kind of position. neo
Thanks tntneo, So at $20 bucks a point per contract, I need to play it tight. I've also read that these things trade virtually all the time. I've traded options extensively but never futures..one thing at a time I guess. I assume that IB will let you place "stop market" orders on E-minis that will execute at all hours?
ktm, if you keep opened positions overnight you have to be very careful with futures. As far as stops are concerned, only stop limits will execute after hours for protection reasons. I think there are other restrictions from IB, but I don't know for sure because I don't hold overnight. neo