8 Advantages of Trading Emini Futures

The Emini futures contract was first launched in 1997 by the Chicago Mercantile Exchange (CME) to attract amateur investors to the trading index futures market. The first one was the S&P500 Emini which tracks the S&P500 index. There are several advantages to trading Emini futures, even for the professional trader. The CME made it possible for non-professionals to enter this market by reducing the contract to 1/5th the size of a standard S&P500 futures contract.

The advantages are:

1. Margin requirements are lower than those of a full-size contract. The CME made the Emini futures one-fifth the size of a

standard S&P 500 futures contract, therefore, making the margin requirements one-fifth those of a standard one. While they

will vary by broker, margin requirements are approximately $2,250 per contract to open a day trade and $4,500 for an

overnight position. These amounts are results of recent increases during to the underlying volatility of the S&P 500 index.

2. Electronic trading platform with Globex. With electronic trading, you can trade basically 23 ½ hours a day, five days a

week. Weekly trading opens on Sunday at 5pm and closes on Friday at 3:15pm. The day session trading opens on weekdays at

8:30am, closes at 3:15pm and then re-opens at 3:30pm. All times are central standard times.

3. Emini futures offer high liquidity which minimizes slippage and tight bid/offer spreads.

4. Trading the Emini gives you the ability to go buy long and sell short with no up-tick rule.

5. With the large volatility there is the opportunity for high leverage.

6. Emini futures carry very low brokerage commissions.

7. For U.S. traders there are lower tax rates on gains and income. This can be a huge advantage for a trader in a high tax

bracket.

8. In addition, there are minimal tax reporting requirements with Eminis, making the trades more private with reduced

government interference.

As a result of these advantages, Eminis are a huge success with both non-professional and professional traders. Monthly trade volumes now average over 40 million contracts and the daily volumes average more than 2 million contracts. The large S&P only does about 0.5 million contracts a month, the equivalent of 2.5 million Eminis.

Even with others opening, the S&P500 Emini futures continue to dominate index futures market, making it an excellent vehicle for the amateur to use to enter the futures market.